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Due to recent flooding and expected rains, Rockies Express Pipeline (REX) again revised its expected in-service date for REX-East interim service. Now it expects the service to begin in late April or early May, the pipeline said. "Initial REX-East service (or interim service) is projected to commence late April to early May with a capacity of 1,600 MDth/d into Zone 3," the pipeline said in an informational posting last week. "This will include deliveries to NGPL (Moultrie County, IL), Trunkline (Douglas County, IL), Midwestern (Edgar County, IL), and PEPL (Putnam County, IN). In addition, REX expects to have the Ameren (Moultrie County, IL) delivery point available for service contemporaneously with the interim service delivery points." Service to Lebanon, OH, is projected to commence June 15 with a capacity of 1,600 MDth/d. In-service of the fully powered REX-East pipeline to Clarington, OH, is projected to commence Nov. 1 with capacity of 1,800 MDth/d, the pipeline said. Earlier in March REX said interim service on the 683-mile REX-East would be delayed from April 1 to the first half of April.

After testing an ultra-deep trend in shallow waters of the Gulf of Mexico (GOM), New Orleans-based McMoRan Exploration Co. (MMR) said it may have hit on a "frontier" pocket of natural gas in the shallow waters of the Outer Continental Shelf. The Ammazzo deep gas exploratory prospect is in 25 feet of water near South Marsh Island Block 256 in one of the largest undrilled deep structures below 15,000 feet on the shelf, MMR said. Drilling began in November and is below 17,700 feet toward a proposed total depth of 24,500 feet. The prospect is on the southern portion of the structural ridge extending from the Flatrock and JB Mountain discoveries. MMR operates the well and holds a 26% working interest and 21% net revenue interest. Plains Exploration & Production Co. (PXP) has a 28% stake; Energy XXI holds a 16% stake. In addition, drilling at the Cordage deep gas exploratory prospect has ramped up and is below 3,600 feet toward a proposed total depth of 19,500 feet. The Cordage prospect, which is in 50 feet of water on West Cameron Block 207, is targeting sands in the Middle Miocene. MMR has a 50% working interest and a 40.7% net revenue interest; Mariner Energy Inc. is the operator with a 50% stake. In related news, MMR said it continues to restore production that was shut in as a result of last September's hurricanes. Current production is 200 MMcfe/d, and it is expected to average 195 MMcfe/d through March. An estimated 45 MMcfe/d "continues to be constrained by outages at third-party facilities," the company said.

The U.S. Forest Service has issued a record of decision (ROD) designating energy corridors in the West as preferred locations for oil and natural gas production, hydrogen pipelines and electricity transmission and distribution lines. The notice, which was published in the Federal Register last Tuesday, said the ROD designates approximately 990 miles of energy corridors on National Forest System lands in 10 western states for energy activities and proposed facilities. The decision takes effect April 23. The Forest Service ROD specifically amends 38 land management plans for national forests in 10 of 11 western states. The Department of Interior and the Bureau of Land Management are expected to announce a similar decision amending their respective resource management plans, according to the notice. The energy corridors, which typically will be 3,500 feet wide, "are located to avoid, to the maximum extent possible, significant, known environmental resources. The corridors are designated considering potential renewable energy development in the West, which is currently constrained in part by a lack of transmission capacity," the notice said. The corridors will "provide pathways for future long-distance energy transmission that will help to relieve [that] congestion, improve reliability and enhance the national electric grid," the Forest Service said.

State legislation to roll back Montana's natural gas and oil tax holiday is near defeat after failing to move out of the House Taxation Committee on Friday. Ten committee members voted for the bill and 10 voted against it. HB 675, introduced by State. Rep. Brady Wiseman (D-Bozeman), would establish an energy education trust fund, which would be funded by abolishing production tax holidays and a portion of the state's coal severance tax. The deadline to transmit revenue bills to the full House is Tuesday (March 31). Since 1999 the state's natural gas and oil producers have had an 18-month tax holiday to encourage oil and gas drilling. The law was enacted when oil was trading at around $20/bbl and gas was less than $3/Mcf. The current tax policy, said Wiseman, doesn't provide drilling incentives but rather offers the energy industry a giveaway that has cost the state more than $500 million in revenue. The Montana Petroleum Association's Dave Galt said the tax holiday allows the state to compete with other producing states in the West. He said it "boils down to economics. It boils down to whether you're going to be able to drill that well and complete that well...and drilling a well has certainly gotten expensive."

The Federal Energy Regulatory Commission (FERC) has given an environmental nod to Chestnut Ridge Storage LLC's proposal to convert a depleted natural gas field in southwestern Pennsylvania and northern West Virginia into a high-deliverability, multi-cycle storage facility. "Approval of the proposed project, with appropriate mitigating measures, would not constitute a major federal action significantly affecting the quality of the human environment," the staff of FERC concluded in its environmental assessment (EA) of the proposed Junction Natural Gas Storage Facility near Uniontown, PA [CP08-36]. The storage project is expected to have up to 25 Bcf of working capacity and up to 500,000 Dth/d of injection and withdrawal capacity, according to Omaha, NE-based Chestnut Ridge Storage, which is owned by affiliates of Tenaska Power Fund of Omaha and eCorp LLC of Houston. The field, known as the West Summit Gas Field, is in Fayette County, PA, and Monongalia and Preston counties, WV. The storage field would be linked to Columbia Gas Transmission, Dominion Transmission Inc. and Texas Eastern Transmission (Tetco) interstate pipeline systems. The proposed facilities would provide service to shippers on the several pipeline projects that would move Rocky Mountain gas to eastern markets, and would provide access to producers in the Northeast and Mid-Atlantic regions as well, Chestnut Ridge said. In addition, the storage project would support the expected growth in gas demand by generators in the Northeast, the company noted.

The North Carolina Utilities Commission has approved conservation programs proposed by Piedmont Natural Gas. The utility will be allowed to recover up to $1.275 million in rates to fund three conservation programs. Last December Piedmont filed for approval of three programs: a low-income energy efficiency program for residential customers, a commercial nonprofit energy efficiency program and an equipment rebate program. Progress Energy Carolinas Inc. and Duke Energy Carolinas LLC both intervened in the case with concerns about the rebate program. Progress said that if Piedmont offered rebates to new customers, the combination of an incentive for installing a high-efficiency air conditioner and an incentive for installing a natural gas furnace would provide customers with a reason to chose a gas furnace over an electric heat pump. Duke expressed similar concerns. To address the concerns, Piedmont later modified the rebate program to clarify that available rebates would not be used for new construction or to replace existing electric equipment.

NiSource Gas Transmission & Storage (NGT&S) unit Columbia Gas Transmission (CGT) is holding a binding open season until noon CDT Friday (April 3) for transportation capacity to Eastern markets following modifications to CGT's Easton Compressor Station. The modifications were designed to increase delivery capacity from the Wagoner interconnection point between Columbia and Millennium pipelines on Columbia's Line 1278. Increased capacity would be available for areas 21-25, 28-29 and/or 30. Information is available at www.ngtsnavigates.com or by contacting Joshua Gibbon at jgibbon@nisource.com; (713) 267-4718.

All of the available storage capacity at Falcon Gas Storage Co. Inc.'s Worsham-Steed and Hill-Lake facilities in North Texas was leased through an open season held last month, the company said. During the open season Falcon offered 6 Bcf of capacity under one- and two-year contracts set to start April 1 (see NGI, Jan. 26). Falcon said it received firm bids for about 20 Bcf from nine companies. It attributed the successful open season to continued strong primary storage value drivers -- seasonal price spreads and volatility -- and decreased costs to store gas, including fuel, taxes and interest rates. Falcon's 24-hour intraday load-following and hourly balancing service provides gas-fired power plants with a way to balance daily gas purchases with hourly power dispatch. North Texas is dominated by gas-fired power generation. Last year Falcon said it received 16 Bcf in interest when it offered 4 Bcf of capacity in an open season at Worsham-Steed and Hill Lake (see NGI, April 7, 2008; Feb. 25, 2008).

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