BW5566 JUN 24,2003 8:25 PACIFIC 11:25 EASTERN     Energy Editors/Business Editors     MURRAY HILL, N.J.--(<a href=www.businesswire.com>BUSINESS WIRE)--June 24, 2003--BOC, through its local company Cryogas, has acquired Comingas, a liquefied petroleum gas (LPG) wholesaler located in Colombia's coffee region. BOC purchased the entire entity of Comingas - along with the assets of two distribution companies that purchase their LPG from Comingas - for US$1.9 million.     "This acquisition provides BOC with a significant platform on which to build in the highly fragmented Colombian LPG market," says Maria Echavarria, BOC's Industrial and Special Products (ISP) business unit head in South America. "Our objective was to enter the LPG market in 2003 and establish a presence in the entire market chain within a power zone, such as the coffee region. This acquisition accomplishes that objective."     Echavarria adds that Comingas and the distributors will be integrated into a single independent entity and will retain their brand identities in the local market. "In addition," she says, "we plan to take advantage of BOC's successful experiences in South Africa and Australia in leveraging LPG into existing industrial gases accounts."     The LPG market in Colombia is about 750,000 tons per year, with a projected growth rate of 3 percent for the coming years. State-owned Ecopetrol is the sole LPG provider in the country. Wholesalers such as Comingas purchase LPG from Ecopetrol, and then store and distribute it in bulk at the wholesale level. Distributors purchase from wholesalers and bottle and sell LPG in cylinders, as well as in bulk, to the end consumer. Colombia has more than 2.5 million LPG customers. About 80 percent are residential with the balance divided between commercial and industrial accounts.     There are currently more than 100 companies involved in the storage, packaging and distribution of LPG in Colombia. Comingas presently holds a 2.7 percent share of the Colombian LPG market, but is particularly strong in the coffee region where it maintains a 20 percent share. "We are confident that once the integration with BOC is complete, we will be able to increase that share significantly," says Echavarria.     BOC's ISP South America (SA) business has a strong position in the medical, industrial and special gases market sectors in Chile, Colombia, Venezuela, Argentina, Ecuador, Peru, Aruba and Curacao, and is continually seeking opportunities for sustainable growth. BOC ISP SA serves more than 30,000 customers with 1500 employees.     The BOC Group (NYSE:BOX), the worldwide industrial gases, vacuum technologies and distribution services company, serves two million customers in more than 50 countries. It employs 46,000 people and had annual sales of some $6 billion in 2002. Further information about The BOC Group may be obtained on the Internet at www.boc.com.

--30--BW/ny*

CONTACT: BOC Corporate Communications
         Renee Talian, 908/771-1490
         renee.talian@us.gases.boc.com

KEYWORD: NEW YORK NEW JERSEY COLOMBIA INTERNATIONAL LATIN AMERICA
INDUSTRY KEYWORD: CHEMICALS/PLASTICS ENERGY OIL/GAS MERGERS/ACQ
SOURCE: The BOC Group

<a href=www.sunspot.net>SunSpotBy A Sun Staff Writer Originally published June 22, 2003

Four hundred workers on the banks of Chesapeake Bay at Cove Point were laboring furiously in the rain last week, pouring concrete, laying fiber optics and welding steel to renovate a liquefied natural gas terminal mothballed since 1980.

There was little time to spare.

The first tanker loaded with the liquid form of natural gas, called LNG, is expected at the Calvert County terminal at the end of July. It will pull up to Cove Point's pier a mile offshore and pump millions of gallons of the frigid fuel through submerged insulated steel pipes and into four giant storage tanks on land.

The ship will be the first of several dozen LNG vessels expected to make that same trip to Southern Maryland this summer from natural gas fields around the world.

Cove Point LNG, which will be the largest operating in the country, is being resurrected as the nation grapples with rising natural gas prices and the tightest supply in a quarter century.

The supply crunch has gotten attention in Washington. This month, Federal Reserve Chairman Alan Greenspan warned a congressional panel that rising prices and dwindling supplies could further damage the weakened economy and urged the country to expand its ability to import LNG.

"He all but named Cove Point," said Daniel Donovan, spokesman for Dominion Resources Inc., which purchased the LNG terminal in September from financially strained Williams Cos. for $217 million.

With gas prices up more than 70 percent in a year, it's no wonder that Dominion is spending another $180 million to upgrade the Cove Point terminal, build a fifth storage tank and refurbish the aging pier that seagulls had claimed as home.

LNG is profitable when natural gas prices reach $2.50 to $3.50 per million British thermal units, according to study by the Institute for Energy Law & Enterprise at the University of Houston. Prices now are well above $6 per million Btu.

"This is the furthest the plant has come," said Chris Buffalini, a control room operator who has worked at Cove Point for five years. "I'm really looking forward to the ships coming in."

A number of those who live near the terminal - about three miles from Constellation Energy Group's Calvert Cliffs nuclear plant - have been less eager about the LGN plant's revival.

Some said it would ruin one of the best fishing spots on the bay. Others worried that a spill would create a vapor cloud that would cause a horrific explosion if ignited. Still others expressed concern that the terminal could become another target for terrorists.

"A few years ago, they started talking about reopening the terminal," said James Oneyear, 64, a retired electrician who has lived in Cove Point since 1966. "There were a lot of people who were really disturbed about it. I went to all three of the meetings that they had and they just told us they were going to do it whether we wanted them to do it or not."

Others in the area said they have come to accept it.

"When you live on the bay, you also live with all the things that could happen ... floods, tornadoes, Calvert Cliffs Nuclear Plant," said Barbara Moyers, 64, a Rockville resident who has lived part time in Southern Maryland since the 1970s. "This is just another thing to add to the list. If you were in bed worrying about all the things that could transpire, you'd have to shoot yourself."

To be inspected

Company officials point out that federal regulators must approve the plant's facilities before the first ship arrives.

Once it is operational, the terminal will be monitored by a number of agencies. The Federal Energy Regulatory Commission, which approved the reopening, will continue to inspect the site once a month. Cove Point's underground pipelines will be regulated by the federal Office of Pipeline Safety and its underwater pipes and pier monitored by the Coast Guard.

Analysts say Dominion's move, at a time when LNG imports account for 1 percent of the nation's natural gas consumption, is astute. The federal Energy Information Administration expects LNG to reach 3 percent of consumption by 2020.

"Dominion is one of the largest companies in the nation," said Shelby Tucker, an analyst with Banc of America Securities. "They do exploration of oil and gas, so they have a sense of overall demand and supply in the country. They're smart people. Acquiring Cove Point was the right move at the right time."

By the time Cove Point is fully operational, which is expected to be in August, the plant will be able to store 5 billion cubic feet of LNG, chilled to 260 below zero to convert it to liquid. Cove Point can pump out enough energy a day through three pipelines to run about 3.4 million homes.

A single ship can carry enough LNG to meet the daily energy needs of more than 10 million homes. Dominion is expecting about 60 ships a year bearing fuel from places that include Nigeria, Trinidad and Tobago, Algeria, Venezuela and Norway.

The company and energy analysts say there is little chance that Cove Point will fall victim to the industry conditions that cut short its use more than two decades ago.

Production in domestic gas fields won't be able to meet demand, which is expected to keep growing, especially because new electricity generating plants mostly use clean-burning natural gas as fuel, they say.

Built in the 1970s, Cove Point imported LNG from 1978 to 1980, until a pricing dispute with suppliers in Algeria shut it down.

The terminal remained dormant as natural gas prices dropped and domestic production increased, supplying 83 percent of the nation's needs. An additional 16 percent was supplied by Canada, so there was no need to import LNG.

Reopened in 1995

Then, in 1995, the original owner, Columbia Gas, reopened Cove Point to serve mainly as a storage site for energy companies in peak winter months, when natural gas prices on the spot market are higher.

Columbia never got far with its reactivation plan before selling it three years ago to Texas-based Williams, which moved ahead with plans to reopen Cove Point. In December 2001, the Federal Energy Regulatory Commission gave its approval. But Williams was derailed by the turmoil racking the energy industry and sold out to Dominion, which is based in Richmond, Va.

Dominion is rushing to get ready for the first load of LNG, which will chill the pipes and tanks to prepare them for regular shipments. The utility also is preparing its operational plan, including security and emergency procedures, which must be approved by the Coast Guard before the first tanker docks.

Regardless of who owns the terminal, Oneyear said, the damage done to the Chesapeake Bay and its surroundings will be the same.

"Those ships, when they come in here, are as large as three football fields," said the retired electrician. "That's a lot of ship. They've got big propellers so there will only be a 4-foot difference between the bottom of the ship and the bottom of the bay. It's just going to churn the heck out of the bay."

LNG has had a fairly good safety record compared with those of refineries and other petrochemical plants, according to the U.S. Department of Energy. In the 40 years that LNG has been delivered across the ocean, eight marine incidents worldwide have resulted in LNG spills.

Fatalities occurred at several onshore facilities in earlier years, but industry experts say more stringent operational and safety regulations have been implemented since then.

Cove Point fatality

One of those fatalities occurred at Cove Point in 1979, when LNG leaked through an inadequately tightened LNG pump seal. The liquid vaporized, passed through 200 feet of underground electrical conduit and entered an electrical substation.

The explosion killed an operator in the building, seriously injured a second and caused about $3 million in damage.

Since then, industry analysts and experts say, the technology involved in producing, storing and processing liquid natural gas has improved greatly.

"One of the demonstrations we like to put on for people is putting out a cigarette in a thermos of LNG," Donovan said. "It's not explosive, and it's not flammable. Then we pour it out on a desk and it gradually vaporizes into the sky. I guess someone could burn that, but the chances of them getting close enough to make that happen are pretty remote."

Donovan said Dominion has upgraded Cove Point's electronic surveillance system and that security guards keep a close watch on the grounds.

A Coast Guard vessel will accompany LNG tankers up the Chesapeake, and a 200- to 500-yard security perimeter will keep other boats and ships from getting close.

"I've got mixed feelings about it," said Marvin Green, 81, who has lived in Cove Point Beach for 15 years. "I used to tell people this place is great because we've got three libraries and no traffic lights. Now I tell people the fishing is lousy because of pollution. It's too crowded now."

"But am I worried?" Green said. "At my age, I've already got one foot in the grave. I'm not all that worried about a gas plant."

The news Enterprise Online, By FORREST BERKSHIRE

The gray peaks and valleys splashed across Elizabethtown Finance Director Steve Park's computer monitor resemble the silhouette of the Rocky Mountains.

Park glances over at the mountain range about every 15 minutes, but he's not seeing a picturesque landscape. He's watching the price of natural gas.

He points to the highest peak.

"That's the day before the Iraq war," he says, when gas prices skyrocketed.

Then he points to the virtual cliff, and his finger follows the slope down into a deep valley as he tracks the progress of the war, with it reaching the bottom at the cessation of the conflict. His finger finally starts to rise again until it gets to the end of the screen, which tells him the price of gas today.

It will be different tomorrow, and the day after that, until it hits a peak and starts dropping again. Part of Park's job is to figure the gas rates for the city, which involves looking at the history of the market, taking advice from consultants, figuring the cost of upkeep and a little bit of gambling.

On Monday, gas was selling on the market for $5.73 per 1,000 cubic feet.

"We could go out and buy it for $5.73 right now," he said.

That means he could lock in that rate for the rest of the year. If gas rates soar, he might get some credit from customers when the winter months roll around and they're paying less to heat their homes than in surrounding areas.

But if gas prices on the market drop, some of that gas might be used to burn him in effigy as customers blame him for paying too much for heat.

"Inevitably, if we lock some in, (the price of gas) is going to drop," Park said.

The city usually locks into a price for part of its supply.

"We, generally, as a rule, if prices look favorable, try to buy half of our supply," Park said.

The city has yet to see a rate it likes this year. Park said anything between $4 and $4.50 is a good buy, but he's not sure natural gas rates will get that low this year.

Locking in a rate for part of the supply at least cushions the volatility of home heating bills. But even with that cushion, home heating bills in Elizabethtown have fluctuated monthly over the past two years. Each time the rate changes, the City Council must pass an emergency ordinance amending the rates, which is time-consuming and slower than the fluctuation of the spot market prices.

That's why Monday, the city approved a new rate schedule that will allow for more flexibility in setting heating rates.

Customers will now be assessed a base rate of $1.40 per 1,000 cubic feet of natural gas usage. During a cold winter month, a well-insulated, three-bedroom house would typically use about 15,000 cubic feet to heat for a month.

That base rate includes fixed costs, like payroll, transportation costs and maintenance.

Then, a variable rate, which will likely change each month, will be added. That rate depends on a number of factors.

It will be based on the "weight average cost of gas," which depends on the rate the city locks into for part of its supply, averaged with the price the city pays on the spot market, then a 2 percent loss rate for gas that escapes the system through leakage, a 4 percent fuel surcharge and any additional transportation costs.

The city also set a minimum rate of $6 a month.

The new rate system is a radical shift from the current one, which has been in place since the city got into the gas business in 1957.

Elizabethtown Mayor David Willmoth said the steep fluctuations the gas market has seen the last few years made the change necessary.

"That's the world we live in," he said, where world events like war in the Middle East, strikes in Venezuela, unrest in Israel and a bad hurricane season all affect the price of natural gas, which affects home heating bills.

"We don't see it changing any time soon," Willmoth said of the erratic gas prices.

Willmoth encouraged homeowners to set up their payments on even-billing, where the annual cost is spread out evenly instead of paying cheap bills in the summer and high bills in the winter.

Meanwhile, Park is still checking the gas rates, watching for a rate he feels comfortable committing to. But that's not an easy call to make.

"It dropped 60 cents last Thursday," he said. He said he's not sure what tomorrow's rates might do.

Forrest Berkshire can be reached at 769-1200, Ext. 240, or e-mail him at forrest@mail.the-ne.co.

<a href=ogj.pennnet.com>Oil & Gas Journal, By Curtis Williams OGJ Correspondent

PORT OF SPAIN, June 16 -- A jointly hosted Western Hemispheric Energy Summit, slated for Trinidad and Tobago this fall, will focus on natural gas, and participates will discuss supply-demand scenarios for the next decade, Energy Minister Eric Williams said.

The summit will hosted by the governments of Trinidad and Tobago and the US.

The US is keen to ensure that it can count on predictable supplies of gas in keeping with its strategic move away from over dependence on potentially unstable Middle East supplies, Williams said.

Trinidad and Tobago, already the largest LNG exporter to the US, is seen as an important future supplier to satisfy a rapidly growing US LNG market.

Members of the 15-member Caribbean regional economic union (Caricom) are going to be invited along with OLADE (Latin American Energy Organization.). Venezuela belongs to OLADE.

Venezuela has been trying to get into the LNG business and has been working closely with Trinidad and Tobago.

"We can be the catalyst that brings all these groups together to come up with a hemispheric position on short- and long-term energy issues," Williams said. Various issues being studied by the Caribbean Hydrocarbons Cooperation Commission also might be discussed.

Topics could include LNG regasification plants in the Caribbean basin and a cost-cap on petroleum products sold to Caricom countries by Trinidad and Tobago and Venezuela.

"If we are going to look at long-term energy supplies into the US, which we all agree is our major market, and we are looking at the supply position from the perspective of the gas-producing countries, it makes sense for the suppliers and demanders to get together and talk," Williams said.

June 16 (<a href=quote.bloomberg.com>Bloomberg) -- Devon Energy Corp., the largest U.S. independent natural gas producer, last month posted a seven-fold surge in earnings, partly because U.S. gas prices more than doubled. Now it's seeking divine intervention to lower them.

We should all pray for warm winters and cold summers in North America,'' James Hackett, Devon president and chief operating officer, told investors at a Credit Lyonnais energy conference in Paris. Rising prices become a question of competitiveness for America. It's not good for consumers or business.''

It also may not be good for producers. Prices for U.S. natural gas, as measured at the Henry Hub in Louisiana, have averaged $5.83 so far this year, about double the price last year. That may mark a boom, and veterans fear a bust.

Every project works at $6 gas -- it will sow the seeds of its own destruction,'' said Thomas Edelman, chairman of Patina Oil & Gas Corp., a Denver company that operates natural gas fields in Colorado's Wattenberg Field. It's very unhealthy for the economy, and in the long run, for the industry.''

So-called independents such as Patina simply drill for new deposits and pump out oil and gas, unlike bigger oil companies such as BP Plc of London or ConocoPhillips of Houston who own oil refineries and chemicals plants. Yet such independents produce 70 percent of all U.S. natural gas.

While the number of working rigs is 30 percent more than a year ago, the current count is one-fourth lower than the peak of 1,058 on July 2001, months after Henry Hub prices rallied to $10.50 in December 2000. Nine months later, gas was at $1.82.

The question is what will kill the rally this time?'' asked Brad Beago, an analyst at Credit Lyonnais. We're not seeing a huge rush to put every rig back to work.''

Gas Deficit

The U.S., the biggest energy market and consumer of about 18 percent of the world's gas, will use about 8 billion to 10 billion cubic feet of gas more than it produces by 2010, according to Cambridge Energy Research Associates. That's even with prices curbing use at steel, aluminum and ammonia makers.

``We don't expect that decline to stop, no matter how much drilling you do,'' Robert Esser, senior consultant director at Cambridge Energy, told the Paris conference.

One of the biggest sources of new demand is for electricity generation, because natural gas is a cleaner-burning fuel source. About 16 percent of U.S. electricity was generated by natural gas in 2000, up from 13 percent four years earlier, according to the U.S. Department of Energy. Utilities used 5.5 trillion cubic feet of natural gas in 2002, 36 percent more than five years earlier, the government estimated.

Esser and others expect the U.S. will have to make up the difference through new facilities to handle imports of liquefied natural gas. Gas can be converted to liquid at minus 260 degrees Fahrenheit (minus 162 degrees Celsius), allowing exports in tankers instead of pipelines.

LNG in U.S.

Liquefied natural gas, or LNG, will account for as much as 15 percent of U.S. gas in a decade, up from about 3 percent now, according to Guy Outen, chief financial officer for Shell International Gas.

Royal Dutch/Shell Group, producer of 40 percent of the world's LNG, plans to ship LNG from Venezuela, Nigeria and eventually from a project off Russia's Sakhalin Island, through plants in Mexico's Baja California, Altamira and Cove Point, Maryland, and Elba Island, Georgia.

The current plans were in place before the increase in prices in the U.S.,'' said Outen, who said plans were made on an assumption of $3 per million British thermal units. We don't forecast today's gas price for our long-term projects.''

High heating bills or surging costs for electricity to run air conditioners this summer will help overcome local opposition to new plants that can convert LNG back into gas, proponents argue.

Opposition ``is less when the price is higher for things like air conditioning and heating,'' said Outen.

`Not Appropriate'

Hackett of Devon said he's not planning on prices staying high. ``It's just not appropriate'' to anticipate $5 gas, he said. Devon is based in Oklahoma City, Oklahoma.

Almost 98.5 percent of the 23 trillion cubic feet of gas consumed in the U.S. last year came from North America, including 15 percent from Canada. Four liquefied natural gas terminals in the U.S. East Coast supplied the remaining 1.5 percent of the nation's gas, according to the American Gas Association.

For all their concern of potential damage to the industry in the years ahead, producers aren't grousing about today's profits.

When the gas price spiked, we were absolutely delighted,'' said Patina's Edelman. At $4 we make a fortune. At $6 it's a gift from God.''