The public utilities commissions of New Hampshire and Maine both approved Unitil Corp.'s proposed acquisition of Northern Utilities Inc. and Unitil's financing plans for the transaction. Regulatory approval is pending in Massachusetts. In February Unitil agreed to purchase Northern Utilities and Granite State Gas Transmission Inc. from NiSource Inc. for $160 million plus an estimated $25 million for natural gas storage inventory and other working capital items (see NGI, Feb. 25). In August, Unitil filed settlement agreements with the utility regulators in Maine and New Hampshire for the proposed acquisition. Northern Utilities is a natural gas distribution utility serving 52,000 customers in 44 communities in Maine and New Hampshire. Granite's operations consist of 86 miles of federally regulated gas transmission pipeline, primarily in Maine and New Hampshire. Granite's principal business is delivering gas transportation services to Northern and providing access to interstate gas pipeline supplies. Upon consummation of the transaction, both Northern and Granite would become wholly owned subsidiaries of Unitil Corp. The transaction is scheduled to close by the end of the year.
SUEZ LNG NA LLC has completed pipeline construction for its offshore LNG project Neptune, which will be 10 miles off the coast of Gloucester, MA. The terminal ultimately will deliver 400-750 MMcf/d of gas to New England markets. State permits for the project were awarded more than a year ago (see NGI, Aug. 13, 2007). The first phase of construction began in late July and included the installation of a 13-mile subsea pipeline that will connect the Neptune LNG facility with the existing Spectra Energy HubLine. The City of Gloucester will serve as the home port for the Neptune project. The second phase, scheduled to begin in early May 2009 and continue into September 2009, includes connecting the new pipeline to the HubLine and installing two off-loading buoys. Upon completion, the LNG facility will consist of an unloading buoy system where specially designed vessels will moor, offload their gas, and deliver it to customers in Massachusetts and throughout New England. The company is a subsidiary of GDF SUEZ Energy North America Inc., whose subsidiary Distrigas of Massachusetts owns and operates an LNG receiving terminal in Everett, MA, which began operations in 1971 and serves most of the gas utilities in New England and key power producers.
The Williams Cos. said it expects its operations, particularly its natural gas midstream businesses, to take a hit on profits in the third quarter of $50-70 million due to the damage inflicted by hurricanes Gustav and Ike. The Tulsa, OK-based energy company estimated that its midstream's third quarter segment profit will be clipped by $45 million to $65 million due to hurricane-related repairs and property insurance deductibles, as well as the downtime and reduced volumes at its facilities following the twin Gulf of Mexico hurricanes, which hit the Louisiana and Texas coasts in September. For the fourth quarter, Williams said it expects a reduction in the midstream's segment profit of $10-$20 million due to hurricane damages and downtime. Any effect on future periods will hinge on the company's ability to restore operations in certain areas and the resolution of any associated business interruption insurance claims, it noted. Other than the Cameron Meadows natural gas processing plant and the Discovery offshore gathering system, Williams said its major gathering and processing assets in the Gulf of Mexico are now operating but at reduced volumes. The Cameron Meadows plant sustained significant damage from Ike, and the Williams-operated Discovery gathering system is not currently accepting gas from producers while repairs are being made, the company said. Inspections of Discovery revealed that an 18-inch diameter lateral was severed from its connection to the 30-inch diameter mainline in 250 feet of water. The mainline is expected to return to service by the end of November, and the lateral is scheduled to return to service at the end of the year. The Discovery system also includes two onshore processing facilities. Both are operational and running at approximately 40% of capacity from onshore sources. Williams Partners owns 60% of the Discovery system. Several onshore and offshore facilities on the Transco pipeline system have experienced varying degrees of damage from the hurricanes, but it has continued to meet customer commitments while running at lower-than-normal volumes, according to the company.
BP America Inc. has discovered oil and gas at its Freedom Prospect, also known as the Gunflint prospect, in the deepwater Gulf of Mexico (GOM). The well, located 70 miles southeast of the Louisiana coast in Mississippi Canyon Block 948, is in about 6,100 feet (1,860 meters) of water. The Freedom well was drilled to a total depth of 29,280 feet (8,927 meters) and encountered more than 550 net feet of hydrocarbon-bearing sands in Middle and Lower Miocene reservoirs. Appraisal will be required to determine the size and commerciality of the discovery. The Freedom well is BP's third discovery in this part of the deepwater GOM following its Tubular Bells and Kodiak discoveries. The well is operated by BP Exploration & Production Inc., a subsidiary of BP America Inc., which has a 25% working interest, and includes co-owners Noble Energy Inc., with a 37.5% working interest, Samson Offshore Co., with a 25% stake, and Marathon Oil Co., which has a 12.5% stake. The lease was acquired by Noble Energy and Samson Offshore in March 2006.
XTO Energy Inc. updated its price hedges for future sales of natural gas and oil production through 2010. The hedges are in the form of swaps with no fall-away provisions, according to CEO Bob R. Simpson. Through October, XTO hedged 1,480 MMcf/d at a New York Mercantile Exchange price of $8.78/Mcf. For November and December, 1,530 MMcf/d was hedged at a price of $8.70/Mcf. XTO hedged 1,200 MMcf/d for $9.42/Mcf for 2009, and 400 MMcf/d was hedged at $8.81/Mcf for 2010.
California regulators decided that they will not try to establish a separate set of rules for utilities to file in undertaking supply contracts involving liquefied natural gas (LNG) imports. It was agreed that LNG imports should compete "head-to-head" with domestic gas supplies, the California Public Utilities Commission (CPUC) said. "LNG supply procurement and cost recovery should continue to be subject to the procedures that apply to the procurement and cost recovery for natural gas supply generally," the CPUC said in its order, which concluded a proceeding the state regulatory commission opened in anticipation of the state's utilities having the option of buying LNG imports from one or more West Coast terminals. Regulators said they wanted to look at two areas related to the new sources of gas supplies: how utility ratepayers could benefit from long-term LNG contracts, and what procedures utilities and the CPUC should use regarding utilities negotiating LNG deals. In the end, the CPUC concluded that most of the stakeholders in the proceeding recommended against the regulators adopting specific reliability and/or cost guarantee requirements for long-term LNG contracts, and that the commission should not attempt to establish guidelines for utilities or pre-approved contracts for them in negotiating LNG supplies. The CPUC also concluded from the feedback it received that "ratepayers may benefit from LNG without the need for utilities to serve as anchor tenants and, in any event, will benefit most by allowing LNG supply to compete head-to-head with domestic supply."
Pulling energy professional resources provider Skipping Stone out from under the Commerce Energy umbrella, Skipping Stone President Greg Lander and founder Peter Weigand have partnered to acquire the company for an undisclosed sum. Founded by Weigand in 1996, Skipping Stone will continue to focus on the energy industry. The partners are expanding the company's existing consulting service offerings to add interim management and contract resources, as well as executive search services. The purchase included all of the assets, intellectual property, client contracts and the operational and consulting personnel. Included in the assets is Capacity Center, www.capacitycenter.com, a wholly owned subsidiary that provides interstate gas pipeline capacity release transactions and other capacity and operational information to physical and financial trading companies and the Federal Energy Regulatory Commission. Skipping Stone's headquarters are in Boston with additional locations in Chicago, Houston, Tampa and Orange County, CA. The company has more than 200 clients worldwide in the natural gas, electricity, renewable energy, software and clean energy technology markets.
Derivatives exchange giant CME Group announced it will launch 18 new natural gas basis, index and swing swaps futures contracts on ClearPort, beginning on Sunday (Oct. 19) for trade on Monday (Oct. 20). The new futures contracts and their commodity codes are: NGPL STX natural gas basis swap (T5); Algonquin Citygate natural gas basis swap (B4); TCO natural gas index swap (Q1); TETCO STX natural gas index swap (Q2); Tennessee Zone 0 natural gas index swap (Q4); Transco Zone 3 natural gas index swap (Y6); Tennessee 500 leg natural gas index swap (Y7); MichCon natural gas index swap (Y8); CIG Rockies natural gas index swap (Z8); TCO natural gas swing swap (A1); TETCO STX natural gas swing swap (T2); Tennessee Zone 0 natural gas swing swap (T4); Malin natural gas swing swap (W9); Stanfield natural gas swing swap (Q3); Transco Zone 3 natural gas swing swap (T6); Tennessee 500 leg natural gas swing swap (T7); MichCon natural gas swing swap (T8); and CIG Rockies natural gas swing swap (U8). The basis and index swap futures contracts will be listed for 36 consecutive months, and the swing swap futures contracts will be listed for two consecutive months. The first listed month for all contracts will be November 2008. The contract will be 2,500 MMBtu in size with a minimum price fluctuation of $0.0025 per MMBtu.
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