The moderate earthquake that shook a width swatch of Southern California inhabited by more than 20 million people last Tuesday was felt throughout the region, but did little or no significant damage to the area's energy and other infrastructures. Local energy utilities reported scattered outages but no major impact on the electricity and natural gas infrastructure. Caltech seismology experts placed the quake's magnitude at 5.4 on the Richter Scale. By comparison, the 6.7 magnitude Northridge event of January 2004 caused widespread death, injury and damage to infrastructure. The quake was centered in the eastern part of the San Gabriel Valley near the Chino Hills, which is about 20-25 miles east of downtown Los Angeles and was described as a "shallow" temblor about seven miles below the earth's surface. Southern California Edison Co., headquartered in Rosemead, CA, less than 15 miles from the presumed epicenter, reported scattered outages in about a half dozen communities closest to the quake's center. Subsequently, Edison did report a fire in a La Habra substation that is within a few miles of the quake's epicenter. Distribution problems were reported in the immediate Chino Hills-Pomona-Brea area in the far eastern end of Los Angeles County caused by the power lines swinging together and touching. At least one fire in a local distribution substation was also reported. The Los Angeles Department of Water and Power and Los Angeles-based Southern California Gas Co. reported no problems.
Commercial finance provider CIT Group Inc. has arranged $125 million in senior secured financings for Arcadia Gas Storage, a salt dome gas storage facility to be developed in north-central Louisiana (see NGI, Jan. 29, 2007). Arcadia is owned by Cardinal Gas Storage, a 50/50 joint venture of Martin Resource Management Corp. and Energy Capital Partners. The facility is to be constructed in two phases over the next three years and will have 7.8 Bcf of working capacity. Financing for the transaction was provided by CIT Energy, a unit of CIT. The senior secured credit facilities included construction, pad gas and accordion financing.
Indigo-Energy Inc., a junior explorer that focuses on prospects located in the Upper Devonian sand formations of Kentucky, Pennsylvania and West Virginia, plans to spend $686.4 million to develop about 135,000 acres in the Illinois Basin, an emerging natural gas play that straddles portions of southern Illinois, southwestern Indiana and western Kentucky. The Illinois Basin covers about 60,000 square miles. Indigo, based in Henderson, NV, obtained the funds through a loan agreement with BJ Petro Inc., a Nevada corporation. Indigo also won mineral rights in Greene County, PA, and in Monongalia County, WV.
In the largest mineral rights lease ever in Arkansas, more than 10,000 acres of the state's forest land -- in a part of the Fayetteville Shale -- has been opened to natural gas drilling after the Arkansas Game & Fish Commission approved a five-year, $29.5 million lease with Chesapeake Energy Corp. The year-long negotiations involved competition to lease mineral rights for the land, which includes 2,949 acres at Gulf Mountain Wildlife Management Area (WMA) in Van Buren County and 7,578 acres at Petit Jean River WMA in Yell County. Chesapeake was chosen as the highest bidder for the Gulf Mountain WMA lease after the company and three other firms -- XTO Energy Corp., Ozark Exploration LLC and Storm Cat Energy -- applied in March to lease land there. Chesapeake, which already has a $2.9 million lease in the Gulf Mountain WMA, agreed to pay a 20% royalty on the gas extracted, which the state would use to improve wildlife protection projects. In a separate agreement, Chesapeake would not be given permission to drill in the Little Red River Basin, which is home to the endangered speckled pocketbook mussel. The commission restricted how Chesapeake may cross the river.
A Bureau of Land Management (BLM) proposed resource management plan (RMP) and final environmental impact statement (FEIS) has been issued for about 1.5 million acres in Utah's Grand and northern San Juan counties. Among other things, the RMP would allow up to 432 oil and natural gas wells on a portion of the land. The Moab, UT, BLM office said release of the RMP and FEIS initiated a 30-day protest period, which ends Sept. 2. BLM prepared the documents, in consultation with state and county officials, using nearly 33,000 public comments received when the draft documents were issued. Under the proposed RMP, BLM would allow wells on some of the acreage -- something that was included in the draft. BLM also would declare 17,000 acres off limits to drilling and 217,480 acres open only to slant drilling so that no rigs would be visible on the parcels. Acreage devoted to special recreation management areas would increase fourfold and nearly 63,000 acres would be managed as areas of critical concern. BLM also noted that 10 river segments would be suitable for a wild and scenic designation, and about 47,700 acres would be managed as wilderness study areas. Following the protest period BLM plans to issue a record of decision to authorize the management decisions in the RMP. More information on the RMP and FEIS is available at www.blm.gov/ut.
Junior Canadian-based explorer Park Place Energy Corp. has acquired 100% interest in 1,280 acres of land in the emerging Montney natural gas play in the Horn River Basin, which straddles the British Columbia (BC) and Alberta border. The leasehold is adjacent to the Vancouver, BC-based producer's Eight Mile property in northeastern BC. At its Eight Mile leasehold Park Place is partnering with Terra Energy, which has operations across the Western Canadian Sedimentary Basin. Park Place said it is continuing to review recently acquired 3-D seismic data on the Eight Mile property, and said decisions would be made as to where to drill additional earning and step out wells in the upcoming months.
A joint $150 million underground natural gas storage project between units of Portland, OR-based Northwest Natural Gas Co. and San Francisco-based Pacific Gas and Electric Co. (PG&E) filed last Tuesday with the California Public Utilities Commission (CPUC) for approval to build and operate the proposed 20 Bcf facility in 2010 at a site near Fresno, CA in the north end of the state's massive central valley region. The proponents' environmental assessment of the project was included in the filing. The Gill Ranch Storage Project was announced last September and an open season to assess potential market interest turned up "strong interest," according to the two utilities. Northwest's Gill Ranch Storage LLC (GRS) unit initially will operate the storage facility, and it will own 75% of the capacity in its first phase, with PG&E holding 25%. GRS is currently in the process of marketing the proposed new facility's capacity and obtaining binding agreements with customers. The facility, which is to be located about 25 miles east of Fresno, will be interconnected to the PG&E utility gas transmission backbone system that is linked to interstate pipelines coming from the Northwest and the Southwest. The CPUC filing is on the schedule the partners outlined at the beginning of this year, calling for a filing at mid-year, contracts signed with major storage customers in late 2008, and CPUC approval for the project by mid-2009. Construction would then begin in late 2009. The CPUC filing outlined a facility that would include 12-15 injection/withdrawal wells located on four drilling pads; a central compressor station located on 10 acres in the Gill Ranch Storage Field; and electric compression to minimize impacts on the San Joaquin Valley's air quality. New connecting infrastructure will include a 27-mile, 30-inch diameter gas transmission pipeline connecting to PG&E's Line 401 north of Panoche, CA, and a new nine-mile electric power line constructed on wood poles, co-located with an existing PG&E power distribution line.
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