The Federal Energy Regulatory Commission has approved the requests of ANR Pipeline, Trunkline Gas Co. and Southern Natural Gas Co. LLC [CP11-543, CP12-5, CP12-4, respectively] to abandon by sale all or virtually all of their pipeline facilities in the Gulf of Mexico. FERC gave ANR the green light to abandon by sale to subsidiary TC Offshore LLC about 600 miles of pipeline and associated facilities onshore; Southern Natural Gas to abandon to High Point Gas Transmission LLC 604 miles of pipe facilities offshore and onshore; and Trunkline to abandon to affiliate Sea Robin Pipeline Co. LLC about 533 miles of pipeline and most of its offshore interests. Several producers, including Apache Corp., LLOG Exploration Co. LLC, Indicated Shippers, W&T Offshore, McMoRan Exploration Co. and the Producer Coalition protested ANR's abandonment proposal, calling it an inappropriate attempt to charge higher rates without having to file a Section 4 rate case under the Natural Gas Act.
A proposal by Enstor Operating Co. LLC affiliate Caledonia Energy Partners LLC to expand an existing storage facility in northeastern Mississippi and vacate authorization to proceed with a separate project has been approved by the Federal Energy Regulatory Commission. Caledonia may increase the maximum allowable operating pressure of the surface facilities of the Caledonia Storage Field in Lowndes and Monro counties, MS, to 3,300 psig from 2,700. Caledonia also proposes to modify the existing compressor station at the storage facility by adding two 4,735 hp gas-fired compressor units. At the Delta Pressure-DP33 (DP33) project, the company plans to build a 16-inch diameter, high-pressure injection pipeline to run from a new compressor discharge header to existing lateral piping and well pads to enable it to increase the maximum daily withdrawal rate of the facility to 765 MMcf/d and the maximum injection rate to 717 MMcf/d. "Upon issuance of this order authorizing the DP33 Project, the Caledonia facility will consist of only the Caledonia Field with a total capacity of 25.7 Bcf," of which 20.6 Bcf will be working gas," the order said.
Global oilfield services operator Tenaris SA plans to invest an estimated $1.5 billion in the United States to expand onshore and offshore services to include a state-of-the-art seamless pipe mill, as well as heat treatment and premium threading facilities. The mill is scheduled to begin operating in 2016 with an annual production capacity of 650,000 tons of pipeline and would be integrated with the company's U.S. manufacturing and service operations. The U.S. market demand for high-quality oil country tubular goods and line pipe products is "growing rapidly due to the development of unconventional...oil and gas reserves and the resumption of deepwater drilling activity in the Gulf of Mexico," Tenaris said. "The new investment plan will strengthen Tenaris' local production and service capabilities, allowing it to reduce lead times and serve its U.S. customers with a full range of locally manufactured seamless, welded and premium products, in a market where imported products account for over half of total consumption."
Schlumberger Ltd. and Liquid Robotics Inc. have partnered to develop services for the oil and gas industry using wave-powered unmanned marine vehicles (UMV) capable of being deployed in the offshore for up to a year without a crew, fuel or a dedicated support vessel. The joint venture would use Liquids Robotics' proprietary Wave Glider and Schlumberger's oil and gas expertise to integrated the service. The surfboard-sized UMVs weigh about 250 pounds and each one is packed with cellphone flash storage, a dual-core processor that runs open Linex software, a battery pack, sensor arrays, a global positioning system, as well as wireless and satellite communications systems that send data to cloud servers. The two-part architecture and wing system converts wave motion into thrust, and solar panels provide electricity for sensor payloads. Wave Gliders are able to travel to distant areas, collect data and return for maintenance without requiring a ship to leave port, according to Liquid Robotics.
Texas Eastern Transmission LP is proposing the South Texas Expansion Project to carry natural gas produced in the Eagle Ford Shale across the Mexican border. The project would transport supplies to a delivery point with Petroleos Mexicanos (Pemex); a binding open season runs through Friday (June 29). Service is targeted for summer 2014. The expansion would have a maximum overall capacity of 300,000 Dth/d, depending upon open season results. For information on the open season, contact Leah Moss at (713) 627-5054.
The North American Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change and the Australia/New Zealand Investor Group on Climate Change, which together represent trillions of dollars in assets, jointly urged industry and governments to take "effective action" to minimize methane emissions from growing unconventional gas and oil output that's made possible because of hydraulic fracturing. The three investor groups represent more than 200 members with total assets of $20 trillion-plus. Representatives are working with industry and experts, in coordination with the Carbon Disclosure Project, to develop an investor framework to evaluate company progress on reducing methane emissions. Consultation with companies is set to be completed in October.
Swift Energy Co. has entered into a long-term agreement for natural gas gathering and processing services in the Eagle Ford Shale with Eagle Ford Gathering LLC, a 50-50 joint venture of Kinder Morgan Energy Partners LP and Copano Energy LLC. The agreement, which became effective June 1, is for Swift's gas production in La Salle County, TX, where it expects to have up to 40 MMcf/d of firm capacity available to the system by 4Q2012. Swift also announced that one of its partners recently completed and tested a well targeting the Austin Chalk in Louisiana where initial production from the GASRS 23-1 well measured 744 b/d of oil and 7.2 MMcf/d of gas, with flowing tubing pressure of 4,100 psi on a 34/64-inchchoke. The well, the first of up to six wells planned for 2012, is in the South Burr Ferry field in Vernon Parish, LA.
Industrial Energy Consumers of America (IECA) has urged Interior Secretary Ken Salazar not to impose "duplicative" regulations on hydraulic fracturing (fracking) of oil and natural gas wells on public lands (see related story). "Instead we urge you to consult with the relevant states and their regulatory agencies before advancing new hydraulic fracturing-related regulation. The manufacturing sector has directly benefited from greater use of hydraulic fracturing and low natural gas prices." The Bureau of Land Management's fracking oversight "raises significant concerns that drilling permitting will slow and that production rates will fall," wrote IECA President Paul Cicio. IECA members include manufacturing companies with annual sales of $700 billion.
The price for Utica Shale acreage is rising if a lease agreement signed by the Board of Commissioners of Columbiana County, OH, and an agent for Chesapeake Energy Corp. is any indication. The board approved a three-year lease agreement with DPS Penn for 548 acres at $5,850/acre, according to minutes of a recent meeting. The $3.2 million deal comes less than a year after the commission voted in August 2011 to a approve a letter of intent to sign a lease proposed by DPS that would have fetched $2,700/acre; that lease was never signed. Under terms of the agreement, Columbiana County would receive 20% royalties on gross revenues from any drilling on the property.
Ohio Department of Natural Resources (ODNR) regulators are considering plans to sell water to operators to use for horizontal drilling and hydraulic fracturing (fracking), as well as possibly lease land in portions of the Marcellus and Utica shales. Officials with the Muskingum Watershed Conservancy District (MWCD), a state government entity that controls 8,000-square mile watershed covering about one-fifth of the state, said they plan to stop future water sales for drilling until the U.S. Geological Survey completes a study of whether three reservoir lakes -- Atwood Lake in Carroll and Tuscarawas counties, Clendening Lake in Harrison County and Leesville Lake in Carroll County -- could handle additional withdrawals. The MWCD also wants additional public input into future water sales.
DCP Midstream Partners moved to increase its market position in East Texas, agreeing to pay Penn Virginia Resource Partners LP (PVR) approximately $63 million for the Crossroads processing plant and associated gathering system in Harrison County, TX. Included in the deal are the 80 MMcf/d cryogenic processing plant, approximately eight miles of gas gathering pipe, 20 miles of natural gas liquids (NGL) pipeline and a 50% ownership in an 11-mile residue gas pipeline. The system would allow DCP to increase midstream services to producers that are expanding liquids-rich Haynesville Shale and Cotton Valley drilling programs in East Texas, the partnership said. "The addition of the Crossroads system is a synergistic bolt-on acquisition to our existing East Texas system and will expand our processing capabilities to support our customers' growth," said DCP CEO Mark Borer. The deal is expected to close by July 2. DCP intends to use borrowings under its credit facility to finance the acquisition. PVR said it expects to recognize a gain of $30-33 million as a result of the transaction.
Wyoming's Office of State Lands and Investments has tightened the limits to extend coalbed methane (CBM) leases that aren't held by production in the midst of growing requests because of sagging natural gas prices. Applications to continue to suspend operations are not to be granted after June 1, 2013 unless there is "a compelling showing that such action is warranted," the five-member State Board of Land Commissioners (SBLC) stated. "Further, any such applicant will be advised that the grant of any additional suspension requests will be contingent on adequate bonding, and supplemental consideration deemed necessary by the board to justify the significant accommodation made through additional suspensions." The SBLC addressed the issue, which mostly affects operators in the CBM-rich Powder River Basin, earlier this month to establish a process by which CBM operators would be required to justify why they would need to continue to getting CBM suspensions. On a case-by-case basis, the SBLC, composed of Gov. Matt Mead, secretary of state, state auditor, state treasurer and state schools superintendent, would decide if the extension was warranted, and if it was, whether large reclamation bond and royalty fees should be imposed.
The Bureau of Land Management (BLM) in Wyoming may begin measuring annual methane emissions not just from Wyoming's natural gas and oil producers in the Jonah and Pinedale Anticline fields, but from cattle on public lands as well, after the Upper Green River Valley is designated as an air quality nonattainment area. The nonattainment designation by the U.S. Environmental Protection Agency (EPA) is scheduled to go into effect next month. The Pinedale BLM office currently leases about 912,000 acres for cattle grazing and EPA estimates that an average cow emits 80-110 kilograms of methane annually. Those ozone-producing emissions contribute to the area's nonattainment designation. In reality, the amount of ozone attributable to cattle would be only a very small portion of emissions from drilling, said state and federal officials. Meanwhile, the producers are continuing to take mitigation steps, such as electric motor-driven (rather than natural gas-powered) compression and trucks, for hauling condensate and liquids, according to Petroleum Association of Wyoming President Bruce Hinchey.
U.S. Silica Holdings Inc. and BNSF Railway Co. plan to build a silica sand storage facility capable of storing 15,000 tons of sand in San Antonio, TX. It is expected to be operational early next year to serve hydraulic fracturing operations in the Eagle Ford Shale. U.S. Silica said it expects to make three to four shipments per month of 10,000 tons of frack sand on 100-car unit BNSF trains from its Ottawa, IL, sand mine to meet the industry's need for proppant. Shipments are to include three different grades of dry sand, as well as resin-coated proppants from U.S. Silica's new facility in Rochelle, IL, which is expected to be fully operational in the first quarter of 2013.
New projections by Alberta's Energy Resources Conservation Board (ERCB) indicate that natural gas use for oil extraction and upgrading is forecast to grow 2.3-fold by 2021, even faster than the anticipated 2.2-fold increase in production across the bitumen belt spanning 142,000 square kilometers (56,000 square miles) of northern Alberta. Over the 10-year period oilsands output will climb to 3.7 million b/d from the 2011 average of 1.7 million b/d, said the latest edition of an annual ERCB state-of-the-industry report, "Alberta's Energy Reserves and Supply-Demand Outlook." Gas consumption by oilsands sites is projected to climb to 2.8 Bcf/d by 2021 from the 2011 average of 1.2 Bcf/d. Bitumen belt economics favor the production technique that uses the most gas, the ERCB figures show.
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