CNX Gas Corp.'s first horizontal well in the Marcellus Shale is producing at a rate of 6.5 MMcf/d, which sets a company record for daily output. The production rate is among the highest reported to date by any producer operating in the Appalachian Basin play. The CNX well, located in Green County, PA, began flowing on Oct. 2 at an initial rate of 1.2 MMcf/d and 4,000 pounds/square inch (psi) of backpressure. The backpressure gradually was reduced, which allowed daily production to increase to about 4 MMcf/d until early in December, when newly installed surface equipment enabled the well to flow at the record rate. The backpressure was being held at 2,640 psi. Cumulative production from the well prior to the record rate achieved was 106 MMcf. The Marcellus well was drilled to a vertical depth of 8,140 feet in the Huntersville Chert, penetrating 83 vertical feet of shale. CNX holds a 100% working stake in the well and also has 100% net revenue interest. The Pittsburgh-based independent is drilling its second vertical Marcellus Shale well, which would be hydraulically fractured using second and third horizontal wells.
FERC gave Dominion Cove Point LNG LP the go-ahead to begin service from the expanded Cove Point liquefied natural gas (LNG) terminal facilities on the eastern shore of Maryland. A spokesman said expansion service is scheduled to start either later this month or in early January. The expansion of the Cove Point LNG import terminal raises sendout capacity to 1.8 Bcf/d from 1 Bcf/d. The project also doubles storage capacity to 14.6 Bcf. Dominion Cove Point and Norway's Statoil ASA signed 20-year service agreements for the expanded terminal capacity and increased pipeline capacity in Maryland and Pennsylvania (see NGI, June 21, 2004). All of the Pennsylvania pipeline facilities associated with the terminal expansion are in service already, said Dan Donovan, a spokesman for Richmond, VA-based Dominion Resources, parent of Dominion Cove Point. The 88 miles of 24-inch diameter pipeline extend northward from the new Perulack Compressor Station in Juniata County, PA, to the Leidy Meter Station and pipeline replacement facilities at the Leidy Hub complex in Clinton County, PA [CP05-131]. But the Maryland part of the project -- 41 miles of 36-inch diameter mostly pipeline loop -- is a "couple of weeks behind" and won't be in operation until later in the month or early January, Donovan said.
Claiming that it has thoroughly tested the "electronic gate" system that was set up to ensure equal access to its natural gas and oil inventory reports, the Energy Information Administration (EIA) said that it will move both reports' standard release time back to their 10:30 a.m. EST time slots. Because energy traders anxiously await the release of the Weekly Petroleum Status Report (WPSR) and the Weekly Natural Gas Storage Report (WNGSR) to help them form their trading strategies, EIA has said it is important that every one has the same access at the same time. Since early June EIA has been delaying the scheduled releases for five minutes as part of a larger effort to assure that the data remained physically inaccessible before the release time. The change back to the original time is effective beginning with the WPSR release on Jan. 7 and with the WNGSR release on Jan. 8. EIA loads these reports behind an electronic gate that prevents access to the data before the release time. At the release time, the gate is removed and interested parties can access the information. "Over the past several months, EIA has thoroughly tested its electronic gate system and eliminated all identified problems, materially reducing the likelihood of an inadvertent early release of either weekly product," the government agency said. EIA noted that the changes to the release times do not reflect EIA's response to comments received as a result of the Oct. 15 Federal Register notice that requested public input on the process and technologies used for disseminating the WPSR and the WNGSR. The public comment period closed on Nov. 14. The comments received are currently under review, EIA said.
The Pennsylvania Department of Environmental Protection's Environmental Quality Board (EQB) has voted to impose increased permit fees for Marcellus Shale drilling operators that would raise the base permit cost to $900 from $100 and require additional fees for deeper wells. The proposed permit increases still require approval by the state's general regulatory review board, but if approved, they would take effect in the spring. Pennsylvania's oil and natural gas drilling permits now cost a flat $100/well. The new fee structure sets a base permit cost of $900 for all Marcellus Shale wells up to 1,500 feet deep, and imposes an additional cost of $100 for every 500 feet of depth past 1,500 feet. For more information visit www.depweb.state.pa.us and select "Public Participation."
The Bureau of Land Management's (BLM) final Resource Management Plan (RMP) for the Pinedale Anticline in Wyoming has been issued, mirroring a preliminary proposal with one addition: more protections in a key migration corridor for deer and antelope, officials said. The final RMP is close to BLM's proposed Alternative 4, issued earlier this year, which attempted to meld protections for wildlife habitat while permitting more oil and natural gas exploration in the region (see NGI, Sept. 1). The record of decision covers 1,875 square miles of mineral estate owned by BLM in the Pinedale Anticline. The BLM Pinedale Field Office (PFO) administers around 922,880 acres of public surface land and 1.2 million acres of federal mineral estate, and under the final RMP, about 758,000 acres of the region would be available for oil and gas development. The approved RMP includes broad land use plan decisions that provide direction for management of resources and resource uses within the PFO planning area, which is spread across Wyoming's Sublette and Lincoln counties. The RMP is designed to be in place for as long as 20 years, but if circumstances warrant, BLM may revise the plan at any time. The final RMP is available in the Pinedale section of BLM's website at www.blm.gov/rmp/wy/pinedale.
ConocoPhillips and Peabody Energy, which previously said they planned to build a $3 billion synthetic natural gas facility somewhere in Kentucky, have filed an air permit to place the Kentucky NewGas facility near Central City in Muhlenberg County in the state's western coal fields region. Peabody subsidiary Kentucky Syngas LLC plans to convert coal and petroleum coke into substitute natural gas, annually producing approximately 50-70 Bcf of pipeline-quality synthetic gas from more than 2.5 million tons of Kentucky-sourced coal. The project would use proprietary ConocoPhillips E-GAS technology and would be developed with the capability to capture and store carbon dioxide. Emissions from Kentucky NewGas are anticipated to be less than 5% of the emissions of a comparably sized traditional coal plant, according to ConocoPhillips and Peabody. Carbon dioxide captured by the E-GAS technology could be permanently stored or used for enhanced oil recovery. The project would be developed as a mine-mouth facility in an area where Peabody has access to large reserves and existing infrastructure. Last year the Kentucky Economic Development Finance Authority gave its preliminary approval to Kentucky Syngas for up to $250 million in inducements under the state's Incentives for Energy Independence Act. The legislation, passed in 2007 by the Kentucky General Assembly, gave energy companies an incentive to build plants in Kentucky that convert coal, corn and other products into clean fuels.
Charlotte, NC-based Piedmont Natural Gas Co. filed for a rate reduction with the North Carolina Utilities Commission and South Carolina's Public Service Commission, seeking to lower the wholesale cost of gas benchmark contained within rates in each state and follow recent declines in the wholesale cost of gas. Earlier this month the company also filed a request with the Tennessee Regulatory Authority to reduce rates in Tennessee. The proposed reductions, if approved by the respective state regulatory bodies, would go into effect on Jan. 1. Piedmont's proposed benchmark reductions would have the effect of reducing residential billing rates by approximately 7% in North Carolina, between 7% and 8% in South Carolina, and by 15% in Tennessee.
Toronto-based Universal Energy Group (UEG) decided on a total package, acquiring troubled Commerce Energy Inc., the operating subsidiary of Commerce Energy Group (CEG), for approximately $26 million. The deal replaced a partial acquisition the companies had originally negotiated. UEG, through its subsidiary Commerce Gas and Electric Corp. (CG&E), acquired more than 90,000 residential, commercial and industrial customers in the United States and also assumed certain letter of credit obligations related to the existing supply arrangements required to serve the Commerce customer base. Those obligations will unwind as current suppliers are replaced with UEG supply and credit arrangements, UEG said. The announcement came days after CEG said it had accepted a foreclosure by its secured lenders on all shares of Commerce after the lenders declared that CEG had defaulted on its debt. Commerce, which began its operations a decade ago in California's fledgling retail electricity market as Commonwealth Energy, said last month it had agreed to sell of most of its remaining customer base to UEG (see NGI, Dec. 15). Under the proposed sales terms at that time, UEG was to have ended up owning 66-2/3% of the Costa Mesa, CA-based natural gas and electricity service provider by providing $16 million in cash and purchasing 49% of Commerce common stock. That deal would have given UEG 60,000 of Commerce's retail gas customers in Ohio and its electricity customers in Pennsylvania, New Jersey, Maryland and Michigan. Commerce Energy would have been left with residential customer operations restricted to California and Florida, along with a commercial/industrial group of customers in various states.
InterGen completed an $89.2 million purchase in northern Mexico of the Libramiento natural gas compression facility, located adjacent to InterGen's Compresion Bajio Project, and an associated 40-mile long gas pipeline from Conduit Capital Partners LLC and minority partners including Green Energy and Infraestructura Para Energia. The Libramiento facility is fully contracted for 20 years with Mexico's state-owned petroleum company, Petroleos Mexicanos (Pemex). The transaction was funded by a combination of InterGen equity and limited-recourse debt. When InterGen and Conduit announced the deal in June, the sale price was estimated at $88.1 million. InterGen, which is jointly owned by the Ontario Teachers' Pension Plan and GMR Infrastructure Ltd., a Karnataka, India-based private-sector infrastructure developer, is a global power generation firm with nine plants representing an equity share of 5,235 MW. InterGen's plants are in the United Kingdom, the Netherlands, Mexico, the Philippines and Australia. New York City-based Conduit Capital Partners LLC is a private equity investment firm focused on the independent power and energy industry in Latin America and the Caribbean.
"Mischief" at several well sites last week in a rural area near Fort St. John, BC -- including valves being tampered with and shots fired at structures -- does not appear to be related to a series of minor explosions along an EnCana Corp. natural gas pipeline near Dawson Creek, BC, earlier this year, according to Royal Canadian Mounted Police (RCMP) investigators. The newest incidents occurred at well sites operated by Iteration Energy and Canadian Natural Resources Ltd. The ongoing investigation is being conducted by the Serious Crime Unit of the Fort St. John RCMP Detachment. Earlier this month the RCMP said EnCana, which endured minor explosions along its natural gas pipeline less than 50 miles from Fort St. John three times in October, was probably targeted by a local person with a grievance against the company (see NGI, Dec. 8).
Onshore natural gas explorer CDX Gas LLC has filed for bankruptcy protection in U.S. Bankruptcy Court for the Southern District of Texas (No. 08-37922). The filing, which indicated the producer owes $500 million to $1 billion, would allow the Houston-based producer to restructure its finances and operations. Formed in 1991, CDX and its affiliated companies were acquired in March 2006 by investor group TCW and some co-investors. CDX operates across the United States in the Appalachian, Barnett, Arkoma, Black Warrior, Cahaba, Piceance, Uinta and San Juan basins. It extracts coalbed methane using its patented Z-Pinnate Horizontal Drilling and Completion System, which was developed for the Appalachian Basin operations.
The Interior Department's Minerals Management Service (MMS) is extending the public comment period for the call for information and notice of intent to prepare an environmental impact statement on a proposed lease for off the coast of Virginia in 2011. The comment period was due to close on Dec. 29, but it has been pushed back to Jan. 13. This is the first lease sale that MMS has proposed off the East Coast in nearly three decades. The proposed sale area, which is at least 50 miles offshore and cover 2.9 million acres in water depths of 100 feet to 10,000 feet, is believed to contain 1.14 Tcf of natural gas and 130 MMbbl of crude oil, according to the agency.
FERC gave Texas Gas Transmission LLC the go-ahead to start up the first 66 miles of its Fayetteville Lateral, with service on the remainder of the lateral and the companion Greenville Lateral scheduled to begin in the first quarter of 2009, the pipeline said. The twin laterals, which consist of 260 miles of 36-inch diameter pipeline, would provide takeaway capacity from the prolific Fayetteville Shale play in North-Central Arkansas. The Fayetteville Lateral is the larger of the two, extending 166 miles from the town of Grandview in Conway County to an interconnection with Texas Gas' existing mainline system. Texas Gas filed an application at FERC earlier this year to expand compression to boost capacity on the Fayetteville Lateral to 1.3 Bcf/d from approximately 800 MMcf/d. The Greenville Lateral will consist of 96 miles of pipeline that will run from the existing Greenville Compressor Station to a new delivery point near the Town of Kosciusko in Attala County, MS. The compression expansion, which is due to be in service in 2010, would hike delivery capacity on the Greenville Lateral to 1 Bcf/d from about 770 MMcf/d. Key shippers on the laterals will be Southwestern Energy Services Co., XTO Energy Inc. and Chesapeake Energy Corp.
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