The 2012 Atlantic Hurricane season, which officially ended Friday, produced 19 named storms, including 10 hurricanes, one of them major (Category 3 or higher), continuing a decades-long high-activity era in the Atlantic Basin, according to the National Oceanic and Atmospheric Administration (NOAA). The number of named storms this year was well above the average of 12 and the number of hurricanes was above the average of six, but the number of major hurricanes was below the average of three, according to NOAA, which classified the 2012 hurricane seas as above normal. It was the second consecutive year that the mid-Atlantic and Northeast suffered devastating impacts from a named storm. In 2011 it was Hurricane Irene, which turned out the lights on millions of East Coast residents and in doing so cut demand for natural gas by about 2.8 Bcf; this year the region was hit by Hurricane Sandy, which struck the New Jersey coastline Oct. 30. But it was the seventh consecutive year that no major hurricanes hit the United States. The only major hurricane was Hurricane Michael, a Category 3 storm that stayed over the open Atlantic. Hurricane Isaac was the only storm to cause significant disruption to energy interests in the Gulf of Mexico.
The U.S. Court of Appeals for the District of Columbia Circuit has upheld a Federal Energy Regulatory Commission order that limited Northern Natural Gas' exercise of market-rate authority to initial customers of its planned aquifer storage field in Redfield, IA. At the crux of the case was a 2006 order in which the Commission authorized market-based rates only to Northern Natural initial shippers that submitted winning bids and signed precedent agreements for the Iowa storage project. In 2010 Northern sought to extend its market-based rate authority to include the "resale of market-based rate capacity" that became available through expired existing service agreements or upon bankruptcy but FERC denied granting Northern the authority to charge market rates for existing contracts that expire. However, the Commission approved a request to charge market-based rates for resales of storage in the event of bankruptcy, default or other turned-back capacity during the 20-year term of the original contracts.
The Commodity Futures Trading Commission (CFTC) has established a new April deadline for swap dealers to comply with certain reporting requirements under the Dodd-Frank Wall Street Reform Act. In a recent no-action letter, the CFTC's Division of Market Oversight (DMO) and Division of Swap Dealer and Intermediary Oversight (DSIO) said "limited relief for swap dealers from the compliance timeline contemplated by the swap data reporting rules is warranted" and recommended no enforcement action for failing to report transactions before April 10. Existing rules require entities that engage in more than $8 billion in swaps annually to register with the agency by Dec. 31, but an "entity could elect to apply for registration, and thereby become a swap dealer at an earlier date," the letter said (see NGI, Oct. 15). The dollar threshold is substantially lower for swap transactions involving "special entities," such as publicly-owned, government-owned or federal agency utilities. "Concerns have been expressed, by market participants and other interested parties, regarding the potential for differing compliance dates for swap dealer reporting under the swap data reporting rules, in the event that one or more entities apply to register as swap dealers before their swap dealer registration deadline," the letter said.
As the Obama administration readies the start of its second term, now is the time for it to reevaluate how the nation's energy policy offices can be better structured, according to the Bipartisan Policy Center (BPC). The center is recommending that the Obama administration consider restructuring several agencies that oversee energy policy. The full report, "The Executive Branch and National Energy Policy: Time for Renewal," is being prepared by the BPC's Strategic Energy Policy Initiative, which is co-chaired by former North Dakota Democratic Sen. Byron Dorgan, former Senate Majority Leader Trent Lott (R-MS), U.S. Marine Corps Gen. James L. Jones and former Environmental Protection Agency Administrator William K. Reilly. The report is to call for the president to set energy policy goals through a cross-agency energy council, and to conduct and interagency review every four years.
Imperial Oil Ltd., Canada's second-largest integrated producer, has agreed to pay $1.56 billion to gain a 50% interest in Celtic Exploration Ltd. after the unconventional operator is taken over by ExxonMobil Corp. ExxonMobil, majority owner (69.7%) of Imperial, in October agreed to pay $3.14 billion, including debt, to buy the Calgary-based producer, which has a shelf of unconventional properties in the Montney and Duvernay shales (see NGI, Oct. 22). Current production from the estimated 650,000 net acres being acquired is 72 MMcf/d of gas and 4,000 b/d of condensate and natural gas liquids.
The New York Department of Environmental Conservation has filed for a 90-day extension and released a 90-page document detailing proposed rules governing high-volume hydraulic fracturing (HVHF). A 30-day public comment period is scheduled to begin Dec. 12 and end at 5 p.m. on Jan. 11. The agency filed the extension to give state Department of Health Commissioner Nirav Shah more time to complete a health impact analysis of HVHF (see NGI, Oct. 29).
Lenape Resources Inc., an oil and natural gas producer based in New York, has filed a lawsuit against a town in Livingston County for enacting a local drilling ban, and against the state Department of Environmental Conservation (DEC) for failing to rein in the town over the ban. The company is reportedly seeking at least $50 million in damages from the Town of Avon on the grounds that its ban has cost the company millions in lost business. The Avon Town Board passed a one-year moratorium, essentially banning all oil and natural gas activities, on June 28. One week later Lenape, which is the only company now drilling in the area, shuttered its wells and pipelines in Avon, which resulted in halting royalty payments and free natural gas for landowners (see NGI, July 16). The company says Avon's ban violates a 1981 state statute known as the Environmental Conservation Law.
The West Virginia Supreme Court of Appeals has ruled that state law doesn't give landowners the right to seek judicial review of well permits issued by the Department of Environmental Protection (DEP). However, the appeals court urged lawmakers to consider changing the law to give landowners more say. The five-member high court ruled unanimously Nov. 21 against Matthew Hamblet, a resident of Doddridge County who had filed a lawsuit suit against the DEP and EQT Corp. in May 2010 (James Martin et al v. Matthew Hamblet, No. 11-1157). A Doddridge County judge had ruled in favor of Hamblet on July 5, 2011, saying the DEP's permits could be revoked, citing a landmark decision from 2002 titled State ex rel Lovejoy v. Callaghan (see NGI, July 25, 2011).
Top Democrats on the House Energy and Commerce Committee and the House Natural Resources Committee have called on Houston-based Black Elk Energy LLC to provide answers on the explosion and fire last month onboard a shallow-water production platform in the Gulf of Mexico that has killed three people to date (see NGI, Nov. 19). The Interior Department's Bureau of Safety and Environmental Enforcement has begun an investigation. The agency said it is committed to determining the direct and indirect causes of the explosion and would take appropriate enforcement action.
Gulfport Energy Corp. and Seneca Resources Corp. separately have reported encouraging production results from some of the first horizontal wells drilled in the Utica Shale. Gulfport said its Shugert 1-12H well in Belmont County, OH, near Kirkwood Township, tested at an average sustained 18-hour rate of 28.5 Mcf/d of natural gas, 300 b/d of condensate and 2,907 b/d of natural gas liquids (NGL), assuming full ethane recovery and a natural gas shrink of 10%, or 7,482 boe/d. Gulfport said it plans to begin flowing the well into a sales pipeline by the end of January. Seneca subsidiary, National Fuel Gas Co. flow tested its first horizontal well in Forest County, PA. The company said initial testing at the well began on Nov. 11, lasted six days, and tested at a peak 24-hour rate of 3.9 Mcf/d. The well has been shut in to await pipeline infrastructure and is expected to begin production in 2Q2013.
Twenty-nine tracts totaling slightly less than 10,000 acres of oil and natural gas leases were sold for $3.85 million in four southeastern New Mexico counties, including three in the Permian Basin, in the latest sale by New Mexico's Land Office. All of the tracts were sold to 10 bidders for acreage in Lea, Eddy, San Juan and Chaves counties. On a year/year monthly comparison, lease revenues were down from $5.2 million for less acreage (8,226.7 acres). A high bid of $930,000 was placed by Roswell, NM-based Ronald Miles for 304 acres in Lea County. Fourteen tracts covering 5,346.84 acres garnered $1.17 million at $219.59/acre under five-year sealed bids. The other tracts, totaling 4,651 acres, brought in $2.6 million at $576.86/acre in five-year oral bids. Lease sale results are posted on the state agency's website.
Bill Barrett Corp. reported in late November it was producing about 33 MMcf/d net (49 MMcf/d gross) in the area of its West Tavaputs field where a fire shut one of its three compressors and sent two employees to the hospital (see NGI, Nov. 26). The company began efforts to reroute gas to its two other compressor stations in the area and a bypass pipeline to reroute gas to the company's Interplanetary compressor station is expected to be completed by mid-December. Repairs to a pipeline connection to its Sage Brush compressor station also are underway. Barrett expects to have 70-80% of its lost gas production online by early January; fourth quarter production estimates were reduced by about 1.2 Bcf.
The U.S. Department of Energy (DOE) Office of Fossil Energy has authorized CEFLNG, a unit of Cambridge Energy Holding LLC, to export domestically sourced liquefied natural gas (LNG) to free trade agreement (FTA) parties from a proposed Louisiana terminal under multiple contracts. Cambridge holds a two-year blanket authorization to import and export gas and LNG to and from Canada and Mexico and import LNG from international sources. CE FLNG is now authorized to export LNG from its proposed terminal in Plaquemines Parish, LA, up to the equivalent of 391 Bcf per year for 30 years. It is in the process of finalizing the design of facilities, which would consist of two floating liquefaction, storage and offloading units, each capable of producing up to 4 million metric tons per year.
EmKey Gathering LLC, a subsidiary of EmKey Energy LLC, has acquired from Norse Energy Corp. ASA the rights to a 75-mile right-of-way (ROW) in New York State where it plans to build a 16- to 24-inch diameter natural gas pipeline from the Marcellus and Utica shales. The proposed pipeline would begin in Madison County and traverse Chenango County before terminating in Broome County. Norse sold EmKey its operated production and other assets in New York (see NGI, March 19). As part of that deal, EmKey committed to constructing a pipeline capable of transporting a minimum of 90,000 Mcf/d, once Norse nominates for firm transportation.
The Susquehanna River Basin Commission (SRBC) will consider 35 applications for water withdrawals, most of them intended to support natural gas drilling, at its next meeting on Dec. 14 in Annapolis, MD. Among the applications is one by Falling Springs Water Works Inc., which has applied for a permit to withdraw up to 800,000 gallons per day (gpd) from the decommissioned Falling Springs Reservoir, located in Lackawanna County's Ransom Township. The company wants to sell the water to natural gas operators in Luzerne, Lackawanna, Susquehanna and Wyoming counties.
The Delaware Riverkeeper Network said more than 50 organizations have signed a petition asking the Delaware River Basin Commission (DRBC) to take regulatory authority over natural gas pipelines in the watershed. The environmental group plans to submit the petition to the DRBC at its Dec. 5 (Wednesday) meeting. The move comes as Transcontinental Gas Pipe Line (Transco) plans its Northeast Supply Link project, which would provide 250,000 Dth/d of incremental firm transportation capacity from supply interconnections on Transco's Leidy Line in Pennsylvania to its 210 Market Pool in New Jersey and the Manhattan, Central Manhattan and Narrows delivery points in New York City (see NGI, Nov. 12).
A Rocky Mountain Institute (RMI) report recommends that a combination of distributed generation and demand-side resources soon be applied to make up for the continuing outage at Southern California's 2,200 MW San Onofre Nuclear Generating Station (Songs). The report concludes that bringing back two previously decommissioned gas-fired coastal generation units and relying on a new major transmission power line may not be available next summer, and distributed generation is an option. During a prolonged late summer heat wave, California withstood the loss of the Southern California Edison Co. (SCE) nuclear plant, where two units were shut down in January.
Teak Midstream LLC's 200 MMcf/d Silver Oak cryogenic gas processing plant is online in South Texas, along with 250 miles of gathering and residue delivery pipelines. Teak also has executed long-term gathering and processing agreements with Comstock Resources Inc. and another producer in support of the facilities. Teak plans to expand the processing capacity on its system by 200 MMcf/d by 1Q2014 based on volume commitments to date and increasing demand to process liquids-rich gas from the Eagle Ford, as well as from the Buda, Pearsall, Olmos and Escondido formations.
Houston-based Plains Exploration & Production Co. has completed separate acquisitions of Gulf of Mexico (GOM) properties owned by BP Exploration & Production Inc., BP America Production Co. and Shell Offshore Inc. for a combined total of $6.1 billion (see NGI, Sept. 17). Plains paid BP $5.55 billion for deepwater properties that include the BP-operated Marlin, Dorado and King fields (collectively the Marlin Hub, 100% working interest (WI)), Horn Mountain field (WI 100%), Holstein field (WI 50%), as well as the nonoperated Diana-Hoover Field (33.33% WI, operated by ExxonMobil Corp.) and Ram Powell field (31% WI, operated by Shell). At the end of July the properties were producing an estimated 59,500 boe/d, 84% weighted to oil and liquids. Plains paid $560 million to Shell for its 50% WI in the Holstein Field, giving it a 100% WI in the field when combined with the BP acquisition. At the end of July the properties were producing an estimated net 7,400 boe/d, of which nearly 86% was oil and liquids.
The U.S. Environmental Protection Agency (EPA) settled a Clean Water Act (CWA) case for wetlands violations, requiring PDC Mountaineer (PDCM) to pay a penalty of $177,500 to resolve violations involving construction activities at Marcellus Shale facilities in northern West Virginia. According to EPA, Bridgeport, WV-based PDCM failed to apply for necessary permits to discharge fill materials into wetlands or streams in Harrison County, WV. PDCM also agreed to restore and/or complete mitigation projects at four sites in the state under separate CWA orders, but it did not admit to violating the CWA.
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