Transcontinental Gas Pipe Line (Transco) is holding an open season through Aug. 23 for capacity on the Mobile Bay South III lateral expansion in Alabama, which is set to be online in the fall of 2014 and provide up to 325,000 Dth/d of firm capacity to the southeastern United States. The additional capacity would be available from Station 85 near Butler, AL, to points along the lateral as far south as the interconnection with Bay Gas Storage Co. Ltd.'s facilities near Mobile, AL. Williams Partners Ltd. said the final capacity, scope and cost of the project will be determined by the open season. For information contact Toi Anderson at (713) 215-4540.
The Federal Energy Regulatory Commission approved two orders to allow the El Paso Natural Gas and Kinder Morgan Texas pipeline systems to increase natural gas exports to northern Mexico. The El Paso order clears the way for the pipeline to increase the export capacity of its Samalayuca Crossing facilities in El Paso, TX, to 544.5 MMcf/d from 308 MMcf/d [CP12-74]. Separately FERC approved a request of Kinder Morgan Texas Pipeline to raise the authorized design capacity of its crossing facilities at the U.S.-Mexico border to 425 MMcf/d from 375 MMcf/d [CP12-440]. The cross-border facilities connect with Kinder Morgan Gas Natural de Mexico S de R.L. de C.V. (Kinder Morgan Mexico), an affiliate of Kinder Morgan Texas that transports gas from the international border to the Monterey, Mexico area. Pemex-Gas Y Petroquimica Basica (Pemex), the shipper-customer of Kinder Morgan Mexico, purchases gas at the U.S.-Mexico border from MGI Supply, an affiliate of Pemex, and uses the gas to serve customers in Monterey and to support its system throughout northeastern Mexico. Kinder Morgan Texas since April it has been transporting up to 425 MMcf/d through the cross-border facilities to provide emergency service to help Pemex offset the effects of a rupture that occurred in November 2011 on a 36-inch diameter pipeline in the Reynosa-Monterey path in Mexico.
Pennsylvania Gov. Tom Corbett issued an executive order requiring the Department of Environmental Protection (DEP) to look for ways to speed up the permit process for applications to drill. The order establishes the Permit Guarantee Program, which calls for the DEP to set up clear guidelines for permit application requirements, a predictable processing time for each application and to expedite applications designed to protect the environment. Permit applications that are "complete and technically adequate" would be eligible for the program, with the processing time considered as the total number of business days from the receipt of an application to action by the department. The order also requires DEP to coordinate the review of applications for projects with multiple permits, establish performance standards for staff engaged in permit reviews and consider compliance with the review deadlines a factor in any job performance evaluations.
Oneok Partners LP plans to spend between $980 million and $1.1 billion by 2014 for midstream projects in Texas, Oklahoma and North Dakota. The projects include a 75,000 b/d natural gas liquids (NGL) fractionator (MB-3) at Mont Belvieu, TX; a 100 MMcf/d processor (Garden Creek II) in eastern McKenzie County, ND; a capacity expansion of the Bakken NGL Pipeline to 135,000 b/d from 60,000 b/d; and a 40,000 b/d ethane/propane (E/P) splitter at Mont Belvieu.
Despite dry gas production curtailments, Northeast production will grow by 1 Bcf/d from its current 8.3 Bcf/d by the end of the year as the Marcellus Shale "seems impervious to the unfavorable economics," Bentek Energy LLC said in its Forward Curve Quarterly. The analytics firm said roughly half that growth is being driven by the dry gas region in Northeast Pennsylvania. "The lack of infrastructure in the region has left an inventory of approximately 1,000 wells that are ready to fill the new pipeline expansions expected later this year (mostly in 4Q2012)." The remaining 1 Bcf is expected from the southwestern part of the Marcellus lay, where the rig fleet has doubled since the beginning of the year. The additional supply is likely displace gas back into the Dawn, ON, and Ohio Valley markets, which would push down Southeast prices next winter.
Seneca Resources Corp. has reduced its outlook in the Marcellus Shale after long-time joint venture (JV) partner EOG Resources Inc. said it didn't expect to drill the minimum number of wells that were defined under an area of mutual interest (AMI) created in late 2006. Seneca parent National Fuel Gas Co. initially provided 200,000 net acres in northern Pennsylvania in exchange for EOG's capital. EOG, which at the time had about 130,000 net acres in Pennsylvania and New York, was to earn a half-stake in the wells drilled in the AMI. However, EOG "has advised Seneca that it does not expect to meet the minimum drilling target for calendar 2012 specified in the JV. Should it not meet that minimum, EOG would no longer have the right to earn additional acreage from Seneca." The partners would retain their respective working interests in wells already drilled and they could drill additional JV wells on the acreage that has been earned, Seneca said.
Crestwood Midstream Partners LP agreed to pay $90 million to buy some of Devon Energy Corp.'s midstream assets in the Barnett Shale and to process the producer's natural gas output from 20,500 dedicated acres, now estimated at 95 MMcf/d, over a 20-year period. The assets to be acquired include a 74-mile low-pressure natural gas gathering system, a 100 MMcf/d cryogenic processing facility and 23,100 hp of compression equipment in the western portion of Johnson County, TX. When the transaction is completed, which is expected by the end of September, Crestwood plans to consolidate the systems and process all of Devon's gas in its plants.
The American Petroleum Institute (API) has launched the "Energy Works" campaign to spread the news about jobs and other contributions the oil and gas industry makes to communities nationwide. API said the print and online advertising campaign would "tell the story of the industry's workers and the communities in which they live" through a series of videos available on the campaign's website. Separately, the U.S. Chamber of Commerce, which has been operating its "Shale Works for US" campaign to educate the public and business community on shale's potential economic impact in Ohio, said it will launch a nationwide campaign highlighting the potential of shale energy. The Ohio campaign includes grassroots recruitment, advertising and educational outreach to businesses and community groups, according to the Chamber, which said similar efforts are already under way in Pennsylvania and West Virginia.
North Dakota oil and natural gas production maintained its record pace through the end of May, according to the Department of Mineral Resources. Preliminary data showed 19.8 million barrels of oil compared with 18.2 million bbl in April. Gas production hit 21.2 Bcf in May, compared with 19.5 Bcf in April. More than 95% of the drilling targets are in the Bakken/Three Forks/Sanish formations. According to NGI's Shale Daily Unconventional Rig Count, there were 228 rigs actively drilling for oil and gas in the play for the week ending July 27, up from the previous week's 220 rigs, and up 25% from a year ago.
Williams is drawing up plans to build the first propane dehydrogenation (PDH) facility in Canada, which would give it room to increase its polymer-grade propylene production to serve a growing petrochemical market. The Tulsa-based operator currently is the only company in Canada that produces polymer-grade propylene, used as a feedstock in plastics manufacturing. As designed, the proposed facility, with an annual capacity of about 1 billion pounds, would be built at Williams' Redwater facility near Edmonton, AB. About $600-800 million in capital spending would fund the facility, primarily from cash on hand. If it is constructed, the PDH facility would convert propane into propylene, which would be transported to to the U.S. Gulf Coast. The associated hydrogen byproduct is to be sold in the Alberta marketplace.
Ohio Governor John Kasich has signed an executive order prohibiting the state's Department of Natural Resources "from issuing any permit, license or lease allowing for the withdrawal or production of oil and gas from or under the bed of Lake Erie." Congress previously enacted legislation prohibiting the issuance of permits or leases for drilling under the Great Lakes, but it was important that Ohio issue its own prohibition on Lake Erie drilling in case the congressional ban should be lifted, according to the executive order.
Plans by McMoRan Exploration Co. to drill a 30,000-foot well in South Louisiana could herald a new era of drilling at depths greater than 22,000 feet in the state, said Louisiana Department of Natural Resources (DNR) Secretary Scott Angelle. McMoRan recently acquired exploratory rights on about 68,000 gross acres in Iberia, St. Martin, Assumption and Iberville parishes. The company has said it plans to start drilling the 30,000-foot well on its Highlander prospect in the second half of the year. Angelle said the potential for ultra-deep energy exploration was a primary driver for DNR recommending related state legislation recently.
North Dakota is considering construction of a world-scale, $1.5 billion nitrogen fertilizer plant to make use of some of the state's natural gas now being flared in the face of low prices to fuel the facility. The North Dakota Corn Growers Association (CGA) would use the plant to make anhydrous ammonia. Gov. Jack Dalrymple encouraged the state agricultural leaders to invest in natural gas processing infrastructure near the Bakken Shale to help ensure the long-term feasibility of the fertilizer facility because the region's farmers would have a stable domestic supply of fertilizer, which for the most part currently is imported and subject to periodic supply problems and price spikes.
Talisman Energy USA Inc., a subsidiary of Talisman Energy Inc., agreed to pay the U.S. Environmental Protection Agency $62,457 in fines for allegedly violating the Emergency Planning and Community Right-to-Know Act (EPCRA) for the past three years at 52 natural gas drilling sites in Pennsylvania. Among other things EPCRA requires companies that store specific amounts of hazardous chemicals to submit material safety data sheets. Talisman discovered the violations and self-disclosed them. As part of the settlement, Calgary-based Talisman did not admit or deny the alleged violations.
The Pennsylvania Department of Environmental Protection (DEP) said it has launched a study to monitor air quality and determine potential impacts of Marcellus Shale activities in Washington County, the primary one being downwind of MarkWest Energy Partners LP's Houston Processing Facility in Chartiers Township. The agency also plans to test the ambient air for more than 60 volatile organic compounds and continuously collect meteorological data. The DEP has conducted three air quality studies in different parts of the state since 2010, but it has found no emission levels that would trigger health concerns.
Range Resources Corp. has drilled the first unconventional natural gas well in Crawford County, PA. According to the state Department of Environmental Protection's (DEP) Office of Oil and Gas Management (OOGM), two permits to drill natural gas wells -- one horizontal, one vertical -- in Crawford's East Fairfield Township were issued to Range Resources Appalachia LLC on June 7. The permits for Range's Lippert Unit #1H were the only ones issued for Crawford County this year and are, according to OOGM's well inventory report, the only unconventional wells in the county.
Demand for heat exchangers to be used in liquefied natural gas (LNG) projects prompted Air Products to construct a second heat exchanger manufacturing facility in Manatee County, FL. The new 300,000 square-foot LNG manufacturing facility, which would employ 250 employees over four years, is to begin operations in late 2013, the company said. Air Products has been manufacturing LNG heat exchangers at a Wilkes-Barre, PA, facility for more than 45 years.
Methanex Corp. is relocating a $550 million methanol plant originally planned for Chile to Louisiana. The Canadian company is relocating to a 225-acre site in Geismar, LA, for its first U.S.-based production facility in more than a decade. The plant is expected to employ 130 and create 996 indirect jobs. Methanex expects to break ground on the project in September with completion in late 2014.
Spain's Repsol could opt to sell its 75% stake in the Canaport LNG terminal in Saint John, NB, as part of a plan to refocus operations and streamline its balance sheet, the company confirmed. "Repsol is reevaluating all of its businesses. This is at a preliminary stage and no decisions have been taken regarding any of the business units," a Repsol spokesman told NGI. The remaining 25% of the terminal is owned by Canada's Irving Oil Ltd. Canaport has a maximum sendout capacity of 1.2 Bcf/d. Canaport has received 10 cargoes so far this year, the last on June 20. As of July 23, gas sendout from the terminal totaled 37.77 Bcf, or an average of 183,339 MMBtu/d, so far this year, according to a Repsol spokeswoman. The consideration of asset sales comes after the Argentina government expropriated 51% of Repsol's stake in YPF, Argentina's largest oil company, without compensation. Repsol is pursuing legal action.
The village council of Carrollton, OH, voted 4-2 in favor of a nondevelopmental oil and natural gas lease agreement with Rex Energy Corp. valued at $938,000. Under the terms of the agreement, the village would lease 268 acres, which includes water well properties, to Rex in exchange for a $3,500/acre signing bonus and 20% royalties on gross revenue from any production, minus deductions. Village Administrator Denny Roudebush told NGI the agreement must be presented at a future council meeting in the form of an ordinance followed by three public readings and a 30-day waiting period. Barring any objections, Roudebush said it could be six weeks to two months before the deal officially takes effect.
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