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Texas General Land Office

Learn about the State Energy Marketing Program by the Texas General Land Office, providing details on the funds generated, customer savings, and the program's objectives in the energy industry.

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Texas General Land Office

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  1. Texas General Land Office Sharing our experience with public customers.

  2. Texas General Land Office State Energy Marketing STATE ENERGY MARKETING PROGRAM • Take In-Kind Program • Public Customer Gas Program • State Power Program

  3. State Energy Marketing Program

  4. Take In-Kind Program • SEMP Takes in kind Royalties • Established in 1983 through the state’s appropriations bill. • The Program operates by taking royalty payments in the form of mineral production instead of receiving monetary royalty payments. • The Program sells the mineral production to customers.

  5. Take In-Kind Program • SEMP Takes in kind Royalties • The Program contracts out with mainline transporters and local distribution companies to transport mineral production to our customers. • Natural Gas value is established using location differential pricing points around Texas that equate back to Houston Ship Channel prices.

  6. Take In-Kind Program • In 1983 State agencies were directed to reduce their utility costs by buying lower priced gas being produced on state lands. • GLO contracts went into effect in 1985. • 33 state agencies were participating.

  7. Take In-Kind Program • TIK Producers ACE ANADARKO APACHE BP AMOCO CABOT OIL & GAS MKTG ETOCO EXXON MOBIL FINA GENESIS GRYPHON EXPLORATION IBC LOCIN MASTERS MERITECH NEUMIN NEWFIELD NORTHSTAR OSPREY PANACO REEF EXPLOR SABCO SAMSON (CONTOUR) SENECA SPINNAKER TRANS-TEXAS VINTAGE WALTER OIL & GAS

  8. Take In-Kind Program • Contract Agreements • Interlocal • Interagency - Last Look • NAESB • Staff negotiates on behalf of the Commissioner.

  9. Take In-Kind Program • TIK Wholesale Purchasers Reliant Houston Pipeline Energy Transfer Kinder Morgan Pipeline Formosa - Dow CrossTex Trammo Plains Marketing Sunco Sempra

  10. Take In-Kind Program • Pricing Model • NYMEX Base Pricing • Differential Base Pricing • Competitive Pricing • RFP Pricing

  11. Take In-Kind Program • Annual Revenue TIK Gas Oil % FY 01 $96.6 M $22.5M 45% FY 02 $55.4M $14.8M 48% FY 03 $117.3M $18.1M 46%

  12. Take In-Kind Program • Annual Volume Gas Oil FY 01 16.8BCF 788Kbbl’s FY 02 19.6BCF 698Kbbl’s FY 03 25.1BCF 631Kbbl’s $0.03 per mmbtu Admin. Fee $0.05 per bbl Admin. Fee

  13. State Energy Marketing Customers • City and county governments, school districts and others may now purchase natural gas through Public Customer Gas Program. • Now serving 587 meters at 24 universities, 2 school districts, 1 city, 39 prisons, and 18 state agencies. • 10 Wholesale Gas and Oil companies and over 26 pipeline and LDC’s.

  14. Energy Marketing Successes • 1986 - 2,209,600 mcf of gas was sold to state agencies - Over $1,196,000 savings! • 1991 - Legislature expanded the program and gave the GLO authority to review and approve the acquisition of natural gas by state agencies. • 2003 - Annual Volume 25.1BCF • 2003 - Annual Revenue $119.7 million • 2003 - Annual Savings of $62 million

  15. State Power Program

  16. State Power Program SB 7 - 76th Texas Legislature • Comprehensive electric restructuring bill. • Authorized start date for State Power Program-September 1, 1999. • Public Utility Commission rulemaking proceedings were necessary to set up program. • State Power Program began providing retail electricity in June 2000. • Full competition began January 1, 2002.

  17. State Power Program • In-kind royalties from state mineral production may be converted into other forms of energy, including electricity, for sale to public retail customers. • These royalties are also defined as royalties from University Fund lands and royalties from the Outer Continental Shelf, otherwise known as the 8(g) area.

  18. State Power Program PROGRAM OBJECTIVES • Increased revenues to the Permanent School Fund. • Utility savings to public retail customers. • Share experience of the competitive retail marketplace prior to and continuing through the deregulated arena.

  19. State Power Program Who Are Public Retail Customers? • Public School Districts • State Colleges and Universities • Junior and Community Colleges • State Agencies • Cities, Counties, and other Local Governments • Military Bases and Federal Veterans Facilities

  20. State Power Program • The State Power Program originally focused and currently serves many of the Independent School Districts and other Public Retail Customers in the Houston area. • The program now also serves Public Retail Customers in Texas Utilities, Central Power & Light, West Texas Utilities, and Texas-New Mexico Power service territories.

  21. State Power Program Progress of Program • 93 contracted customers under 5% discount deal prior to January 2002. • 180 customers added, or re-signed, under new market value contracts going through 2003. • 355 customers now being served by State Power Program.

  22. State Power Program Program Progress (Continued) • Now serving 238 school districts, 29 cities, 13 universities, 5 state agencies, 40 counties, 30 municipal utility districts. • Now serving a total of 355 Public Retail Customers. • Power program increased value over 50% compared to monetary royalty payment, not including the savings realized by customer base.

  23. State Energy Marketing • Customer Count: Electricity 182 ISDs 49 MUDs 39 Counties 13 Colleges 31 Cities 15 Other 5 State Agencies 2 Military Bases

  24. State Energy Marketing • Annual Volume Electricity FY 01 200MW FY 02 400MW FY 03 1200MW

  25. Texas General Land Office Energy Marketing Contact: Richard Bone, Director richard.bone@glo.state.tx.us 512/475-1525 1-800-998-4GLO (4456) www.glo.state.tx.us/energy

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