Natural gas well completions in 3Q2012 were down considerably from a year ago, according to the American Petroleum Institute's latest well completion report, which indicated that 2,209 gas wells were completed in the period, a 35% decline from y3Q2011; oil well completions rose by 18% to 8,580. "The oil and natural gas industry expanded oil drilling in the third quarter...thanks in large part to access on private and state lands," said Hazem Arafa, director of API's statistics department. Overall, well completions -- including oil and gas wells -- maintained high levels from a year ago, with 12,291 wells completed during the third quarter, according to the API report. Total exploratory well completions in the third quarter remained the same (700 wells), and total footage drilled rose 3% to 91.985 million feet.
The Federal Energy Regulatory Commission has approved two companion applications to allow El Paso Natural Gas Co. LLC to amend presidential permits to increase natural gas exports to northern Mexico. El Paso asked FERC to amend and reissue the presidential permits for three separate border-crossings to raise the combined maximum daily export capacity to 446,000 Mcf from 208,000 Mcf of gas to serve two new power plants to be sited in Sonora, Mexico [CP12-7]. Concurrently the Kinder Morgan pipeline wants modify existing compressor and related facilities on its 61-mile Wilcox Lateral upstream of El Paso's border-crossing facilities [CP12-6]. El Paso's facilities are being expanded to accommodate the Agua Prieta II Power Plant being developed by the Comision Federal de Electricidad. Natural gas volumes to Agua Prieta would be provided by MGI Supply Ltd. In addition, Mexicana de Cobre S.A. de C.V. is planning to build a 500 MW combined-cycle generating facility in two stages at mining facilities in La Caridad, Sonora.
El Paso Natural Gas Co. LLC (EPNG) also is holding a binding open season until 1 p.m. MST Nov. 15 for a proposed pipeline that would extend from its South Mainline System near Tucson, AZ, to the U.S.-Mexico border near Sasabe, AZ, to allow more gas to be exported to Mexico. The Sasabe Pipeline, a 36-inch diameter line, is slated to tie in close to milepost (MP) 502.6 on EPNG's existing 26-inch Line No. 1100 and 30-inch Line No. 1103 and extend about 60 miles southwest to the border, where it would connect with a new pipeline to be constructed in Mexico. Initial capacity would be about 200,000 Dth/d; service could begin by Sept. 30, 2014, depending on shipper commitments and regulatory approvals. For information, see the customer notice on EPNG's bulletin board.
The Interstate Natural Gas Association of America (INGAA) believes that an existing voluntary system with the Transportation Security Administration (TSA) for dealing with cyber attacks "is the way to go," a spokeswoman said. In the Congressional Research Service report, "Pipeline Cybesecurity: Federal Policy" that was issued in August, "TSA officials [asserted] that [mandatory] security regulations could be counter-productive because they could establish a general standard below the level of security already in place at many pipeline companies based on their company-specific security assessments," according to a letter sent by INGAA President Donald Santa to Sen. John D. Rockefeller IV (D-WV), the Commerce Committee chairman. The report noted that "because TSA believes the most critical U.S. pipeline systems generally meet or exceed industry security guidance, the agency believes it achieves better security with voluntary guidelines, and maintains a more cooperative and collaborative relationship with its industry partners as well." INGAA "agrees with these comments" and "members have a strong record of working voluntarily and successfully with TSA to develop, maintain and update effective cyber security guidelines, which have been implemented across our industry."
The New York Independent System Operator (NYISO) and regional transmission organization PJM Interconnection, which together coordinate the movement of wholesale electricity in 14 of the nation's most populated states and the District of Columbia, have agreed to a long-term strategy that includes a call for development of a shared understanding of regional natural gas delivery constraints on power generation. The study will look at existing and planned pipeline and generation facilities, identify contingencies on the regional natural gas system that could adversely affect reliability, and evaluate the adequacy of the regional gas pipeline system to meet electricity system needs, they said. Other elements of the grid operators' long-term strategy include coordinating planning processes to facilitate efficient transmission investments and deploying smart grid technologies that maintain system balance through the use of robust data, communications and automated systems. Market-to-market software and processes are scheduled to be operational in January, they said.
A legal battle over a Maine Natural Gas (MNG) proposal to build an 80-mile-long natural gas pipeline to Maine's state capital and the surrounding Kennebec Valley has taken another turn with a lawsuit filed by MNG, which claims a competitor's previously successful challenge to the project was filed too late. Summit Natural Gas of Maine Inc. "filed a request for a hearing beyond the statutory 15 days," according to MNG's petition, which was filed in Kennebec County Superior Court. MNG,affiliated with Central Maine Power Co. parent company Iberdrola USA, asked the court to remand the case back to Maine's Bureau of General Services (BGS), reinstate BGS's selection of MNG to build the pipeline system in the Augusta area, or vacate a decision in September by a special state appeal panel that invalidated BGS's selection (see NGI, Sept. 17).
Former U.S. Sen. George Mitchell has been appointed to serve as mediator in ongoing talks aimed at resolving a series of enforcement cases against Pacific Gas and Electric Co. (PG&E) stemming from a natural gas transmission pipeline rupture and explosion two years ago in San Bruno, CA, the California Public Utilities Commission (CPUC) said. Mitchell, who served as U.S. Special Envoy to Northern Island, President Obama's Special Envoy to the Middle East and head of Major League Baseball's steroid investigation, will serve as mediator in ongoing negotiations among PG&E, the CPUC's safety enforcement staff and other parties to the proceedings, which include San Bruno, the city and county of San Francisco, the CPUC's Division of Ratepayer Advocates, as well as ratepayer advocacy group The Utility Reform Network. Any stipulation agreed to in the mediation process must be publicly filed with the CPUC and considered by the CPUC's five Commissioners in public after an opportunity for public review and comment.
The Marcellus Shale Coalition has published recommended practices to respond to stray gas incidents, the fourth in a series of guidance documents published by the industry group. Stray gas may originate from various sources, including coalbeds, oil and natural gas wells, landfills, pipelines, naturally occurring methane and microbial gas, according to the MSC. Gas migrates from one of the sources into groundwater, a structure, surface water and soil. The MSC previously published guidance documents for operators on recommended practices for site planning development and restoration, supply chains, and water testing.
Environmental groups have filed a lawsuit in California claiming that state regulators had failed to "consider or evaluate" the risks of hydraulic fracturing (fracking) as required by the California Environmental Quality Act (CEQA). The lawsuit was filed in Alameda County Superior Court against the California Department of Conservation (CDC), Division of Oil, Gas, and Geothermal Resources by Earthjustice on behalf of the Center for Biological Diversity, Earthworks, Environmental Working Group and Sierra Club. The coalition asked the court to declare the CDC in violation of CEQA for its "failure to consider, evaluate, and mitigate the impacts of fracking when approving permits for oil and gas wells."
The Colorado Oil and Gas Conservation Commission (COGCC) has launched a color-coded interactive map tool that allows the public to view water quality data from more than 450 oil and natural gas drilling sites in the state. The data was compiled beginning in January 2011, according to the COGCC. Additional data is to be added to the database beginning with information compiled by the industry's Colorado Oil and Gas Association (COGA), which is working on a voluntary groundwater monitoring program. Operators that have signed on to the program drill about 93% of the state's wells every year, COGA said.
Marathon Oil Corp. is selling all of its interest in 98,409 gross acres (96,738 net) in nine tracts in Karnes, Northern Bee and Wilson counties, TX, in the Eagle Ford Shale, which are considered noncore to its development plans for the remaining 200,000. Bids, due by Friday (Oct. 25), will be accepted on all or part of the lots, according to the Oil & Gas Asset Clearinghouse, which is marketing the acreage.
Carrizo Oil & Gas Inc. sold about 19,000 acres, most of its leasehold in the northern Utica Shale, to an undisclosed buyer for $43 million in cash. Before the sale was finalized, the Houston-based company used a purchase option with joint venture partner Avista Capital Partners to increase its interest in the properties from 10% to 50%. Avista also sold its stake in the property, which is in Crawford and Mercer counties, PA, and Trumbull County, OH.
Waller LNG Services LLC has applied to the Department of Energy for authorization to export liquefied natural gas to free trade agreement (FTA) countries from its terminal now under development at the entrance of the Calcasieu Ship Channel in Cameron Parish, LA. Waller is seeking multi-contract authorization for a 25-year term to export about 1.25 million metric tons a year (58.4 Bcf) of LNG, which is about 0.16 Bcf/d, according to its application [12-152-LNG]. Based on export volume requested, the project is the third smallest on DOE's list, slightly larger than SB Power Solutions Inc., which wants to export 0.07 Bcf/d to FTA countries; and Carib Energy (USA) LLC's request to export a combined 0.04 Bcf/d to FTA and non-FTA countries.
Consol Energy Inc. expects to report lower natural gas production year/year in 3Q2012, but the company said the figures are misleading because of reporting adjustments and its decision in September to idle a southern Virginia coal mine that produced associated gas. Earnings numbers are scheduled to be issued on Thursday (Oct. 25). Consol said it produced 39.5 Bcf, a 2.2% decrease from year-ago production of 40.4 Bcf. The company drilled and completed 12 wells in the Marcellus Shale, placing 22 into production, and it drilled four wells in the Utica Shale, completing two and placing one on production. Consol's estimate for net gas production in 2012 remains 157-159 Bcf. For the fourth quarter, estimated output is 42.5-44.5 Bcf.
Warren Resources Inc. has closed on its previously announced deal to acquire certain additional natural gas and midstream assets from subsidiaries of Anadarko Petroleum Corp. in the Atlantic Rim Project area in Wyoming's Washakie Basin. After learning this past summer that Anadarko was soliciting bids for all of its operated coalbed methane (CBM) assets in the project (see NGI, Oct. 8), Warren, which was a working partner with Anadarko on a number of the assets, decided to exercise its preferential rights to purchase Anadarko's share. Under the deal, Warren acquired 79% of Anadarko's working interest in the Spyglass Hill Unit area within the project, representing about 37,142 net acres and about 32.8% additional total unit working interest for $11.4 million, which increased its working interest in the entire unit from 30.1% to 62.9%. Warren also acquired 26.5% of Anadarko's interest in the Catalina Unit area within the Atlantic Rim Project, representing about 1,121 net leasehold acres and a 5.2% additional total unit working interest for $700,000, which increased its working interest in the entire unit area from 16.9% to about 22%. Warren also acquired 100% of Anadarko's 50% interest in the midstream assets within the project for $4 million. The midstream assets include gathering and compression equipment, as well as a 59-mile long pipeline that transports gas to the Wyoming Interstate Co.'s interstate gas transportation pipeline.
Murphy Oil Corp. plans to spin off its downstream operations to become a pure-play explorer, with a U.S. focus on the Gulf of Mexico and the Eagle Ford Shale, where the company has 220,000 acres, as well as Canada's Montney Shale, Alberta's Bakken Shale and Seal heavy oil areas. CEO Steven Cosse said separating the businesses would allow the exploration arm to have "more proceeds to redeploy...more organic spending..." Mergers and acquisitions "aren't out of the question" but today's competitive market makes them "harder to accomplish to add to the portfolio."
The United States is already significantly "energy independent" in most sectors, with transportation fuels the notable exception, according to a Deloitte report, "Energy Independence and Security: A Reality Check." According to Deloitte, natural gas provided 3% of the energy used for transportation in 2010, mainly in the form of compressed natural gas (CNG) to fuel fleets such as buses, delivery, maintenance and warehousing vehicles. "Various groups have called for federal assistance to expand the use of natural gas for transportation, in the form of CNG or liquefied natural gas (LNG), but significant new infrastructural construction is required to support the wider use of these fuels," the report said.
Liquids-rich gas and high initial production rates from oil wells are driving Eagle Ford Shale interest, bolstered established midstream infrastructure and proximity to energy markets, Fitch Ratings said. The "shale provides some of the highest returns of any unconventional play in the U.S...Furthermore, producers and infrastructure developers face relatively less environmental, political and regulatory obstacles in energy-friendly Texas than in competing shale basins such as the Marcellus and Utica." The ramp-up in output has spurred development of infrastructure, with several projects set to be completed late this year and in mid-2013. "Given the ability to piggyback off existing infrastructure, many Eagle Ford projects are of more limited size, often laterals to or expansions of existing networks...These pipeline expansions can have lower developmental and operating risk and quicker payback than 'mega pipeline' projects being built to serve other more isolated shale basins."
Canadians are generally opposed to the takeover of Calgary-based Nexen Inc. by China's CNOOC Ltd., an arm of state-controlled China National Offshore Oil Co., according to a recent opinion poll that showed practically four-in-five respondents believe foreign governments should not be able to control resources on Canadian soil. The Angus Reid Public Opinion poll surveyed a sample of 1,000 Canadians online. One-in-four respondents (26%) said they have followed news stories related to the proposed deal "very closely" or "moderately closely." Albertans (41%) and British Columbians (35%) are paying more attention to the issue than those in Eastern Canada, the poll found. British Columbians oppose the Nexen takeover by a seven-to-one margin (69% to 7%). While one-in-five Albertans would prefer to allow the takeover (22%), three-in-five (63%) are against it. CNOOC made its $15.1B offer for Nexen in July (see NGI, July 30). The deal is the third test in four years of Canadian tolerance for foreign takeovers of national economic pillars. Nexen is Canada's seventh-largest oil and natural gas producer.
The Pennsylvania State Senate unanimously passed a bill absolving mine operators and landowners from liability for any injury or damage caused by the use of acid mine drainage (AMD) in hydraulic fracturing operations. SB136, which passed the Senate 49-0 on Oct. 15, has been referred to the Pennsylvania House Environmental Resources and Energy Committee. "The Commonwealth must begin to take an innovative approach to the treatment and use of acid mine water," said the bill's primary sponsor, state Sen. Richard Kasunic (D-Dunbar). "This measure is aimed at encouraging the use of mine water in drilling rather than the continued heavy use of municipal and fresh water sources." The chamber's last scheduled day to meet this year is Nov. 14.
Pennsylvania Attorney General Linda Kelly filed a motion to dismiss a lawsuit alleging that Act 13, the state's omnibus Marcellus Shale law, has a medical "gag rule" that violates a doctor's constitutional rights to communicate with his patients. Alfonso Rodriguez, a kidney specialist from Luzerne County's Dallas Township, filed the lawsuit July 27 in U.S. District Court for the Middle District of Pennsylvania. A spokesman for Kelly's office told NGI that legal briefs in support of a dismissal would be filed within 14 days. At issue are portions of Section 3222 of Act 13 that list the circumstances where disclosure of the fracking chemicals is required and not required (Rodriguez v. Krancer et al., No. 3:12-CV-1458).
The U.S. Environmental Protection Agency's (EPA) has fined Atlas Resources LLC $84,500 to settle alleged air and hazardous chemical violations at a Marcellus Shale natural gas well in Avella, in Washington County's Independence Township. According to the EPA, inspectors said a fire started while Atlas was developing the Cowden No. 10H well. The well had been hydraulically fractured and was in a period of flowback when a spark from a light generator ignited vapors from a condensate pit. The fire then spread to a nearby flowback tank. As part of the EPA's investigation similar setups were found at eight other Atlas wells in Hopewell and Cross Creek, also in Washington County. The company has since shut in the wells to perform an audit and is working with the EPA to ensure compliance with new source performance standards and national emission standards. The Pennsylvania Department of Environmental Protection also fined Atlas $80,000 for the fire on Nov. 9, 2011 for failing to maintain a two-foot freeboard in an impoundment and for failure to implement a preparedness, prevention and contingency plan.
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