ENRON POWER SERVICES SIGNS 20-YEAR GAS CONTRACT FOR SITHE
ENERGIES GROUP'S INDEPENDENCE STATION
HOUSTON, Jan. 28 /PRNewswire/ -- Enron Power Services, Inc., a subsidiary of Enron Corp.(NYSE: ENE), and a member of the Enron Gas Services Group, announced today that it has signed a 20-year contract with Sithe/Independence Power Partners L.P., a unit of Sithe Energies, U.S.A., to supply 100 percent of the natural gas requirements of the 1,000 megawatt cogeneration facility that Sithe is developing at Oswego, N.Y.
The facility is scheduled to begin commercial operation on Jan. 1, 1995, and will require 195 million cubic feet (MMcf) of natural gas per day, or a commitment of approximately 1.4 trillion cubic feet over the life of the contract. During the first five years, the majority of the natural gas will be sold at a fixed price. The remaining portion during that time and for the following 15 years will be market responsive. Based on these pricing parameters, the gas sales under the contract are estimated at between $3.5 billion and $4 billion over the 20 year period.
"We are excited about participating in this major project with Sithe," said Jeffrey K. Skilling, chairman and CEO of Enron Gas Services. "The contract exemplifies Enron's commitment to the electric generation industry and demonstrates the role that natural gas can play in meeting the energy challenges of the 1990s. Natural gas is an abundant and reliable fuel, and long-term contracts such as this are absolutely essential to meet the incremental growth opportunities presented by electric power generation."
"We are very pleased that we were able to obtain this significant long-term supply of natural gas from Enron," said Bruce J. Wrobel, executive vice president for Sithe Energies, U.S.A. "This project was originally conceived as a coal project, but due to the availability of a competitive firm long-term gas contract such as this and due to a number of environmental, siting, and economic reasons, we decided to proceed with natural gas as the primary fuel for this facility. The project will provide a number of economic benefits including the creation of over 750 construction jobs and approximately 75 permanent operating jobs. The project has been exceptionally well received in upstate New York.
Enron has appropriately hedged for this stage of project development the natural gas associated with the fixed price commitment and will be acquiring the remaining market responsive gas from three major supply basins: the Gulf Coast, including Mobile Bay; the Mid Continent; and Canada. Sithe is currently
negotiating firm natural gas transportation contracts. It has contracted to supply the majority of electricity over the 20-year period to Consolidated Edison of New York, and contracts to supply the remaining power are being finalized. Financial closing on the project should occur during the second half of 1992.
The Sithe Energies Group is headquartered in New York City. It currently operates 18 independent power projects totalling over 400 megawatts in 10 states and is completing construction of two additional gas fired cogeneration projects. When the Independence Station and other projects commencing construction in 1992 are completed, Sithe Energies will operate over 2,000 megawatts of power generating facilities, and its committed investment will be close to $2.5 billion.
Enron Power Services, Inc., a member of the Enron Gas Services Group, markets long-term natural gas supplies to the electric power generation industry. Enron Corp., America's leading natural gas company with more than $13 billion in annual revenues and $10 billion in assets, operates the nation's largest natural gas transmission system; markets natural gas, gas liquids, crude oil and refined products nationally and world wide; owns 84 percent of Enron Oil & Gas Company, one of the country's largest independent (non-integrated) natural gas exploration and production companies; is one of the largest independent developers and producers of electricity in the United States and the United Kingdom, with extensive experience in combined heat and power installations; and is a leading non-regulated purchaser and marketer of long-term natural gas commitments.
/CONTACT: Diane Bazelides of Enron Corp., 713-853-6285; Bruce Wrobel of Sithe Energies, 212-755-755-7600; E.P. Segner, senior vice president of Enron (public, investor & govt. relations), 713-853-5299; or Paula Rieker of Enron, 713-853-5981/
(ENE) CO: Enron Power Services, Inc.; Sithe/Independence Power Partner ST: Texas, New York IN: OIL SU: CON SH -- NY066 -- 4284 01/28/92 13:22 EST