Britain’s Centrica plc has struck a 20-year sale and purchase agreement with Cheniere Energy Partners LP‘s Sabine Pass Liquefaction LLC for 1.75 million metric tons per annum (mmtpa) of liquefied natural gas (LNG) with deliveries to begin as early as 2018. The contracted amount is equivalent to 91,250,000 MMBtu/year and with Sabine’s contract with Total Gas & Power North America Inc. (see NGI, Dec. 24, 2012), brings Train 5 contracted volumes to 3.75 mmtpa. Centrica, Sabine’s sixth LNG export customer, is to buy LNG on a free on board basis at a Henry Hub indexed price, plus a fixed component,. The 20-year contract, contingent on regulatory and financing approvals, begins on the date of first commercial delivery from Train 5 and has an extension option of up to 10 years. Centrica businesses include British Gas, which serves about 12 million homes in Britain, nearly half of the country’s homes, and Direct Energy, which has businesses in natural gas production, power generation and distribution in North America.

El Paso Natural Gas, a Kinder Morgan pipeline, has asked the Federal Energy Regulatory Commission for authorization to place the remaining portions of its Willcox Lateral expansion into service for power plants in northern Mexico. Proposed service compressor units to be placed into service at the modified Willcox Compressor Station in southern Arizona would be on a staggered schedule for project shippers Mexicana de Cobre S.A. de C.V. and MGI Supply Ltd. The station does not provide any compression for the Willcox Lateral. The pipeline has reconfigured existing compressors and facilities on the 61-mile lateral upstream of El Paso’s border-crossing facilities to accommodate two gas-fired power plants that are being developed in northern Sonora (CP12-6). The Agua Prieta II Power Plant gas volumes would be provided by MGI. Mexicana de Cobre is planning to build a 500 MW combined-cycle facility in La Caridad, Sonora. MGI has executed a transportation agreement to transport 95,000 Dth/d of gas through the Willcox Lateral for delivery to the modified El Fresnal Meter Station. Mexicana de Cobre executed an agreement to transport 90,000 Dth/d on the lateral to serve a power plant at the Douglas Meter Station. When the new incremental volumes are combined with the existing firm contracts, total firm contract capacity would be 291,286 Dth/d (106,286 Dth/d of existing capacity and 185,000 Dth/d of expansion capacity). El Paso called on FERC to act by Saturday (March 29) for service on Monday (April 1), and for the second unit into service on Saturday (April 6).

U.S. District Court for the District of Columbia Judge Richard J. Leon has rejected Alaska’s challenge to the Clinton-era administration’s roadless rule, which bars road construction on 58 million acres of forest lands that are seen as critical to energy exploration and production, logging and other commercial activities. In an eight-page opinion, Leon said the complaint of the state of Alaska and Alaska Forest Association to overturn the roadless rule exceeded the six-year statute of limitations. “The court concludes that Alaska’s claims fail…because they are untimely…The six-year [statute of] limitations period…expired well before Alaska instituted the present action in 2011.” Because of this, the court granted defendants Department of Agriculture’s and SACC’s motion to dismiss the claims. Petitioners who delay filing requests for review on their own assessment of [justiciability] do so at the risk of finding their claims time-barred.” The U.S. Forest Service created de facto wilderness by prohibiting road building, logging and other development activities, such as oil and natural gas drilling, on about one-third of Forest Service lands. The rule was enacted in early 2001. The rule has survived challenges in a number of courts over the past decade (see NGI, Oct. 31, 2011, Dec. 12, 2011).

A Harris Interactive poll found that 60% of North Carolina voters support the use of hydraulic fracturing (fracking) in their state, and 74% support the Tar Heel State moving forward with offshore oil and natural gas exploration and production. The poll — released March 21 and conducted on behalf of the American Petroleum Institute — found 33% of respondents saying they “strongly support” fracking and 27% saying they “somewhat support” the practice. Meanwhile, 22% of the net respondents said they opposed fracking. The poll also showed 74% approval for exploration and drilling for oil and natural gas off the coast of North Carolina, while 21% were opposed. The poll surveyed 601 registered voters between March 7 and 10 and has a margin of error of plus/minus 4.0%, at 95% confidence.

Researchers from Cleveland State University said 13 counties in Ohio with significant Marcellus and Utica shale development — Ashtabula, Belmont, Carroll, Columbiana, Coshocton, Geauga, Guernsey, Harrison, Mahoning, Portage, Stark, Trumbull and Tuscarawas — saw only a 1.4% increase in job creation between 2011 and 2012. According to the 18-page report “Ohio Utica Shale Region Monitor” for March, job creation in the eight moderate shale counties was also 1.4%, while 44 non-shale counties saw a 1.3% increase in employment and 23 weak shale counties saw a 0.8% increase. But the report also found that retail sales jumped 21.1% in strong shale counties during that time frame. By comparison, retail sales in weak, moderate and non-shale counties grew 10.9%, 7.6% and 6.9%, respectively.

New rules to encourage Texas operators to conserve water used in hydraulic fracturing (fracking) processes were adopted by the Railroad Commission of Texas. Under the changes, no state permit would be needed if an operator were to recycle fluids on its leases or transfer fluids to another operator’s lease for recycling. The changes also clarify recycling permit application rules and “reflect existing standard field conditions for recycling permits,” the commission said.

Ameren Illinois has offered a legislative proposal that could, over 10 years, accelerate rebuilding aging natural gas delivery infrastructure while maintaining regulatory oversight. The utility maintains close to 1,250 miles of natural gas transmission lines and nearly 17,000 miles of delivery lines that feed service to more than 806,000 Illinois customers within a 43,700 square-mile territory in Central and Southern Illinois. Under the Natural Gas Modernization, Public Safety & Jobs Act (SB 1665/HB 2414), it would invest $330 million and create 250 jobs to boost efforts to update its gas transmission, distribution and storage facilities. The 10-year blueprint is designed to reduce nonhazardous leaks and trim maintenance costs while delivering long-term savings for customers. The Illinois Commerce Commission would monitor the process and level penalties if the utility fails to comply. A typical Ameren Illinois residential natural gas customer (using 785 therms annually) would experience an average increase of $3.70/year, or about 0.5% of the total gas bill, for each year of the 10-year program, the utility said.

Southern Natural Gas Co. LLC has asked the Federal Energy Regulatory Commission for the green light to make modifications to three compressor stations on its mainline system: the DeArmanville, Auburn and Selma stations. At the DeArmanville on Southern’s 20-inch diameter North Main Pipeline in Calhoun County, AL, Southern wants to spend $1.55 million to increase the bore diameter on all four compressor cylinders on North Main Units, replace pistons and rods to match the bore diameters and install four cylinder unloaders. The City of Austell, GA, has subscribed to all of the capacity that would be created by the DeArmanville modification — 3 MMcf/d. Construction may begin as early as June 1, and the project could be in service by November. The proposed modifications to Auburn and Selma stations would increase capacity on the South Main Pipeline by an additional 1.973 MMcf/d of firm transportation capacity. Weyerhauser Paper, the City of Grantville, GA, and Packaging Corp. of America have collectively subscribed to the entire amount to be created by the project (1.973 MMcf/d) and have executed firm agreements. The cost of the Auburn-Selma expansion is estimated at $1.3 million Construction may begin as early as June, and the project could be in service by November.

Privately held Marcellus GTL LLC plans to build a natural gas-to-liquids (GTL) processing plant in Blair County, PA, in the heart of the Marcellus Shale. At a press conference at the Altoona-Blair County Development Corp. headquarters in Altoona, the Gilberton, PA-based company said it is planning a GTL plant capable of producing about 84,000 g/d of gasoline and propane that it would market locally. The $200 million project will create about 120 construction jobs, 30 permanent jobs and 60 secondary jobs, according to CEO John Rich Jr. Construction is scheduled to be completed in 2015.

SandRidge Energy Inc. was able to come to terms with a hedge fund that sought to revamp the company’s leadership, but some shareholders apparently think the changes don’t go far enough. In a lawsuit filed in U.S. District Court for the Western District of Oklahoma, CEO Tom Ward and members of the board of directors are accused of breaching their fiduciary duties by allowing Ward “to usurp the company’s corporate opportunities by front-running the company and acquiring mineral rights to almost 500,000 acres through multiple leaseholds immediately next or adjacent to the company’s leaseholds.” The allegations echo those previously made by hedge fund TPG-Axon Capital, which recently reached a settlement with SandRidge (see NGI, March 25). The hedge fund had said that it was “concerned” with the scale of WCT Resources LLC‘s involvement in the Mississippian Lime and by the “suspicious timing” of land purchases. Separately, four other lawsuits filed in the same court by shareholders over the past four months claim that SandRidge’s board “acted in the best interests of Ward rather than the interests of the company, caus[ing] the company to make major strategic missteps.” Those lawsuits have been consolidated and a hearing is scheduled April 9 in Oklahoma City.

Former Pennsylvania Gov. Ed Rendell urged New Yorkers, and in particular, Gov. Andrew Cuomo in a recent editorial in the New York Daily News to support high-volume hydraulic fracturing in their state. “We’re at an energy crossroads as a nation,” Rendell wrote. “If we choose to embrace natural gas, it will help us get past a number of significant economic and environmental challenges. On the other hand, if we let fear carry the day, we will squander another key moment to move forward together.” In Pennsylvania, he said regulators had “put in place strong oversight while allowing development throughout the Marcellus Shale, and the economic benefits were significant.”

An offshore reserve response team to control incidents in the deepwater Gulf of Mexico (GOM) has been formed by the Marine Well Containment Co. (MWCC) and Wood Group PSN. The team is to be made up of 100 personnel who would be activated if MWCC’s modular capture vessels are needed for a well control incident. The GOM systems would be able to operate in water depths of up to 8,000 feet and contain up to 100,000 b/d of liquids. The team primarily would be based in southern Louisiana and trained to operate and maintain equipment during a response.

North American-based units of Royal Dutch Shell plc and Volvo Trucks agreed to collaborate and coordinate on liquefied natural gas (LNG) technology in heavy duty commercial vehicles. Volvo plans to introduce an LNG engine next year, and officials described the Shell agreement as “global and nonexclusive,” covering issues such as fuel specifications and emissions performance. Using spark-ignited engines, Volvo plans to offer gas-powered versions of its VNM and VNL models for daycab trucks beginning this year; a 13-liter LNG engine for North America was introduced last year. The new engine is an “advanced high pressure diesel ignition technology” that would create “significant” fuel efficiencies when compared with spark-ignited NGVs, making it applicable to the long-haul trucking sector.

The Pennsylvania Department of Conservation and Natural Resources (DCNR) plans to hold an invitation-only meeting on Thursday (April 4) to discuss requests by Anadarko Petroleum Corp. and Southwestern Energy Co. to access mineral rights under the Clarence Moore tracts in the Loyalsock State Forest. The leaseholds total 25,621 acres. Invitations went to local stakeholders, including county commissioners, planners and municipal officials. Environmental groups, including the National Audubon Society and the Responsible Drilling Alliance, were also invited. The tracts were at the center of a legal dispute that began in the early 1980s and ended with in 1999 with a ruling in the case Estate of Clarence Moore and Pennlyco Ltd. v. Pennsylvania and DCNR by the Pennsylvania Board of Claims. The Loyalsock State Forest comprises 114,494 acres in Bradford, Lycoming and Sullivan counties.

North Dakota lawmakers continue holding hearings and debating the merits of energy bills to create incentives for less associated gas flaring at the wellhead and to provide tax relief for oil and gas producers, according to the Department of Mineral Resources. Director Lynn Helms reportedly said the flaring bills (HB 1134 and SB 2370) would offer property tax exemptions for gas gathering systems. Helms also applauded HB 1134 for providing incentives for more gathering systems. “It may not do anything more than offset the rising costs of getting pipeline easements, but that has become big business in western North Dakota.”

The U.S. unit of Australia’s Aurora Oil & Gas Ltd. has raised its 2013 guidance for Eagle Ford Shale well count by 25-30% and said it plans to spend $430-465 million this year on drilling and related infrastructure. The company expects to spud 45-50 net wells, including 30-32 on nonoperated Sugarkane acreage (Marathon Oil Corp. is the operator) and 14-19 net wells on soon-to-be-acquired operated acreage. The forecast for the operated acreage presumes one rig beginning work around the middle of the year and a second rig being added shortly thereafter.

The Midwest Independent System Operator (MISO) has identified the need for closer coordination with the region’s natural gas system, according to Executive Vice President Clair Moeller. She told a House panel MISO was committed to “coordination between the electric and natural gas sectors” in the grid operator’s region, which covers 11 states and the Canadian province of Manitoba. “Sustained low natural gas prices in combination with compliance requirements for Environmental Protection Agency regulations are driving a transition to more reliance upon gas-fired generation in the MISO footprint.” MISO analyses indicated “significant investments in infrastructure expansion may be required to keep pace with growing demand — identified potential pipeline capacity shortfalls under peak demand days in the MISO system.”

D&L Energy Inc. plans to pursue its appeal before the Ohio Oil and Gas Commission because the Ohio Department of Natural Resources‘ (ODNR) decision to shut down the company was “a gross violation of due process,” according to attorney Michael Cyphert. He claimed that D&L was being unjustly punished by ODNR’s Division of Oil and Gas Resources Management, after oilfield waste was illegally dumped into waterways near Youngstown in late January (see NGI, Feb. 11). Former CEO Ben Lupo faces one charge of violating the federal Clean Water Act (see NGI, Feb. 18). A hearing for the appeal is April 12, with merit hearings scheduled for May 22 and 23.

U.S. Rep. Tim Ryan (D-Ohio) recently met with German Chancellor Angela Merkel to discuss Germany purchasing liquefied natural gas from the United States. Russia is currently Germany’s largest supplier of natural gas. “…[W]e had an opportunity to speak about the issue of our natural gas supply in Ohio,” Ryan said. “I believe she is very interested in increasing competition for natural gas and buying it from a strong strategic ally that shares their values, especially an appreciation for the rule of law.” All of Germany’s gas comes to the country via pipeline; however, Germany is bordered in part by the North and Baltic seas.

©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.