DCP Midstream LLC and its master limited partnership DCP Midstream Partners LP restored operations at their gas processing complex and residue gas delivery system, known as the Carthage Hub, in East Texas, following a Feb. 11 explosion and fire resulting from a third-party pipeline rupture. Production was temporarily shut in at the processing complex and the residue gas delivery system following the incident (see NGI, Feb. 16), which occurred just outside DCP Midstream’s property. The aboveground residue delivery system was damaged in the fire and remained partially shut in as a result of the 16-inch pipeline rupture, the company said last month (see NGI, March 2). The complex consists of five gas processing plants with capacity of approximately 780 MMcf/d. The Carthage Hub has approximately 1.5 Bcf/d of delivery capacity. The East Texas joint venture facilities are operated by DCP Midstream and owned 75% by DCP Midstream and 25% by DCP Midstream Partners. As previously announced, DCP Midstream Partners has agreed to acquire an additional 25.1% interest in the East Texas joint venture from DCP Midstream in a transaction expected to close in April.

Southern Star Central Gas Pipeline Inc. announced a potential new delivery project and the launch of an open season to solicit binding bids for new firm deliveries to Northern Natural Gas (NNG). Southern Star said it can construct facilities capable of providing firm deliveries up to 64,750 Dth/d. NNG is holding a concurrent open season to allow customers access to firm capacity on both systems. The delivery project will allow for new deliveries into NNG’s field area at Kiowa County, KS, from Southern Star’s KH Line (Line Segment 130) in the production zone. Bids for the delivery project should be submitted by 5 p.m. CDT March 27. Open season information is available on Southern Star’s electronic bulletin board at https://csi.sscgp.com. For information about the project, contact Todd Millay at (270) 852-4664 or Jim Neukam at (270) 852-4665. For information on NNG’s concurrent open season, contact April Gregory at (402) 398-7643 or Penny McCarran at (713) 653-1807.

An Oregon business/labor coalition pushing for approval to develop a liquefied natural gas (LNG) terminal and related infrastructure ran a full-page advertisement in the Portland Oregonian, urging Gov. Ted Kulongoski and the state legislature to back major new natural gas infrastructure projects. Placed by Energy Action Northwest, the advertisement was billed as an “open letter to our elected officials from the working men and women of Oregon.” It cited the state’s current unemployment at 1.2 million, allegedly the highest in state history. Using a “help wanted” ad theme, elected officials were urged to get Oregonians back to work, inject common sense into the energy debate, and build the bridge to a green energy future. The newspaper ad was the culmination of a four-day lobbying campaign by Energy Action Northwest directed squarely at Kulongoski and the legislature in the state capital. Bradwood Landing recently won a victory when the Oregon state appeals court rejected an attempt by opponents to overturn a land-use ruling supporting the development of a LNG terminal.

Columbia Gulf Transmission is holding an open season through Wednesday (March 18) for 105,000 Dth of open capacity to be delivered to Florida Gas Transmission (FGT) near Lafayette, LA. The capacity would be available beginning April 1, Columbia Gulf said. Binding firm contract offers are being taken for transportation capacity from the Columbia Gulf Mainline rate zone near Delhi, LA, for delivery to the FGT-Lafayette interconnect in Columbia Gulf’s onshore rate zone. Columbia Gulf, a unit of NiSource Gas Transmission & Storage (NGT&S), said the new gas supplies would serve growing southeastern markets. The open capacity is in addition to the 195,000 Dth/d already subscribed; total capacity from Columbia Gulf to FGT is 300,000 Dth/day. More information is available at www.ngtsnavigates.com or by contacting Joshua Gibbon at jgibbon@nisource or (713) 267-4718; Pete Brastrom at pbrastrom@nisource.com or (713) 267-4735; or Beth Medlin at bmedlin@nisource.com or (713) 267-4756.

Spectra Energy Corp. joined a growing list of pipeline operators that have announced plans to expand their systems to accommodate natural gas supplies from East Texas and northern Louisiana. The ETX Expansion Project would expand Spectra’s existing Texas Eastern Transmission LP mainline, the company said. ETX would offer phased-in service beginning in 2010. Regency Energy Partners LP and its partners in February announced plans to construct the Haynesville Expansion Project (HEP), which initially would transport up to 1.1 Bcf/d of shale gas supplies from northern Louisiana (see NGI, March 2). Energy Transfer Partners LP also launched an open season in February to solicit interest in the Tiger Pipeline, which would carry gas supplies from the Haynesville Shale (see NGI, Feb. 23). Nonbinding nominations will be accepted for service from any existing or proposed receipt points to any existing or proposed delivery points in its East Texas zone, Spectra said. Nominations for the open season will be accepted through 2 p.m. CDT on March 31. For information contact Chris Ditzel by e-mail at ctditzel@spectraenergy.com or by fax at (713) 386-4681.

Onshore natural gas producer GMX Resources Inc. is cutting its capital expenditures (capex) this year by more than half — to $70 million from an earlier forecast of $150 million — with 98% of the budget earmarked for East Texas. Under the modified capex budget, GMX plans to drill a net total of 14 wells and complete 16 horizontal wells in its East Texas leasehold, which is spread across portions of the Haynesville Shale and the Deep Bossier Sands. Wells by four rigs now running are scheduled to be completed with a drilling program in April, and once done, two of the rigs on well-to-well contracts are to be released; the other two rigs, owned by a subsidiary of GMX, would be laid down. GMX then plans to drill horizontal wells through June using two Helmerich & Payne “FlexRigs.” GMX also secured contracts for an additional 3,900 gross (3,700 net) acres of acquired and drill-to-earn leasehold in the Haynesville/Bossier leasehold from undisclosed parties. It now is drilling on 1,100 gross acres and has also obtained first refusal rights on an additional 5,000 gross acres.

Stone Energy Corp. expects to receive $113 million from unwinding most of its 2009 natural gas and crude oil hedges. A “substantial portion” of the proceeds will be used to build its cash position and reduce its debt, the Lafayette, LA-based producer said. Stone focuses its U.S. production efforts in the Gulf of Mexico; it also has exploration prospects onshore in the Appalachian Basin and Rocky Mountains. The cash raised from unwinding most of its 2009 hedge contracts, combined with projected operational 2009 cash flow, still should allow Stone to execute on its $300 million capital program with projected excess cash available for debt reduction or stock repurchase, said CFO Kenneth Beer. Before the hedges were terminated, Stone had $77 million in cash as of March 1, Beer said. Stone’s bank borrowing redetermination is to be completed in April, and the company’s “overall position has been bolstered by bringing forward the cash value of these hedges,” said Beer.

The Colorado Senate is considering final approval of more stringent rules for the natural gas and oil industry after the state’s House affirmed the legislation early Friday. If the Senate approves the bill, the drilling restrictions could go into effect beginning in April. The Colorado Oil and Gas Conservation Commission (COGCC), which was tasked with writing the rules, sent the voluminous package to the general assembly earlier this month. The commission began its work in late 2007 at the direction of the Colorado General Assembly when a gas drilling boom was in full swing (see NGI, Dec. 3, 2007). The general assembly at the time gave overwhelming support to require the COGCC to update the energy rules to protect public health, private property and the environment. The new rules were formally approved by the COGCC in December following a lengthy public consultation process (see NGI, Dec. 15, 2008). With overwhelming support by the state’s Democrats and mixed support among Republicans, the Colorado House passed HB 1292 by a vote of 50-13.

The California Public Utilities Commission (CPUC) has rejected a request from the state’s major private-sector utilities to reduce the burden on businesses that pay a disproportionate amount of the surcharge on monthly natural gas utility bills that goes for public purpose programs, such as those that assist low-income customers with their bills. The regulators’ action rebuffed the utilities’ proposal to shift about $90 million of gas utility rates annually from business customers to residential customers. It was proposed to be phased in during the next three years. Noting that it will look at alternative methods to provide future relief to business customers, the CPUC determined there was no evidence now that this portion of utility rates adversely affected the competitiveness of the state’s gas charges. While acknowledging that the nonresidential customers pay more than their fair share of the surcharge and California’s cost of doing business is higher than most states, the CPUC nevertheless said the utilities — Pacific Gas and Electric Co., Southern California Gas Co. and San Diego Gas and Electric Co. — did not provide a strong enough case to support making a change in how the costs are allocated among customer groups.

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