TW Negotiated Rate Filings - We were notified by FERC this week that TW's recent negotiated rate filings are on the docket for Wednesday March 28.  The possible outcomes include 1) approval of the negotiated rates or; 2) reduction of the rate down to TW's max rate and refunding the difference back to the shippers or; 3) acceptance of the rates but directives to modify all future negotiations to some form of more standardarized rate calculation.

Conoco -  The shipper missed its ROFR notification last month.  They hold 20,000 MMBtu/d from Thoreau to Needles expiring 04/2002 and 20,000 from Blanco to Thoreau expiring 03/2003.  We will post the capacity for five business days (ending Monday 03/26 at 5 pm) because the replacing contract is for term greater than 1 year.  If other shippers come in with a request during the 5 posting days, capacity will need to be prorated or allocated in a lottery.  If requests come in after the 5 posting days, the space is sold first come first served for max rate bidders.  Mavrix is requesting this capacity through 12/2004.

Alberta Energy Co. - AEC is Canada's largest gas producer and North America's largest independent gas storage operator.  Included in their storage facilities is Wild Goose Storage near Gridley, California (north of Sacramento).  They are currently connected to PG&E and are marketing an open season to expand the facility from 14 bcf to 38 bcf (in service date of April 1, 2004).  They are asking for minimum 5 year term commitments at rack rates awarded by net present value.  This may be an opportunity for Transwestern to indirectly have an option on storage or for Mavrix to directly lease storage.

SoCal Gas Needles Expansion - TW met with SoCal Gas in Los Angeles on 3/22.  In this meeting, SoCal Gas said it would be presenting a plan to management on Monday 3/26 to expand its Line 235 capacity at Needles by 50 MMcf/d.  The $2mm expansion requires the installation of a 1,000 hp electric compressor.  SoCal Gas intends only to notify the CPUC of its planned construction but will not seek CPUC approval to include the cost of these new facilities in rates.  SoCal Gas believes it can have the new facilities in place within 8 - 10 months.  TW will continue discussions with SoCal Gas to identify additional projects to further increase take-away capacity beyond the 50 MMcf/d contemplated in this first expansion.

Agave - TW and Agave field personnel are evaluating some valve and compressor reconfigurations that may allow Agave to move up to 60,000 MMBtu/d across the 10" LEC/Atoka line.  The changes would enable high pressure field gas to avoid being compressed into the low pressure side of the Atoka lateral.  We are also considering installing a tap and meter to move some Agave gas into the Duke/Crawford system.  Duke would then re-deliver the volume into the high pressure side of the West Texas lateral.  Because the gas would be moving off TW, into Duke, then back into TW, it could subject Duke to regulation under the Natural Gas Act.  Duke is aware of the risk and is evaluating their strategy.

Lone Star - LS Pipeline representatives were in the office this week in conjunction with Gas Fair.  We described the Red Rock project and the aptitude for producers on Lone Star to reach California markets.  Lone Star realizes they need to add compression to their system to access the West Texas lateral on a consistent basis.  They are evaluating their options, including selling some "under-utilized" pipe in west Texas.  They are sending us an updated system map to see if any asset synergies exist.

US Gypsum - USG' s energy management representatives from the Chicago headquarters came to Houston to discuss the Red Rock expansion.  The have four plants in California that consume a combined 11,000 MMBtu/d off SoCal and PG&E.  Their current transport contract with PGT expires April 2002 and they are evaluating options to source supplies from areas other than Canada.  They would like a portion of Red Rock but require Needles delivery capacity (which is fully subscribed through 2005).  They are very frustrated by the lack of response from their SoCal reps in coming up with a feasible solution to expanding Needles in the short term.  We told them we would keep them updated as our expansion conversations with SoCal progress.

Enron Energy Services - EES Corporate Development is evaluating opportunities to install small (50 Mw or less) distributed generation units in the western region.  They have identified TW's Kingman compressor station site as a strong candidate because of its proximity to gas supply, an APS electric substation, and abundance of available land.  Their goal is to have something operating before summer 2001.  They are reviewing environmental permitting requirements to see if fast-tracking the installation is feasible.

TXU - We negotiated an extension of the transport contract for 20,000 MMBtu/d for a 2 year term beginning April 1, 2002.  The path is Bloomfield to Needles.  This contract was done in lieu of the shipper exercising its ROFR option under the existing agreement.

Transwestern's average deliveries to California were 1120 MMBtu/d (103%), with San Juan lateral throughput at 861 MMBtu/d and Rio Puerco at 7 MMBtu/d.  Total East deliveries averaged 350 MMBtu/d.  

El Paso's average deliveries to California were 2071 MMBtu/d (71%) :
- PG&ETop, capacity of 1140 MMBtu/d, deliveries of 478 MMBtu/d (42%)
- SoCalEhr, capacity 1248 MMBtu/d, deliveries of 1055 MMBtu/d (85%)
- SoCalTop, capacity 539 MMBtu/d, deliveries of 538 MMBtu/d (100%)

Friday's posted Gas Daily prices:
-SoCal gas, large pkgs	 10.995
-PG&E, large pkgs	   5.97
-TW San Juan		    n/a 
-TW Permian		   4.85

Friday's Enron Online bases:
		Apr-Oct			Nov-Mar		
Perm-CA	5.24			4.43
SJ - CA		5.72			4.25  
SJ-Waha	  .29			  .28
Perm-Waha	  .07	 		  .10