The American Petroleum Institute (API) has launched a television and print ad campaign in Washington, DC, and in several states to drive home the importance of a favorable tax code in developing domestic domestic oil and natural gas and creating jobs. "Taxes on the industry are a key energy issue, and, as our Election Day polling showed, voters are skeptical about targeting the industry for higher taxes. To encourage members of Congress who are part of that conversation with voters, we're launching new television and print advertising inside the [Washington, DC] beltway and in selected states," said Khary Cauthen, API senior director of federal relations. Both the print and television ads will run for two weeks in the DC area, as well as New Mexico, North Carolina, Virginia, Arkansas, Alaska, Colorado and Louisiana. President Obama has proposed eliminating $4 billion annually in tax breaks for oil and gas producers. "Raising our taxes is not the answer. We already are taxed at a higher rate than [many] other industries," an API spokesman said.
The Federal Energy Regulatory Commission (FERC) has issued its first order to improve coordination of the natural gas and electric markets [AD12-12]. The order responds to some of the key concerns about coordination that were raised by power generators and natural gas pipelines at the five regional conferences in August in the Mid-Atlantic, New England, Southeast, West and Midwest regions (see NGI, Sept. 3; Aug. 27). The Commission also published the "Staff Report on Gas-Electric Coordination Technical Conferences." The order directs FERC staff to convene two technical conferences to focus on common issues that arose in nearly every regional conference, namely better communications and scheduling between the two markets. The order also directed each regional transmission organization and independent system operator to appear before the Commission on May 16 to report their market experiences during the winter and early spring, and again to appear on Oct. 17 to report on their summer and early fall coordination progress. Moreover, the order requires Commission staff to report on the gas-power coordination activities at least once each quarter in 2013 and 2014.
Looking to bolster the pool of trained natural gas industry workers while also reaching out to U.S. military veterans, DTE Energy has rolled out a seven-week pilot program to prepare Michigan veterans for jobs as maintenance fitter apprentices, which, if successful could be a model for programs nationwide. Detroit-based DTE acknowledged that the job prospects for U.S. soldiers coming home from tours of duty in Afghanistan and Iraq are often bleak, and Michigan has the highest veteran unemployment rate in the country at 30%, with some Michigan-based military units nearing 40%. Dubbed Natural Gas Boot Camp, DTE Energy said it is hoping to change the trend of high veteran unemployment. "Our veterans are a highly skilled, tough-minded, physically fit group of people, and the government has already made a significant investment in their training," said DTE's Bob Richard, senior vice president, Gas Operations. "They're a tremendous resource, but despite the unemployment statistics, they've been difficult to recruit." DTE's operating units include Detroit Edison, which serves 2.1 million customers in southeastern Michigan, MichCon, a natural gas utility serving 1.2 million customers in Michigan and other nonutility, energy businesses focused on gas storage and pipelines, unconventional gas production, power and industrial projects, and energy trading.
Following President Obama's re-election, the Independent Petroleum Association of America (IPAA) formed a task force to challenge in court federal regulations issued over the next four years that may affect oil and natural gas. The IPAA plans to "ramp up its litigation efforts on the environmental front with regard to endangered species," and it will seek to take an "across-the-board" approach as well, said Julia Bell, IPAA manager of public and industry affairs. The "Endangered Species Act [ESA] is sure to be a growing problem in the years ahead. Again, it doesn't affect oil and gas exclusively -- a huge swath of industries will be impacted -- including city expansion efforts," she said. The task force is "going to be big," including at least 10 different industries, among them construction, manufacturing and trucking, in addition to oil and gas, Bell said. Asked when she thought the IPAA would file its first lawsuit, she said, "I'm not sure of that yet." In a recent letter to the U.S. Fish and Wildlife Service (FWS), the IPAA requested a public forum with FWS on its plans regarding the ESA because members are concerned that new listings could harm domestic oil and natural gas exploration and production. By 2016 FWS is required to complete a review of 250 candidate species for final listing on the ESA and is required to complete other actions on listings and critical habitat petitions of more than 1,000 species.
The Pennsylvania Public Utility Commission (PUC) issued revised distribution figures for impact fee revenue generated by Act 13, after correcting an error over how it applied the five-linear-mile rule. Overall, municipalities will receive $111,673,038.74, an increase of $104,887.14. By far the biggest beneficiary of the recalculation is the City of Williamsport, located in Lycoming County, which saw its distribution increase by $300,145.26, for a total distribution of $559,742.98. Loyalsock Township, also in Lycoming, saw the biggest decrease in distribution, down $56,499.69 to $244,000.34. The PUC had originally published a distribution list on Oct. 15 but rescinded it in late October (see NGI, Oct. 29; Oct. 22). According to PUC figures, 1,388 municipalities received impact fee revenue. The revised figures show that 652 of them will receive less money after the recalculation, 138 will receive more money and 598 were unchanged.
LLOG Exploration Co. LLC has formed a long-term partnership with private equity giant Blackstone to accelerate the producer's deepwater operations in the Gulf of Mexico (GOM). The partners, which have committed to invest more than $1.2 billion in the alliance, plan to leverage the operational and financial resources of LLOG and private equity funds managed by Blackstone (see related story). Among their targets are four of LLOG's recent deepwater discoveries, as well as its extensive prospect inventory, which includes 110 offshore leases. In addition, the partners plan to expand LLOG's asset base in the GOM through federal lease sales, farm-ins, as well as merger and acquisition activity (see related story).
With a Nov. 29 deadline quickly approaching, the New York State Department of Health (DOH) has reportedly hired experts from George Washington University, the University of California at Los Angeles and the Colorado School of Public Health to conduct a health impact analysis of high-volume hydraulic fracturing (fracking). The state's Department of Environmental Conservation (DEC) Commissioner Joseph Martens had asked for the study (see NGI, Sept. 24). Gov. Andrew Cuomo had been expected to issue final recommendations on whether the state would allow high-volume drilling to restart after the DEC had completed its public review (see NGI, Oct. 3, 2011; Sept. 12, 2011). The last of four public hearings on the proposed rules was held Nov. 30. Under state law, DEC has one year after the last hearing to finalize the rules; a 90-day extension also may be filed.
Piedmont Natural Gas is investing $180 million in Marcellus Shale-focused Constitution Pipeline Co. LLC to join Williams Partners LP and Cabot Oil and Gas Corp. as an equity holder in the project. In February Williams Partners and Cabot announced the project to carry gas from northern Pennsylvania to northeastern markets; the project is scheduled for service by March 2015. Piedmont Constitution Pipeline Co. LLC would have a 24% stake.
San Antonio-based Abraxas Petroleum Corp. is finalizing talks to sell its 25% working interest in the Nordheim Project in the Eagle Ford Shale for about $20 million. The divestiture consists of 544 net acres in DeWitt County, TX, and about 64 boe/d net (56% gas; 26% natural gas liquids; 26% oil) and retain rights to its Edwards production, reserves and upside in the Nordheim and Wagner lease blocks. Closing is expected in December. Separately, Abraxas has also agreed to sell its Alberta Basin properties for $2.85 million and an overriding royalty interest of 1.25-5% depending on lease terms. The buyer was not disclosed.
Targa Resources Partners LP is acquiring Saddle Butte Pipeline LLC's Williston Basin crude and natural gas assets for $950 million in cash. The assets are in the Bakken Shale in McKenzie, Dunn, and Mountrail counties, ND, and include 155 miles of crude oil pipelines. The business has combined crude oil storage capacity of 70,000 bbl. The deal also includes 95 miles of gas gathering pipelines and a 20 MMcf/d gas processing plant with an expansion under way to increase capacity to 40 MMcf/d.
BP plc has awarded the first contracts for Project 20K, a multi-year initiative to develop next-generation systems and tools to unlock the next frontier of deepwater oil and gas resources that currently are "beyond the reach of today's technology." The producer estimates that application of the new technologies across its global portfolio alone could potentially access an additional 10-20 billion boe of resources. The next-generation technology would help the London-based major access deepwater treasure around the world, including recent discoveries in the Gulf of Mexico that include Kaskida and Tiber, BP said. Initial contracts for Project 20K were awarded to KBR and FMC Technologies.
Schlumberger Ltd. and Cameron have created OneSubsea, a joint venture (JV) to leverage their expertise to manufacture a complete subsea production system from pore space to export space to unlock reserve potential from offshore developments. The new company would offer a "step change in reservoir recovery" for the subsea industry by integrating and optimizing the "entire production system over the life of the field," the companies said. A key priority is to strengthen research and engineering investment, including complementary projects. Under the JV the partners would manufacture and develop products, systems and services for the subsea oil and natural gas market.
Tallgrass Energy Partners LP closed on a previously announced deal to buy Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., Kinder Morgan Energy Partners LP's (KMP) Casper-Douglas gas processing and West Frenchie Draw treating facilities in Wyoming, and KMP's 50% interest in the Rockies Express Pipeline (REX). Tallgrass paid $1.8 billion in cash; the total deal including debt is worth $3.3 billion. The Federal Trade Commission gave final approval to sell midstream assets to Tallgrass in early November.
California has held its first auction for carbon emissions trading; gas-fired plants account for more than two-thirds of the state's 50,341 MW of available capacity. Power plants and refineries account for about 60% of all greenhouse gas (GHG) emissions in the state. The California Air Resources Board (CARB) is to post auction results on Monday (Nov. 19). The auction begins implementation of the AB 32, which would require power plants and refineries to buy and sell carbon emission permits.
Anchor Drilling Fluids USA Inc. has opened a drilling fluids production plant in Wellsville, OH, the first such facility in the state and designed to service oil and natural gas operators in the emerging Marcellus and Utica shales. Tulsa-based Anchor said its new facility -- located in the Columbiana County Port Authority's Wellsville Intermodal Industrial Park -- will have the capacity to produce and store up to 10,000 barrels of drilling fluids. The company also said it was investing in an adjacent plant to produce barite (barium sulfate), a naturally occurring nontoxic mineral that increases the density of drilling fluids. According to Anchor, the investment with Cimbar Performance Minerals has created the only barite plant in the northeast United States.
U.S. Environmental Protection Agency (EPA) Science Advisor Glenn Paulson told a conference at the University of Pittsburgh in early November that a progress report on a study of the potential impacts of hydraulic fracturing (fracking) on drinking water should be issued before the end of the year, and the final report published in 2014. Meanwhile, the agency announced in the Nov. 9 issue of the Federal Register that it is also seeking public comments and peer-reviewed studies on fracking through April 30 to help it complete its report. Congress instructed the EPA to conduct the drinking water study in 2010 (see NGI, March 22, 2010).
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