TransCanada Corp. has settled some old business that could have been a stumbling block to development of a long-haul pipeline to carry Alaska North Slope natural gas to Lower 48 markets. The Federal Energy Regulatory Commission recognized the surrender of a certificate issued in 1977 to TransCanada subsidiary Alaskan Northwest Natural Gas Transportation Co. In the opinion of some, that certificate for a gasline project that never got built could have created a $9 billion liability to the subsidiary's former partners to be borne by future shippers on the Lower 48 pipeline. While it was lobbying last year for the state concession to build the pipeline under the state's Alaska Gasline Inducement Act process, TransCanada said the so-called "withdrawn partners liability" was a nonissue. Even if old legal business is not going to do in the company's pipeline plans, current market circumstances still could. Weak gas prices and burgeoning Lower 48 gas production, as well as the potential for stepped-up imports of liquefied natural gas, all are causing some to question the economics of a Lower 48 gasline.
Ongoing repairs from hurricanes Ike and Gustav last September continued to hammer Stone Energy's production at year's end, the company said. However, Stone still managed to increase its estimated year-end 2008 proved reserves to 519 Bcfe, well ahead of the 403 Bcfe at year-end 2007. Production from the Gulf of Mexico (GOM) continues to be "adversely affected" by third-party and company pipeline repairs and shut-ins, the Lafayette, LA-based producer said. Stone exited 2008 producing 200 MMcfe/d. To date another 20-25 MMcfe/d has come back on line (225 MMcfe/d on Feb. 1), driven primarily by the return of the Bluewater pipeline. Stone estimated that another 35-40 MMcfe/d remains shut-in, including 20-25 MMcfe/d in oil and gas volumes at Mississippi Canyon Block 109 from the Amberjack platform. Stone's capital expenditure (capex) budget for 2009 was set at $300 million, excluding acquisitions. Stone is now projecting that its 2009 net output will average 210-240 MMcfe/d.
Less than five months after agreeing to form a joint venture combining OGE's Enogex midstream business with Energy Transfer Partners LP's (ETP) interstate operations and midstream operations in the Rocky Mountains, the two companies said they have terminated the agreement. The companies said recent economic turmoil and uncertainty in the capital markets "made it unfeasible to complete the formation of the joint venture at this time." Given current conditions and projections for the near term, it was in their mutual interest to terminate the agreement, they said. Announced in September, the venture, ETP Enogex Partners LLC, was to have been owned and managed by OGE and ETP on a 50/50 basis (see NGI, Sept. 29, 2008). Oklahoma City-based OGE had planned to contribute to the venture its ownership interest in its gas midstream subsidiary Enogex LLC; ETP was to have contributed its ownership interests in subsidiary Transwestern Pipeline Co. and ETC Canyon Pipeline LLC, along with its 50% interest in Midcontinent Express Pipeline LLC. In addition to a 50% interest in the venture, OGE would have received a cash payment of $266 million.
Denali -- The Alaska Gas Pipeline LLC awarded an engineering contract for the gas treatment plant on its proposed pipeline from Alaska's North Slope to serve Lower 48 markets to Fluor WorleyParsons Arctic Solutions. The contract covers the services required during the initial design phase of the project for the plant. Major contract elements include a series of technical studies, development of the project design basis, project execution planning, cost estimating, schedule development and other services. The plant, to be located on the North Slope, will remove carbon dioxide, water, hydrogen sulfide and other impurities from the gas before it is shipped in the pipeline. It will also provide initial gas chilling and compression. It will be the largest plant of its type on earth, and will have process modules weighing up to 9,000 tons.
UGI Corp.'s UGI LNG Inc. subsidiary is holding a nonbinding open season through Feb. 25 for the proposed expansion of its Temple LNG (liquefied natural gas) peaking facility near Reading, PA. The expansion would involve adding a 1 Bcf LNG storage tank and increased deliverability of 150 MMcf/d to provide on-peak supplies for the Mid-Atlantic and Northeast markets. The expansion would connect directly to the Texas Eastern Transmission system and would be in service no later than 2012. The existing 0.25 Bcf Temple facility has operated since 1972. Any party interested in contracting for service must submit a bid by 5 p.m. EST on Feb. 25. For information and a bid package, contact Matt Dutzman at (610) 568-1362 or firstname.lastname@example.org.
CME Group Inc. announced the dual listing of Henry Hub natural gas financial last day options, scheduled to begin trading on Feb. 22. These contracts are listed with and subject to the rules and regulations of the New York Mercantile Exchange Inc. The products will trade on CME ClearPort and the New York trading floor. The new contract (commodity code: E7) will be a European style option that is 10,000 MMBtu in size with a minimum price fluctuation of $0.0001/MMBtu. It will begin trading with the March 2009 contract and will be listed for the balance of the current year, plus consecutive months for the next five years through 2014.
Midcontinent Express Pipeline (MEP) has filed an application at FERC for a 300,000 MMcf/d expansion of its mammoth pipeline project that would provide takeaway capacity for shale producers in Texas, Arkansas and Oklahoma. The expansion seeks to boost the main segment of MEP's Zone 1 from the previously sold out capacity of 1.5 Bcf/d to a total of 1.8 Bcf/d by increasing compression at stations in Lamar County, TX; Cass County, TX, and Hinds County, MS. MEP, a joint venture of Kinder Morgan Energy Partners LP and Energy Transfer Partners LP, has awarded the expansion capacity to two shippers, Chesapeake Energy Marketing Inc. and National Fuel Marketing Co. The Federal Energy Regulatory Commission last July approved the nearly $1.27 billion MEP project, which calls for the construction of 507 miles of 30-, 36- and 42-inch diameter interstate pipeline from Bryan County, OK, to a terminus in Choctaw County, AL; a 4.2-mile, 16- and 24-inch diameter lateral in Richland and Madison Parishes, LA; approximately 111,420 hp of compression; and associated facilities (see NGI, Aug. 4, 2008). A portion of the expansion, extending from Oklahoma through Delhi, LA, is targeted for start-up on April 1, while the remainder of the project through Alabama is scheduled for service on July 14, the pipeline said.
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