NGI The Weekly Gas Market Report / NGI All News Access

Industry Briefs

Development of the emerging Eagle Ford Shale play in South Texas got a boost from Enterprise Products Partners LP, which agreed to provide natural gas transportation and processing services to an undisclosed producer. The agreement, with "one of the largest and most active producers in this emerging play," covers more than 150,000 acres, said Enterprise CEO Michael Creel. The shale formation, which is known as the "Eagle Ford" and the "Eagleford" play, is beneath or near some of Enterprise's Texas energy assets. Because of the proximity of Enterprise infrastructure in the South Texas play, only "modest" capital expenditures will be needed for the partnership to begin providing the transportation and processing services required under the agreement, said Creel. No additional financial details were provided.

Florida's governor has put his support behind the proposed Port Dolphin Energy LLC deepwater liquefied natural gas (LNG) port project. As part of the federal permitting process, Gov. Charlie Crist is required to express support or opposition, or take no position at all, for the proposed LNG terminal. Port Dolphin is a subsidiary of Norway's Hoegh LNG. Port Dolphin plans to construct a deepwater port 28 miles off the coast of Manatee County (see NGI, July 20). LNG tankers arriving at the port would link with a natural gas pipeline running from the offshore terminal to Port Manatee and then inland for four miles before interconnecting with the state's natural gas pipeline grid. The LNG would be returned to a gaseous state onboard the vessels and fed into the pipeline. Permitting of the project is expected to be completed by 2010 with construction to begin in 2011.

A proposed natural gas processing plant to be built in the West Virginia portion of the Marcellus Shale gained subsidiaries of Chesapeake Energy Corp. and StatoilHydro ASA as customers, MarkWest Liberty Midstream & Resources LLC said. MarkWest Liberty, a partnership between MarkWest Energy Partners LP and the Midstream & Resources Funds, is building the Majorsville cryogenic plant, a 120 MMcf/d facility, in West Virginia's Panhandle. The plant is scheduled to be completed by the middle of 2010. The facility already has an agreement with Range Resources Corp. to process shale gas (see NGI, April 13). Under the latest agreements, MarkWest Liberty would provide processing services for Chesapeake Appalachia LLC and Statoil Natural Gas LLC.

Unprecedented energy development across parts of the West now threatens 10 of the most important fish and wildlife habitats on U.S. public land, according to Sportsmen for Responsible Energy, a coalition led by the National Wildlife Federation, Trout Unlimited and the Theodore Roosevelt Conservation Partnership. In a report, the coalition, which includes more than 500 businesses, organizations and individuals, said that over the past decade, a surge in "poorly planned" energy development has transformed "huge" tracts of public land in Colorado's Roan Plateau, North Park and San Juan Mountains; Montana's Middle Yellowstone River and Powder River Basin; New Mexico's Otero Mesa and San Juan Mountains; Utah's Uinta National Forest and Books Cliffs; and Wyoming's Greater Little Mountain Area and Horse Creek Ryegrass Rim. Included in the report are recommendations on how state and federal agencies may work together to develop energy without losing recreational opportunities or the estimated $7 billion that hunting and fishing contributes to the western economy every year.

The New Jersey Board of Public Utilities (BPU) has approved proposals from the state's natural gas utilities -- Public Service Electric and Gas (PSE&G), New Jersey Natural Gas (NJNG), South Jersey Gas (SJG) and Elizabethtown Gas -- to save their residential and small business customers more than $500 million annually. The BPU approved a PSE&G proposal to reduce its rate 10.4%, trimming the utility's annual revenue by $142.2 million. Interim reductions taken in January and March had already reduced the bill for an average residential heating customer by $106.41 annually; the new rate will result in an additional reduction of $155.91 for average residential customers. NJNG, which earlier this year had instituted bill credits that reduced the typical residential heating customer's annual bill by $107.70, received BPU approval for its request to further reduce those annual bills by $187.70. The rate reduction, combined with a bill credit that NJNG said it will institute effective Oct. 1, will reduce NJNG's annual revenue by $220.4 million. The BPU approved SJG's proposal to reduce its annual rate by $215.01 for typical residential customers. SJG had already implemented an interim reduction in January, which resulted in a reduction of $26.22 in the average residential customer's annual bill. The latest rate reduction will result in a reduction of $80 million in SJG's annual revenue. Elizabethtown Gas will see its annual revenue decrease $107.2 million as a result of the 37.3% rate reduction approved. In April the BPU approved $956 million in infrastructure spending by the four gas utilities and Atlantic City Electric (see NGI, April 20).

A pair of Energy East Corp. subsidiaries have asked the New York State Public Service Commission (PSC) to approve rate increases for both electricity and natural gas that they said are necessary to cover increasing operation and maintenance costs and to help pay for infrastructure investments. The proposed delivery rates would increase typical New York State Electric & Gas Corp. (NYSEG) residential gas customer bills approximately $25.34/month (17.4%) and Rochester Gas and Electric Corp. (RG&E) $21.03/month (15.2%). Typical NYSEG electricity bills would increase approximately $12.39/month (18.6%) and RG&E $11.86/month (16.1%). If approved, the rates are expected to go into effect next summer. In April the PSC denied rate hikes the two companies had said they needed because of "a significant shortfall in cash needed to make required infrastructure investments" (see NGI, April 14). Electricity and natural gas supply costs, which have declined for the companies, could keep the average bills of many customers below 2008 levels even if the higher rates are approved by the PSC. NYSEG and RG&E said their "BBB" credit ratings were partly to blame for the need for rate increases. The proposed rate increases would begin moving the companies toward "A" ratings, which the PSC has historically targeted for New York State utilities, the companies said.

British Columbia's September oil and gas rights sale resulted in more than C$8.7 million in bonus bids, bringing the calendar year to date to C$330.6 million, the Ministry of Energy, Mines and Petroleum Resources said. The sale offered -- and sold -- 34 parcels covering 15,885 hectares at an average price of C$549/hectare. The top bids included three drilling licenses and two leases in the Graham River area, about 50 kilometers northwest of Hudson's Hope, that sold for a total of C$4.5 million. Bids ranged from C$1,425 to C$2,168/hectare. Two leases also were sold in the Horn River Basin, about 15 kilometers west of the Cabin Gas Field, for a total of more than C$837,620. Drilling licenses have primary terms of two, three or four years, depending on the location. Leases acquired at the Crown sale have primary terms of five or 10 years, also depending on the location. The next sale, scheduled for Oct. 21, is expected to offer 62 parcels covering 66,837 hectares. Results from the September sale are available at: www.em.gov.bc.ca/Subwebs/landsale/results/default.htm.

Goodrich Petroleum Corp.'s natural gas production results in the Haynesville Shale continue to show promise, the Houston-based producer said. Goodrich and joint venture (JV) partner Chesapeake Energy Corp. are developing a leasehold in Louisiana (see NGI, June 23, 2008). Including its JV with Chesapeake, Goodrich has around 22,000 net acres in the northern Louisiana portion of the play, and it has about 38,500 net acres in the Minden and Beckville fields in Panola and Rusk counties in East Texas. Two more Chesapeake-operated wells were completed in the Bethany-Longstreet field in Louisiana. The Johnson 10H-1 well (50% stake) had a 24-hour initial production (IP) rate of 17 MMcf/d, and the Dixie 31H-1 (19% WI) had an IP rate of 14.4 MMcf/d. The company is completing two additional Chesapeake-operated wells, the Hunsicker 13H-1 (50%) and Caddo Parish 30H-1 (25%), along with one operated well, the Plants 26H-1 (36%). In the Greenwood-Waskom field in Caddo Parish, the Trosper 2H-1 (77.5%) had a 24-hour IP rate of 11.7 MMcf/d. Its half-owned Bohnert 25H-1 well, in the Longwood field in northern Caddo Parish, had an IP rate of 7.5 MMcf/d. The producer also has completed two wells in its Beckville and Minden fields. The 100%-owned Swiley 4H, in the northwest corner of the lease, had an IP rate of 7 MMcf/d; the Beard-Taylor 1H, 100% owned, had an IP rate of 6.5 MMcf/d.

The release in Dimrock Township, PA, of an estimated 8,500 gallons of a gel used to fracture natural gas shale was contained, according to Pennsylvania Department of Environmental Protection (DEP) officials. According to officials, the incident occurred Wednesday (Sept. 16) when oil services provider Halliburton was using hydraulic fracturing (hydrofracing) to release gas in one of Cabot Oil & Gas Corp.'s Marcellus Shale wells. A pipe apparently operated by contractor Baker Tank came loose and released the gel, which is used in the hydrofrac process. The substance, spilled at the Heitsman well site, affected a shallow wetland, said a spokesperson for Cabot, which operates the site. The substance also may have entered Stevens Creek, and state officials were sampling the area to see if private water supplies were affected. DEP said the gel is considered "relatively innocuous," but it has the potential to cause eye, skin and respiratory irritations. The gel, used to suspend sand particles in hydrofracing fluid, is said to be made of paraffinic material, or polysaccharides, which is similar to starch and wax.

CME Group, parent company of the New York Mercantile Exchange, announced that combined natural gas futures trading on the CME Globex electronic trading platform and the New York trading floor on Sept. 15 set a daily volume record. Natural gas futures reached 404,450 contracts, surpassing the 403,106 contracts traded on July 24, 2008. "We know our customers have multiple venues in which they can manage their risk in the domestic natural gas markets," said Joe Raia, CME Group managing director of energy and metals products and services. "Our customers continue to rely on the liquidity, price transparency, and the stability that our central party clearing facility brings to the markets."

The Commodity Futures Trading Commission (CFTC) and its United Kingdom counterpart, the Financial Services Authority (FSA), have begun to work "to enhance cooperation and the exchange of information" to supervise cross-border clearinghouses. A memorandum of understanding (MOU) signed Sept. 14 by CFTC Chairman Gary Gensler and FSA CEO Hector Sants took effect immediately. According to the CFTC, the MOU "is an important step in ensuring the sound oversight of clearing houses providing services in both the United States and the United Kingdom and will help promote market integrity and appropriate customer protection in the global derivatives markets."

Houston-based Magnum Hunter Resources Corp. is acquiring an additional 37.5% working interest from a private seller in the company-operated East Chalkley Field in Cameron Parish, LA. The company already has a 34.4% stake in 714 gross mineral acres in the field, and the purchase would increase the interest to 72%. Funding is to be with existing cash, with an effective date of July 1, 2009. Closing is scheduled for mid-October. The East Chalkley Field currently produces about 80-90 boe/d net. With the additional acquisition, the company estimated that net output would increase to 170-190 boe/d. Magnum Hunter had 93,000 boe of booked net proved reserves in the field as of June 30, and the company estimated that it would have 258,500 boe once the acquisition is closed.

Wyoming Gov. Dave Freudenthal said a federal Endangered Species Act listing for the sage grouse would impact 83% of the gas production, 64% of the oil production and 80% of the coal production in his state. Speaking at a state wind energy symposium, Freudenthal said he expected energy developers to prevent the economic harm he sees befalling Wyoming if the sage grouse is placed under the Act, according to a report. Different viewpoints were expressed by other speakers at the symposium. Erik Molvar, director of the Biodiversity Conservation Alliance, said the wind industry faces restrictions related to the sage grouse, but the gas, oil and coal industries do not. Aaron Clark, a rancher and energy adviser to the governor, said the sage grouse core areas negotiated between the state and fossil fuel industries would cause little disruption of those industries. Clark said protecting the grouse within core areas would impact only about 4% of the coal industry and 2% of natural gas lands.

©Copyright 2009 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus