Why would a private Midwestern utility holding company backed by investor Warren Buffett jump into the disarray of the natural gas pipeline business? Because change creates opportunity, David L. Sokol, chairman and chief executive officer of Mid-American Energy Holdings, told participants in the Colorado Oil & Gas Association's annual Rockies gas conference, held in Denver. Last year the company, which is 80% owned by Berkshire Hathaway, acquired two midstream prizes: Northern Natural Gas Co. for $928 million and Kern River Transmission Co. for $450 million. Northern Natural, once a centerpiece for Dynegy, operates 16,000 miles of pipeline and transports gas from Texas to the upper Midwest. Kern River's 17,000-mile line, acquired from The Williams Cos., moves gas from the Rockies to Utah, Nevada and California. "Less than a year and a half ago, we were a non-entity in the pipeline business and today we are No. Two in the field. I say that not to brag, but to illustrate the dramatic changes occurring in that industry," Sokol said. "We see opportunities to bring stability back to that industry." Buffett has pledged that the company could spend up to $15 billion on pipeline acquisitions if the right deals were available. Meanwhile, Sokol said Kern River will file later this year for its third capacity expansion, of another 500 million cubic feet per day, with the expansion to be operational in late 2005. Sokol cited the fact that since May 1, when a 900-million-cubic-foot-a-day expansion on Kern River came onstream, wellhead gas prices for Rocky Mountain producers have risen, and prices paid by California consumers have fallen. "That's what an investment in this sector can do. But we must have more access to land for drilling, and we must have more pipeline capacity-these Rocky Mountain basins' production could be doubled but for lack of takeaway capacity." Sokol decried short-term gas-price spikes as being harmful to the economy and pleaded with industry members to lobby more successfully for additional energy infrastructure in the U.S. "In this sector we have seen 17 CEOs replaced-that can have a real dampening effect on leadership. We've seen enormous amounts of time spent on cash triage within their respective companies, rather than focusing on long-term infrastructure needs, the energy bill and where new pipelines should be built. Industry could spend another $60- or $70 billion just in the pipeline sector alone in the next 10 years, just to keep up with demand." He concluded, "Things cannot continue as they have." Des Moines-based Mid-American Energy Holdings provides natural gas to 5 million customers, mostly in Iowa; generates 10,000 net megawatts of power from gas, coal and nuclear facilities; and now, has interstate natural gas pipeline throughput capacity of 6 billion cubic feet per day. It has $19 billion of assets and about $6 billion in annual revenues from 25 states and several other countries. -Leslie Haines
Guyana Kicks Off Oil Conference as Exxon Mulls Adding More Blocks
2023-02-14 - Exxon Mobil is working to increase Guyana production to 1.2 MMbbl/d by 2027 and possibly beyond, according to president of oil and gas production business Liam Mallon.
E&P Highlights: Feb. 27, 2023
2023-02-27 - Here’s a roundup of the latest E&P headlines, including BP’s latest plans for the GTA2 development offshore West Africa and prequalification for a jacket and platform for projects offshore U.K. in the upstream oil and gas industry.
FPSO for BP's GTA sails toward West Africa
2023-01-23 - BP and partners expect first gas later this year from the development that straddles Mauritanian and Senegalese waters.
Pemex Submits Zama Field Plan with Talos, Partners to Mexican Authorities
2023-03-24 - The shallow GoM discovery, made by Talos Energy, could produce 180,000 bbl/d for Pemex, about 10% of Mexico’s current oil output.
Shell, Chevron and Petrobras Weigh Guyana Oil Auction Bids
2023-03-06 - Guyana's vice president Bharrat Jagdeo is set to meet with top energy executives at this week's CERAWeek in Houston to gain support for the South American country's bidding round.