The government of Nova Scotia has approved amendments to its natural gas plant regulations, which establish standards for the design, construction and operation of liquefied natural gas (LNG) terminals. The rules took effect July 8 and will affect two proposed LNG facilities in Nova Scotia. The province currently has two LNG terminal proposals on the board. Anadarko Canada Ltd. is developing an LNG facility in Bear Head, NS, which is scheduled for start-up in 2008. Also, Keltic Petrochemicals has proposed construction of a combined LNG and petrochemical plant for Goldboro, NS. The revised regulations establish a code of practice for LNG plants based on a Canadian Standards Association standard. However, the revised rules require more conservative design and operation standards in situations where the government thinks it is warranted. Nova Scotia's Department of Energy received advice on the regulations from an independent consultant and released the draft regulations for public consultation. The Nova Scotia Utility and Review Board will administer the regulations, and expects to recover the costs for the regulations from LNG operators.
El Paso Corp. has closed the previously announced sale of its 50% interest in Korean Independent Energy Corp. (KIECO) to Korea Power Investments Co. Ltd. for $284 million. El Paso, which acquired an interest in the facility in 2000, will record a pretax gain of approximately $111 million on the transaction. KIECO owns a 1,800 MW combined-cycle liquefied natural gas-fired power generation facility in the Republic of Korea that provides peak-load power to the city of Seoul. The sale supports El Paso's long-range plan to reduce the company's debt, net of cash, to approximately $15 billion by year-end 2005. Since its mid-March update, the company has announced or closed $0.6 billion of its targeted $1.2-1.6 billion of asset sales.
Duke Energy and ConocoPhillips completed a restructuring of their ownership in Duke Energy Field Services with Duke Energy receiving, directly and indirectly through its ownership interest in DEFS, $1.1 billion in cash and assets from ConocoPhillips and ConocoPhillips receiving a 19.7% stake in the field services company. The transaction creates an equal 50% share in DEFS for both companies. "We believe a 50-50 joint venture between the two parent companies is a better fit than an uneven ownership split," said Duke Energy Chairman Paul Anderson. "And with such a strong price environment, we felt the time was right to monetize a portion of the DEFS business. DEFS Chairman William Easter III said, "Given the strong support from our parent companies, we are excited about future growth opportunities at DEFS, including the possible formation of a new master limited partnership." ConocoPhillips also reported that the transfer of its interest in the Empress System to Duke Energy, originally envisioned as part of the transaction, has been delayed pending repairs to the assets, which were damaged in a recent thunderstorm. In lieu of the Empress facilities in western Canada, Duke received the equivalent value in cash. The transaction includes the transfer of all of DEFS' Canadian assets to Duke Energy Gas Transmission (DEGT). The DEFS Canadian business consists of natural gas gathering and processing facilities in Alberta and British Columbia.
Pioneer Natural Resources Co. said last week that it has closed on its previously announced acquisition of assets in two of its U.S. onshore core areas, the Permian Basin and South Texas, for a combined purchase price of $177 million. The Permian Basin assets were purchased from an affiliate of Occidental Petroleum Corp., which recently acquired these assets in a larger transaction from an affiliate of Exxon Mobil Corp. The South Texas assets were acquired from an undisclosed seller. Pioneer said these purchases add 70 million barrels of substantially undeveloped proved oil equivalent reserves with daily production of 1,800 Boe and an estimated 800 undrilled locations. The company said it expects to accelerate the pace of drilling in each of these low-risk core areas beginning later this year and anticipates that production from the acquired assets could exceed 10,000 Boe/d upon full development of the proved reserves.
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