NGI The Weekly Gas Market Report

Briefs -- Sempra | Impulsora Pipeline | Pennsylvania Protest | Sunoco Logistics | Columbia Gas Transmission | Alaska LNG

San Diego-based Sempra Energy's Mexico-based unit Infraestructura Energetica Nova, SAB de CV (IEnova) has completed its acquisition of a 50% interest in a group of energy pipelines and an associated storage terminal from Mexico's Petroleos Mexicanos (see Daily GPISept. 22). IEnova paid $1.14 billion to buy out interest in the Gasoductos de Chihuahua joint venture.

Impulsora Pipeline LLC has asked FERC for authorization to begin construction of U.S.-Mexico border crossing facilities now that it has received the final regulatory authorization necessary from the International Boundary and Water Commission. The company wants to begin construction on Monday (Oct. 3). In June the Federal Energy Regulatory Commission approved amendments to an authorization it previously granted Impulsora for the border crossing facilities in support of its pipeline project to carry natural gas from the Eagle Ford Shale to markets in Mexico [CP16-70] (see Daily GPIJune 17July 2, 2014; Shale DailyMay 15).

Roughly 150 protesters were at the Pennsylvania Capitol in Harrisburg on Tuesday for a rally urging lawmakers to pass legislation that would make it difficult for oil and gas companies to deduct post-production costs from royalty checks. Lawmakers have tried but failed for years to pass legislation to clarify the state's Guaranteed Minimum Royalty Act of 1979, which sets forth the minimum payment to landowners but doesn't address marketing costs and how they should be factored into royalties. Bradford County, PA, has launched a campaign to pressure lawmakers into passing state HB 1391, which may be considered in October (see Shale DailySept. 9). The industry has fought against the legislation, claiming contractual disputes should be settled in court.

Sunoco Logistics Partners LP has struck a $760 million deal to acquire Vitol Group's Permian Basin crude oil system in West Texas that is set to close by the end of the year. The transaction includes a 2 million bbl crude oil terminal in Midland and an oil gathering and mainline pipeline system in the Midland sub-basin, which includes an acreage dedication from a Permian producer. Also included are Vitol's oil purchasing and marketing business in West Texas. The acquisition also would provide Sunoco Logistics 100% of SunVit Pipeline LLC, a 50-50 joint venture with Vitol that connects the Midland terminal to the partnership's Permian Express 2 pipeline. In connection with the acquisition, Energy Transfer Partners LP and Energy Transfer Equity LP, owners of the partnership's general partner Sunoco Partners LLC, agreed to reduce incentive distributions by $60 million over a two-year period. The financial assistance "provides us with expected accretive economics for this strategic acquisition," Sunoco Logistics CEO Michael J. Hennigan said.

The Federal Energy Regulatory Commission said it will prepare an environmental assessment (EA) for Columbia Gas Transmission's proposed Central Virginia Connector Project in Louisa and Goochland counties in Virginia [CP16-493]. Columbia has proposed replacing three Solar Saturn Units (1,350 hp each) with one Solar Centaur 50 unit (4,050 hp) at the existing Louisa Compressor Station, converting the replaced units to standby, increasing the certificated horsepower of the compressor station to 6,130 hp from the current 4,050 hp, and other associated modifications. The project would modernize the compressor station and provide an additional 45,000 Dth/d of firm transportation service to two shippers, according to Columbia's application. Construction is scheduled to begin in October 2017 with a scheduled in-service date of Oct. 31, 2018. FERC will accept public comments on the project through Oct. 27.

Alaska Gov. Bill Walker and members of his oil and gas team met in South Korea with the U. S. Ambassador and key government and company officials about potential offtake, investment and partnership opportunities in Alaska's liquefied natural gas (LNG) project. "Korea spends at least $10 billion on LNG every year," Walker said. "Alaska reinjects twice the amount of natural gas that the entire country of South Korea uses every day. That gives us an indication of the significant potential annual revenue for the state." Korea currently imports liquefied natural gas from the Gulf of Mexico and the Middle East, where shipments can take up to 25 days to arrive. Importing from Alaska would significantly shorten the delivery time -- to about eight days, according to Alaska officials. "Alaska's location makes our project strategically advantageous to Korea, one of the world's top LNG consumers," Walker said. "We were able to confirm during our meetings that the Asian market will be looking for new sources to begin supplying LNG no later than 2023 -- which matches the Alaska LNG market delivery window."

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