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Newfield Takes More Midcontinent Express Capacity out of Woodford

Leading Woodford Shale producer Newfield Exploration Mid-Continent Inc. has stepped up for more capacity on the planned Midcontinent Express Pipeline LLC (MEP), taking an additional 100,000 Dth/d, Kinder Morgan Energy Partners LP said last week.

Newfield now holds about 300,000 Dth/d of firm capacity, said Kinder Morgan, which along with Energy Transfer Partners LP is developing MEP. Newfield also has dedicated up to an additional 150,000 Dth/d of Woodford production, which may increase its firm capacity on MEP to as much as 450,000 Dth/d.

"The Woodford Shale play is the fastest growing component of our portfolio today," said Newfield CEO David A. Trice. "We remain the leader in the Woodford Shale and our production is rapidly growing. We exited 2007 at 165 MMcfe/d (gross) and have already increased volumes an additional 15% since that time to a recent high of 187 MMcfe/d (gross). We are early in the development of this play, which will provide years of production and reserve growth. This agreement ensures that a large portion of our expected future production from the Woodford will move out of the region on firm transportation, reducing both basis risk and pricing volatility."

The Midcontinent region is Newfield's largest division in terms of proved reserves -- representing 1.1 Tcfe at year-end 2007, or about 45% of its total proved reserves, the company said earlier this year (see NGI, Feb. 11). Planned investments in the region account for about 40%, or $620 million, of Newfield's total budget this year, with most of the spending planned for the Woodford.

MEP now has long-term binding commitments of more than 1.4 Bcf/d, which does not include Newfield's 150,000 Dth/d of dedication, said Scott Parker, president of Kinder Morgan's gas pipelines. The MEP project can be expanded to up to 2 Bcf/d with additional compression, he said. When completed, the pipeline will carry gas from the Barnett Shale and Bossier Sands in Texas, the Fayetteville Shale in Arkansas and the Woodford Shale in southeastern Oklahoma, as well as other regional sources.

The $1.3 billion MEP project would extend from southeastern Oklahoma, across northeast Texas, northern Louisiana and central Mississippi, to an interconnection with the Transcontinental Gas Pipe Line (Transco) near Butler, AL. The 500-mile pipeline would consist of 266 miles of 42-inch diameter, 202 miles of 36-inch diameter and 39 miles of 30-inch diameter pipe, and have up to 13 receipt/delivery interconnections, providing access to markets served by the NGPL, Transco, Texas Eastern, Tennessee, Columbia Gulf, Texas Gas, Southern Natural, Destin and ANR pipelines. Subject to regulatory approvals, construction is scheduled to begin this summer and the pipeline is expected to be in service by March 2009. The Federal Energy Regulatory Commission (FERC) gave the project a favorable draft environmental review in February (see NGI, Feb. 11).

"The timing of the MEP project is aligned with Newfield's development, and when coupled with Energy Transfer's pipeline systems, provides Newfield significant flexibility and market diversification as they develop this rapidly emerging resource play," said Lee Hanse, Energy Transfer senior vice president.

Also targeting Woodford production, OGE Energy Corp. subsidiary Enogex Inc. recently completed construction of the first phase -- 22 miles -- of a 30-mile pipeline to connect the company's Hughes, Coal and Pittsburgh county gathering system in Oklahoma with the 30-inch diameter Enogex mainline to Bennington, OK, and the 24-inch Enogex mainline to Wilburton, OK. The company said in February that it has committed approximately $50 million to expansions in this area and expects its latest expansion to be in service by 3Q2008, adding that it continues to develop other projects in the area (see NGI, Feb. 11).

Late last year shippers on the Enogex system challenged an agreement for the lease to MEP of 500,000 Dth/d of Enogex capacity, alleging that the lease is discriminatory because they have been unable to get firm transportation on the intrastate line themselves (see NGI, Oct. 29, 2007). A spokesman said the case is ongoing at the FERC.

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