ConocoPhillips expects its 1Q2008 production to be "slightly below" 1.8 million boe/d following an unplanned shutdown at a nonoperated gas processing plant in the San Juan Basin, which was complicated by cold weather. Output in the final quarter of 2007 was 1.84 million boe/d. The Houston-based major issued an interim update ahead of the April 24 scheduled release of quarterly results. The producer noted that in the first three months of this year, the average price of natural gas climbed 19% from the same period a year ago while crude oil prices surged 69%. Henry Hub first-of-month prices in 1Q2008 averaged $8.03/Mcf, compared with $6.77 in 1Q2007. Gas prices in 4Q2007 averaged $6.97/Mcf. Realized domestic refining and marketing margins for 1Q2008 are expected to be "significantly lower" than margins in 4Q2007 because of the absence of a quarterly inventory benefit, higher crude costs relative to benchmarks and lower margins. Conoco said the prices for its "secondary products," such as fuel oil, natural gas liquids and petroleum coke "did not increase in proportion to the cost of the feedstocks to produce them." Debt balance for the major was estimated to be about $21.5 billion at the end of March. Stock repurchases in the first three months of this year were estimated at $2.5 billion.
After a series of delays Equitrans LP asked FERC for the green light to place in service its Big Sandy Pipeline, which was built to ease the capacity constraints that have plagued producers in the eastern part of Kentucky over the years. Ironically, Equitrans' request came a week after FERC granted the company another deadline extension -- until July 31 -- to put the new pipeline in operation (see NGI, March 31). The Commission has approved a series of extensions for the Big Sandy project, which was originally scheduled to be in operation by Nov. 15, 2007. Construction efforts have been hampered by significant rainfall in Kentucky, the company reported. FERC approved the project in November 2006 (see NGI, Nov. 20, 2006). Big Sandy Pipeline is a 68-mile, 20-inch diameter line that extends from Equitable Resources' Kentucky Hydrocarbon plant in Langley in eastern Kentucky to Tennessee Gas Pipeline's Broad Run Lateral in Carter County [CP06-275]. It will provide 130 MDth/d of takeaway capacity for Kentucky producers to transport Appalachian gas to markets in the Mid-Atlantic and Northeast regions. Equitrans is the pipeline subsidiary of Pittsburgh-based Equitable Resources, an integrated energy firm with a focus on Appalachian natural gas supply, transmission and distribution.
The Federal Energy Regulatory Commission (FERC) Friday reported that it lost a binder containing the personal information of 2,810 employees, including commissioners, who had left government service between October 1983 and August 2007. FERC, however, said the odds were low that the binder had been stolen. The binder contained "copies" of packing slips for boxes of official personnel files on FERC employees who had left the government during that time. The copies of the packing slips included the names and Social Security numbers of the former employees. The binder was last seen Feb. 20 in the office in the Human Resources Division of FERC's Office of the Executive Director. It was believed to have been lost during an office move, according to the agency. "We are confident there was no theft involved...But FERC wants to be cautious and has taken all possible steps to fully protect and inform our former employees," said Executive Director Tom Herlihy.
GE Energy Financial Services is partnering with Union Gas Corp. subsidiary Union Gas Production Partners LP to acquire oil and natural gas reserves from two fields in East Texas and along the Texas Gulf Coast for $115 million. The exact location of the fields was not disclosed. The GE business unit will be a 90% limited partner in the venture, and it initially plans to invest $104 million in the partnership. Union Gas will own a 10% stake and act as operator. The new alliance plans to spend another $29 million to develop and produce proved reserves over the next two years. Additional financial and operating details were not disclosed. Union Gas, headquartered in Houston, was founded in 1995, and it currently is developing seven fields on the Texas Gulf Coast.
Calling it "barely noticeable" to natural gas utility consumers, the Oregon Public Utility Commission (PUC) raised natural gas rates 0.7% for Spokane, WA-based Avista Utilities' 92,355 Oregon customers, effective April 1. It was the first of two small gas rate hikes the PUC has authorized for Avista this year. A second 1.1% hike will be effective Nov. 1. The combined 2008 increase is $2.2 million, or 1.8%, in annual revenues. Higher labor, pension and insurance costs were cited, along with capital project cost increases. Avista originally asked the PUC for a $2.9 million, or 2.3%, increase. For the average customer, the increases amounts to an added 45 cents monthly now and another 89 cents monthly in November. The PUC approved a stipulation reached among Avista, the PUC staff, the Citizens Utility Board and Northwest Industrial Gas Users. Avista gas customers are scattered in parts of southern, central and northeastern Oregon. The rate increase this year is being phased in, the PUC said, because a portion of the Avista request includes two unfinished capital projects -- East Medford Reinforcement and Jackson Prairie Storage.
A subsidiary of Houston-based Helix Energy Solutions agreed to sell a 30% working interest in its Gulf of Mexico Danny Noonan discoveries on Garden Banks blocks 463, 506 and 507, as well as other Outer Continental Shelf assets on East Cameron blocks 371 and 381, to a private independent in two separate transactions for a total of $165 million. Additional cash payments of up to $20 million may be paid to Energy Resource Technology GOM Inc. based upon certain field production milestones, Helix said. The new partner also will pay a 30% share of all future capital expenditures related to the exploration and development of these fields. Most of the transaction already has been funded, and the parties expect to complete the sale by the end of April. "As we have stated, our intention during 2008 is to unlock a portion of the value in our oil and gas portfolio through the monetization of certain reserves," said Helix CEO Owen Kratz. "These sales are the first of such efforts that we believe will allow us to demonstrate the value created through our unique two-stranded approach to oil and gas exploration and production and will allow us to recover previously invested capital, reduce future capital expenditure requirements related to these developments and reduce the profit deferral in our services division associated with the development work."
The Interior Department's Minerals Management Service (MMS) last week said it collected $3.1 million in civil penalties from offshore producers in calendar year 2007 for violations of the Outer Continental Shelf Lands Act (OCSLA). An estimated $3,106,000 was paid by producers last year for 36 violations on the federal Outer Continental Shelf. With the exception of Chevron U.S.A. Inc., which was penalized $15,000, all of the producers that paid penalties in 2007 were independent operators. Dominion Exploration & Production Inc. was assessed the largest single penalty -- $697,500 -- for operating a well for 279 days after being denied a request to do so. It was followed by Apache Corp., which paid a civil penalty of $446,000 for failing to conduct a test on a blowout preventer, related equipment, choke valve, kill valve, kill line check valve and choke manifold, as well as other violations. Other producers paying dearly for a single violation included Houston Exploration Co., $317,500; Merit Energy Co., $220,000; NCX Co. LLC, $170,000; Maritech Resources Inc., $162,500; and Pogo Producing Co., $120,000. Several well-known independent producers were assessed multiple civil penalties in 2007. Forest Oil paid $190,000 for three separate violations; Apache paid $32,000 for two additional violations; Devon Energy Production paid $35,000 for two separate violations; Maritech Resources paid an additional $30,000 for a second violation; Pogo Producing paid an additional $15,000 for a separate violation; and Merit Energy paid an additional $10,000 for another violation.
Double Eagle Petroleum Co. has reached a record level of gross sales volumes for a month from its Catalina Unit in the Atlantic Rim of Wyoming, the company said recently. The March 2008 total gross sales volumes from the 24 wells currently on production exceeded 300 MMcfe, or an average of 12,500 Mcfe (9,230 Mcfe net to Double Eagle's working interest) per well for the month of March. This compares to March 2007 gross sales volumes of approximately 145 MMcfe from the original 14 Cow Creek wells, or an average of 10,400 Mcfe (10,400 Mcfe net to Double Eagle's working interest) per well for the month. Eagle currently has a 73.84% working interest in the wells at Catalina. “We are excited about the current production results from our Catalina development program and the success of our 2007 drilling program," said Richard Dole, chairman of the board of Double Eagle. "Our record gross production in March and the anticipated production from the additional 23 wells still to be hooked up provide the company with a strong production outlook for 2008.” The March 2008 volumes include the original 14 producing wells, seven new Pod A wells and two weeks production from the company's three producing wells in Pod B. Double Eagle Petroleum explores for, develops, and sells natural gas and crude oil, with natural gas constituting more than 95% of its production and reserves. The company's current major development activities are in its Atlantic Rim coal bed methane play and in the Pinedale Anticline in Wyoming.
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