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Industry Briefs

Chesapeake Energy Corp. has completed the sale of all of its ownership stakes in privately held Chaparral Energy Inc. for gross proceeds of $215 million. In connection with the transaction, Chesapeake CFO Nick Dell'Osso has resigned from the Chaparral board. Chesapeake announced its intention to sell its interests in the Oklahoma producer in early 2011, then estimated at 20%, as part of a wide-ranging divestment plan (see Shale Daily, Feb. 8, 2011). Chaparral, a Midcontinent-focused operator, has said it may launch an initial public offering by the end of 2014 (see Shale Daily, Oct. 18, 2013).

Royal Dutch Shell plc is casting off its stake in a major liquefied natural gas (LNG) export project in Western Australia for $1.35 billion. The agreement, announced on Monday, would provide Wheatstone joint venture partner Kuwait Foreign Petroleum Exploration Co. (Kufpec) an additional 8% equity interest in the Wheatstone-Iago joint venture LNG project. Kufpec also would secure a 6.4% stake in 8.9 million metric tons/year of LNG from the still-to-be completed facility. No existing commercial agreements would be impacted. "Shell will remain a major player in Australia's energy industry," said CEO Ben van Beurden, who took the helm this month. "However, we are refocusing our investment to where we can add the most value with Shell's capital and technology. We are making hard choices in our worldwide portfolio to improve Shell's capital efficiency."

Maine Gov. Paul LePage is urging legislators to tackle the state's energy challenges, with an emphasis on lowering residential heating bills, and natural gas, which has found Maine a hard market to crack. Wholesale electricity prices in New England were up 57% in 2013 compared to 2012; the price of propane has jumped 22% since the heating season began in October; and the 70% of Maine households that use heating oil can expect to spend $3,200 on that fuel this winter, according to LePage. "Our energy prices are becoming more expensive for businesses competing across the world and the Maine people are spending more of their disposable income on energy," LePage said in a letter to legislative leaders Tuesday.

FERC rejected tariff filings by Portland Natural Gas Transmission System (PNGTS) that would have restructured its creditworthiness and financial assurances provisions using a higher present value (PV) calculation than the Northeast pipeline uses in other parts of its tariff. PNGTS, majority-owned by TransCanada Pipelines, proposed to revise its generally applicable creditworthiness standard by lowering the minimum required Standard and Poor's (S&P) debt rating from "BBB" to "BBB-" and the Moody's debt rating from "Baa2" to "Baa3," while at the same time adding a tangible net worth requirement. The latter requirement would limit the present value of the shipper's overall payments under the contract to no more than 10% of its tangible net worth.

While the Columbia River-based Oregon LNG project to import/export shale gas supplies from British Columbia (BC) has quietly filed for a permit from the National Energy Board (NEB) in Canada, it is still searching for the right mix of partner/customers that can give the $6 billion venture a realistic chance of being completed before 2020. Oregon LNG CEO Peter Hansen told NGI on Wednesday that he is not seeking contracts with BC producers because his project's future equity partners and/or tolling customers will ink their own supply deals. Hansen refuses to speculate on when the project at the mouth of the Columbia River at Warrenton, OR, might land some partner/customers, and whether that could happen this year.

Natural gas lost a bit of ground last year in its share of the Texas power generation pie, according to data released by the Electric Reliability Council of Texas (ERCOT), the grid operator for most of the state. Natural gas fueled 40.5% of the state's power generation last year, down from 44.6% in 2012; however, coal use increased to 37.2% from 33.8% in 2012. Nuclear dropped slightly to 11.6% from 11.8%; wind power grew to 9.9% from 9.2%. Hydro power stayed steady at 0.1% while "other" sources fell to 0.3% from 0.5%, according to ERCOT data. Late last year the Brattle Group released a study that said natural gas-fueled generation and renewables would be sufficient to cover the future power needs of the Lone Star state and that no new coal plants needed to be built (see Daily GPI, Dec. 11, 2013). With more than 12,000 MW of installed generating capacity, Texas is the largest state producer of wind power in the country. Texas also is the leading U.S. producer of natural gas.

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