The Federal Energy Regulatory Commission has issued a favorable environmental assessment (EA) for Alliance Pipeline LP's Tioga Lateral Project that would deliver liquids-rich natural gas from the Permian Basin to the Chicago market hub. Alliance proposes to build a 79.3-mile lateral to extend from Hess Corp.'s facility in Tioga, ND, to the Alliance mainline near Sherwood, ND, with ultimate delivery to Chicago, as well as a 6,000 hp compressor station [CP12-50]. A precedent agreement has been executed with Hess as an anchor shipper on the Tioga Lateral, which would be able to provide up to 106.5 MMcf/d of capacity with a planned in-service date of July 2013. The Alliance Pipeline system consists of a 2,311-mile integrated Canadian and U.S. high-pressure gas transmission system, delivering rich gas from the Western Canadian Sedimentary Basin and the Williston Basin.
The world's first cleared liquefied natural gas (LNG) swap traded on July 16, settling on the ICIS East Asia Index (EAX) for physical LNG. The deal was done for September at $13.90/MMBtu and brokered by Tradition over the CME Direct trading platform and has been cleared by CME Europe. The New York Mercantile Exchange (Nymex) also launched the East Asia Index (ICIS Heren) Swap futures contract for open outcry trading, having received approval from the Commodity Futures Trading Commission. The product is to be cleared through CME ClearPort. Four ICIS Heren LNG swaps, including the East Asia Index swap, were already available for clearing through CME Clear Europe as of April 16. There had been a very small over-the-counter swaps market for LNG, with a limited pool of counterparties and no clearing services, ICIS said. Clearing services and more active brokering should accelerate liquidity growth, said Louise Boddy, ICIS head of gas, power, emissions and coal.
The environmental assessment of a proposed $6 billion liquefied natural gas (LNG) import-export terminal in Oregon and a connecting 86-mile transmission pipeline are to be combined, according to the Federal Energy Regulatory Commission, which plans to conduct a "cumulative environmental review" of the project's planned facilities at Warrenton, OR, and the connecting 36-inch diameter gas pipeline proposed to run under the Columbia River to the Washington state side of the river and head northeasterly to interconnect with an enhanced Northwest Pipeline interstate segment at Woodland, WA, about 25 miles north of Portland. Oregon LNG switched to a bidirectional import-export project and signed an agreement with Northwest Pipeline Co. to expand the capacity of lines bringing Canadian gas into the Pacific Northwest (see NGI, July 9).
The Federal Energy Regulatory Commission last Thursday approved a request of Equitrans LP, a subsidiary of Pittsburgh-based EQT Corp., to place into service the remaining facilities of a new pipeline in Pennsylvania and West Virginia that will provide additional takeaway capacity for Marcellus Shale gas producers. The remaining facilities of the Sunrise Pipeline that the Commission cleared for operation include "EQT's H-302, H-306 and H-309 [lines]; the Logansport and Pickenpaw interconnects; and the Jefferson Compressor Station in Wetzel County, WV, and Greene County, PA," the letter order said [CP11-68]. The $272 million Sunrise Pipeline extends approximately 45 miles from southwestern Pennsylvania into northern West Virginia, terminating in Wetzel County. The project included the construction of one compressor station (14,205 hp). The pipeline expands Equitrans' existing mainline transmission system to accommodate the rapid development of natural gas from both the liquids-rich and dry areas of the Marcellus Shale formation in the central Appalachian basin. Marcellus producers will be provided with 313,560 Dth/d of new capacity to transport gas to markets in the Northeast and Mid-Atlantic, according to Equitrans. The Sunrise facilities will tie in with MarkWest Energy Partners' 120 MMcf/d Mobley processing complex in West Virginia and the pipeline systems of Texas Eastern Transmission, Dominion Transmission and Equitrans' mainline. Last month, FERC approved Equitrans' request to abandon by sale its Sunrise Pipeline facilities to the newly created affiliate Sunrise Pipeline LLC (see NGI, June 18), which was formed by EQT [CP12-32]. In the order, the Commission approved Equitrans' request to lease the Sunrise facilities and to terminate the lease agreement when it ends in 15 years and to permit Equitrans to "reacquire ownership...of the Sunrise facilities."
U.S. natural gas well completions plunged by an estimated 24% from April through June, while oil well completions continued to steadily rise, according to the latest statistics from the American Petroleum Institute (API). Gas well completions totaled 2,474 in the second quarter, versus 3,477 in the same period of 2011 (see NGI, July 25, 2011). However, total domestic oil and natural gas well completions in the latest quarter maintained levels similar to those of a year ago at about 11,000 wells, boosted by onshore oil and liquids-weighted drilling, according to the API's 2012 Quarterly Well Completion Report: Second Quarter. Oil well completions jumped by 13% year/year, with 7,195 total wells finished in the latest quarter, versus 6,595 wells a year earlier. Exploratory well completions were up 26% to 800 wells year/year. Total footage drilled was estimated at 83,270 feet, a 3% increase from a year ago.
Penn Virginia Corp. (PVA) is selling "substantially all" of its gassy Appalachian Basin portfolio, except the Marcellus Shale assets, for $100 million to an undisclosed buyer to help fund development in the Eagle Ford Shale in South Texas. The asset sale includes vertical and horizontal coalbed methane and conventional properties, along with royalty interests in parts of West Virginia, Virginia and Kentucky. The properties had net production of 20 MMcfe/d in June, almost 100% weighted to natural gas. The sale, which is expected to close in mid August, is expected to cut PVA's estimated 2012 production by 2.9 Bcfe. Third-party engineers at the end of 2011 estimated proved reserves associated with the divested properties were 105.7 Bcfe, 95% of which were proved developed and all natural gas.
Newfield Exploration Co. has raised its full-year production forecast based on rising output from key U.S. onshore plays. The Woodlands, TX-based independent now expects 2012 output to hit 296-304 Bcfe, up from an April forecast of 292-302 Bcfe; the producer originally expected output to be 290-300 Bcfe this year. Oil and liquids liftings in 2Q2012 totaled 6.1 million boe, or 67,000 boe/d, which was 49% of total output; about 4% was natural gas liquids. Together oil/liquids volumes were 40% higher than in the year-ago period. Natural gas production totaled 40 Bcf, or about 440 MMcf/d. On an equivalent basis, production in the quarter was 76.4 Bcfe.
Riverstone Holdings LLC is providing Meritage Midstream Services LLC $500 million to pursue natural gas liquids (NGL) midstream opportunities in some of North America's emerging resource plays. Meritage II is the second partnership with Riverstone. Meritage I, formed in 2009, initially funded Eagle Ford Shale opportunities, including the Eagle Ford Escondido Gathering System and Cuervo Creek Gathering System, which were purchased by Howard Energy Partners (see NGI, March 19).
Canadian Pacific Railway Ltd. (CP) is partnering with Pennsylvania-based Smart Sand to supply Northern White sand to drillers in key North American unconventional plays beginning with the Bakken Shale, where the first of several transload facilities is planned. The partners also are targeting sand deliveries to the Eagle Ford, Marcellus and Utica shales. The first transload facility, which they said would be the region's largest, is to be in Makoti, ND, with startup scheduled for early next year. No financial details were disclosed. Smart Sand's primarily facility, which opened in June, is on the CP rail line in Oakdale, WI. It would supply the Northern White sand to be used in hydraulic fracturing operations.
The Susquehanna River Basin Commission (SRBC) suspended a record 64 water withdrawal permits on July 16 due to ongoing drought conditions in the basin, but the commission had restored 10 permits by Friday (July 20) after several days of rainfall. A SRBC spokeswoman said additional permits would probably be restored within days because the National Weather Service was forecasting more rain. The commission said permits held by 33 companies, the majority of them operators in the Marcellus Shale, were affected by the original suspension order, which was a record since the SRBC began issuing water withdrawal permits in 2008.
The U.S. Department of Interior's Office of Natural Resources Revenue (ONRR) said Wednesday a subsidiary of BP plc has agreed to settle charges that it submitted false production reports on tribal lands in Colorado and will pay a penalty of $5.2 million. The ONRR's Office of Enforcement first issued the civil penalty in June 2010, accusing BP America Inc. of allegedly submitting false, inaccurate or misleading reports to the Southern Ute Indian Tribe. "After receiving audit issue letters and an order, the company agreed with the auditors' concerns and repeatedly promised to correct the problems, which they attributed to errors in their automated files. However, ONRR and the tribal auditors found the same errors in later reviews, prompting ONRR to issue the civil penalty. BP America has now corrected the reporting errors."
A 19-year-old man was killed after an explosion at drilling site in Tuscarawas County, on July 16. According to reports, Paul Christopher Sherman was the son of Michael Sherman, owner of MKE Producing Inc., which owns the site. Authorities said a large battery of above-ground oil storage tanks exploded at around 9:45 a.m. on July 16 and the victim was reportedly painting an oil tank at the time of the explosion.
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