NGI The Weekly Gas Market Report

Briefs -- Vaquero Midstream, Ohio Legislation, Carnero Gathering, Statoil Taxes

Vaquero Midstream has commissioned the 200 MMcf/d Caymus I Natural Gas Processing Facility in Pecos County, TX. The cryogenic plant is supported by long-term commitments with major producers and could be expanded with four additional 200 MMcf/d processing trains. It features oversized inlet liquids handling with condensate stabilization and storage, inlet compression to minimize field pressure, amine treating, propane refrigeration prior to cryogenic processing. The plant has the operational flexibility necessary to handle production from the Permian Basin's Avalon, Wolfcamp and Bone Spring formations for future drilling. Caymus I is supplied by 80 miles of a high-pressure gathering pipeline, consisting of 30- and 24-inch diameter pipe connecting Pecos, Reeves, Ward and Culberson counties to the facility and designed for volumes of more than 800 MMcf/d. A 16-inch diameter residue header connects multiple outlets at the Waha market, including connections with Atmos, Enterprise, Northern Natural Gas and Oneok's WestTex Transmission system connecting to the Roadrunner Gas Transmission Pipeline. The Vaquero 12-inch diameter natural gas liquids header was also commissioned with outlets connecting to Lone Star's West Texas Gateway Pipeline and Enterprise Chaparral systems. Vaquero was formed to target projects in the Permian, East Texas and Oklahoma (see Shale DailyAug. 22, 2014).

Ohio Gov. John Kasich has signed a bill to clarify the status of pending unitization applications for mineral rights owned by the Ohio Department of Transportation. The bill requires the Ohio Department of Natural Resources to issue unit orders 90 days after it is signed into law. Some of the applications have been pending for about two years. Unitization, similar to pooling, allows producers to gather landowners into a unit, in which they proportionately share royalties based on the acreage they own within it. Given the commodities downturn, HB 390 also allows an applicant to wait for up to two years before operations begin.

Sanchez Production Partners LP (SPP) has acquired the 50% interest in the Carnero Gathering LLC joint venture (JV) held by Sanchez Energy Corp.; Targa Resources Corp. owns the other half. SPP initially would pay $37 million and assume Sanchez Energy's remaining capital commitments to Carnero, estimated at $7.4 million. Carnero would own about 45 miles (10 miles of which remain under construction) of high-pressure natural gas gathering pipelines, known as the Carnero Gathering System, that connect SPP's existing Western Catarina Midstream system to pipelines in the Eagle Ford Shale in South Texas. Carnero would ultimately connect to a cryogenic natural gas processing plant under construction in La Salle County, TX (see Shale DailyOct. 5, 2015). The processing plant is expected to be operational in early 2017. Capacity on Carnero Gathering is held by Targa.

Marshall County, WV, has denied Statoil ASA's request that a roughly $353,000 property tax overpayment be refunded. Statoil said the overpayment resulted from a clerical error when it used production estimates instead of actual volumes to calculate its 2015 payment. State law does permit refunds for such clerical errors, but the West Virginia Tax Department told county commissioners that the company's miscalculation was a matter of negligence. The commissioners voted 2-1 last month to deny the refund.

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