Northwest Pipeline has asked the Federal Energy Regulatory Commission for another month to complete and place into service the North Seattle Delivery Lateral Expansion to meet the growing demand for gas in the Seattle area. At the same time, the agency approved Natural Gas Pipeline Co. of America's (NGPL) request for an additional year to complete a project in Oklahoma. It requested that the in-service of the lateral be delayed until Nov. 1, which the Commission approved. The North Seattle Delivery Lateral Expansion, being built for Puget Sound Energy, calls for removing an existing eight-inch diameter pipeline and replacing it with a new 20-inch diameter pipe within the existing right-of-way, and upgrading the existing North Seattle meter station. The expansion will raise delivery capacity on the North Seattle Delivery Lateral by 84,200 Dth/d. NGPL is proposing to increase the maximum allowable operating pressure of the gathering system at its Sayre Storage Field in Beckham County, OK.
The Interior Department's Bureau of Land Management (BLM) plans to hold an oil and natural gas auction on Nov. 7 in the National Petroleum Reserve-Alaska (NPR-A), its second in less than a year, offering producers 400 tracts and an estimated 4.5 million acres to explore. This would be the eighth oil and gas lease sale in the NPR-A since 1999, according to the BLM. Last December BLM offered three million acres for sale in the NPR-A that generated bids totaling more than $3.6 million (see NGI, Dec. 12, 2011). To date, only exploratory drilling since 1999 has occurred within the NPR-A, although last year permits were issued to ConocoPhillips to allow for future oil and gas production. Currently there are 186 authorized oil and gas leases totaling 1,481,092 acres within the planning areas of the NPR-A, the BLM said.
The Bureau of Ocean Energy Management (BOEM) is holding an auction on March 20 in New Orleans for 38 million acres in the Central Gulf of Mexico (GOM). The proposed 7,250 blocks are offshore Louisiana, Mississippi and Alabama. Technical reserves estimates put total production from the leaseholds at 1.9-3.9 Tcf of natural gas and 0.46-0.89 billion bbl of oil. The blocks to be leased are three to 230 miles offshore in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters). The auction would be the second in the Obama administration's Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 and the first of five annual Central GOM lease sales. Proposed terms and conditions for the sale are available at www.boem.gov/sale-227.
Magnum Hunter Resources Corp.'s production in the Appalachian Basin remains "substantially curtailed" nearly three months after an unusually severe thunderstorm knocked out electricity service to much of the region, the Houston-based independent said. Approximately 30 MMcf/d net to Magnum Hunter was shut-in after the June 29 derecho swept across the area, and the company said it experienced gas production curtailments at the tailgate of its pipeline into the Dominion Transmission Inc. (DTI) system due to power and start-up issues at DTI's processing facility in Hastings, WV. By early August full power was restored to the region, allowing Magnum Hunter to begin bringing its production back online, but the lack of available processing capacity at the Hastings facility has kept a lid on output, the company said. Magnum Hunter also said it shut-in about 1.7 MMcf/d related to about 400 producing natural gas wells in Kentucky at the beginning of 3Q2012 "because production of the wells would not have been economical, due to a combination of factors, including low natural gas prices and the cost of blend stock required to reduce the ethane content of the gas for transportation purposes."
WBI Energy Transmission Inc. is seeking Federal Energy Regulatory Commission authorization to expand the northern portion of its natural gas pipeline system to meet increased demand in western North Dakota. The pipeline is proposing to install and operate new mainline natural gas facilities and to increase the maximum allowable operating pressure (MAOP) to 700 pounds per square inch gauge (psig) from 500 psig of a segment of its mainline and associated pipe laterals in McKenzie, Mountrail and Williams counties, ND, as a result of population growth associated with Bakken Shale production activities. In an open season held in March, WBI said it entered into a binding precedent agreement with Montana-Dakota Utilities Co. to deliver a maximum quantity of 17,600 Mcf/d for five years to several North Dakota towns, including Williston, Watford City, Trenton, Alexander, Ray, Minot, Stanley and Tioga. WBI plans to begin construction of the $1.3 million project as soon as it receives approval from the Commission, with an anticipated in-service date by the end of this year.
Houston-based Sidewinder Drilling Inc., a privately held services provider controlled by Avista Capital Partners, has a $242 million definitive agreement to buy Fort Worth, TX-based onshore operator Union Drilling Inc., which operates 53 land drilling rigs across the United States. As of Sept. 21, Union had 14 rigs operating in the Permian Basin, eight in the Marcellus Shale and Pennsylvania Utica, four in the Ohio Utica, three in the Fayetteville, two in the Barnett, one in the Arkoma-Woodford and three elsewhere. Under terms of the agreement, Sidewinder subsidiary Fastball Acquisition Inc. would pay about $6.50/share in cash for all of Union's outstanding shares. Shareholders representing the majority of Union's stock (51%) have voted in favor of the transaction, which is expected to close by the end of the year.
TransCanada Corp. has signed a memorandum of understanding (MOU) with the Ontario Power Authority (OPA) to develop, own and operate a 900 MW gas-fired power plant at OPA's Lennox Generating Station in Bath, on Lake Ontario's northern shore. TransCanada and the OPA expect to finalize a contract based on terms of the MOU by Dec. 14, and the plant is expected to be in service by 1Q2017. The decision comes almost two years after the Ontario government, besieged by opposition community groups, pulled the plug on plans for a gas-fired generating station in Oakville, about 135 miles west of Bath (see NGI, Oct. 11, 2010). The cost of the plant "will be comparable to the cost of the original, competitively procured Oakville plant," which had been estimated at C$1.2 billion, according to OPA.
The Pennsylvania General Assembly passed a bill that authorizes leasing of state-owned land for oil and natural gas drilling, as well as mining for coal, limestone and collecting coalbed methane. SB 367, also known as the Indigenous Mineral Resources Development Act, now heads to Gov. Tom Corbett, who is expected to sign it. The legislation defines "state system land" as property owned or controlled by the State System of Higher Education (SSHE). Under the bill, 50% of the payments and royalties for minerals extracted from "state system land" would be retained by the host university, and another 35% would go to the SSHE. The universities and the organization would be able to use the revenue for deferred maintenance costs, or energy efficiency or energy cost saving improvements. The remaining 15% would go to 14 universities that are members of SSHE to help offset tuition fees and other charges. For other state-owned land, the bill allocates 60% to the Oil and Gas Lease Fund, 25% to the Pennsylvania Infrastructure Investment Authority, and 15% to the state agency that signed the lease.
Gas Natural Inc. has closed on its acquisition of a leasehold interest in a 189-mile pipeline corridor easement in Maine that runs from Searsport to Limestone and various parcels of land, the Mentor, OH-based holding company said. The $4.5 million deal, which included $2.25 million in cash and 210,951 shares of the company's common stock valued at $10.67/share, closed Sept. 25. The assets, which include a liquid pipeline previously owned by Loring BioEnergy LLC, were purchased at a public foreclosure auction in June. The company plans to recondition and convert the Loring pipeline into a natural gas pipeline. In addition to operations including interstate pipelines, natural gas production, propane and natural gas marketing, Gas Natural distributes natural gas to about 70,000 customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, Maine, North Carolina and Kentucky.
The Muskingum Watershed Conservancy District (MWCD) may consider short-term water sales from two lakes in eastern Ohio to oil and natural gas operators drilling in the Marcellus and Utica shales. In September the MWCD's board authorized temporary water sales from Clendening and Piedmont lakes during their upcoming "drawdown," an annual event during which billions of gallons of water are released downstream to protect against flooding. The board said terms over the temporary sales -- including price and amounts to be sold -- would be discussed in future negotiations with the industry. The MWCD said it had received a sharp increase in requests for water from operators as they prepare to begin their drilling operations.
Restrictions on ocean water used to cool California's coastal natural gas-fired power plants have reshaped the state's reliance on gas-fired generation and that has been magnified by the unexpected loss of the 2,200 MW San Onofre Nuclear Generating Station (Songs) this year. As a result, AES Corp. said it plans to repower and transform its sites along the Southern California coast during the next 10 years. With the state's once-through-cooling (OTC) ban slated to be phased in over the next 10 years, AES is holding 4,200 MW of gas-fired generating capacity in its three coastal sites and has submitted OTC compliance plans to the state water board.
Philadelphia Mayor Michael Nutter called on the oil and gas industry to fully fund and participate in the Delaware Valley Early Warning System, an integrated monitoring, communication and notification system launched in 2004. During his opening remarks Sept. 21 at the Marcellus Shale Coalition's Shale Gas Insight 2012 Conference, Nutter also called on the industry to fund upstream environmental monitoring and regular meetings among stakeholders. The mayor said he also supported the ongoing de facto moratorium against drilling in the Delaware River Basin (see related story).
Pennsylvania Senate President Pro Tempore Joseph Scarnati (R-Warren) told colleagues that he plans to introduce a bill to create a nine-member Marcellus Shale Health Advisory Panel in the near future, a move suggested in the past by both Gov. Tom Corbett and the Marcellus Shale Advisory Commission. Scarnati proposed that the nine-member panel include the secretary of the Pennsylvania Department of Health and appointees by the governor, president pro tempore of the Senate, speaker of the House, and the House and Senate minority leaders. Scarnati Chief of Staff Andrew Crompton told NGI it was unlikely the advisory panel would be created before the end of the year.
Pittsburgh City Councilman Patrick Dowd (D-7th district) introduced four proposed amendments to the city's zoning code that would allow 40-acre minimum "mineral extraction districts" for Marcellus Shale drilling. The proposed amendments, Nos. 756 through 759, would require operators to get written permission from all affected property owners before drilling starts, guarantee their operations won't have a series of negative impacts, and require soil testing before drilling and after hydraulic fracturing operations. The proposals are now in committee.
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