Falcon Gas Storage Co. Inc. subsidiary NorTex Gas Storage Co. LLC started flowing gas through its newly constructed Worsham-Steed Pipeline, the company said. The system is a 60-mile, 24-inch high-pressure pipeline in the western portion of the Barnett Shale play in North Texas. Initial flow rates have ranged 150,000-200,000 Mcf/d and are expected to increase as gas injection activity accelerates at the Falcon's Worsham-Steed Gas Storage facility. Traversing Jack, Parker and Hood counties, the pipeline has a capacity of 450,000 Mcf/d, which can be expanded to 650,000 Mcf/d. The pipe connects with three export pipelines serving the North Texas market area -- Energy Transfer's Old Ocean pipeline, Enterprise Product's and Energy Transfer's North Texas Pipeline, and Atmos Energy's Line X pipeline. These pipelines serve markets from the Waha Hub in West Texas to the Carthage Hub in Northeast Texas, as well as the Dallas-Fort Worth metroplex and surrounding areas in North Texas, including the Barnett Shale. Ultimately, Falcon plans to connect the Worsham-Steed Pipeline with a total of 10 pipelines in the North Texas/Barnett Shale market area.

Dallas-based Pioneer Natural Resources Co. has discovered two new natural gas fields in one of its four onshore core areas, the Edwards Trend in South Texas. The independent said two new wells encountered 150-200 feet of vertical gas pay, and an appraisal well is drilling on one of the discoveries where 3-D seismic is available. Appraisal of the second discovery will begin after 3-D seismic data has been acquired and interpreted in 2008. To date, Pioneer has discovered eight new fields in the Edwards Trend, with most of its current production coming from the Pawnee Field, which is located on the reef of the trend. Pioneer's net gas production from the Edwards Trend now is about 60 MMcf/d, which is 50% higher than it was at year-end 2006. Average net gas production is expected to exceed the 30% annual growth rate targeted for 2007 and increase 25% next year based on current 2008 drilling plans, the company said.

The deepwater Gulf of Mexico (GOM) Tahiti project, one of the largest platforms of its kind, will be delayed about a year because of defective shackles in the mooring system, according to project sponsor Chevron Corp. First production is now expected by 3Q2009; it was originally scheduled to ramp up by mid-2008. Estimated production is expected to be about 70 MMcf/d of gas and 125,000 b/d of oil. Construction of the massive project began in late 2005, but a contractor discovered the mooring system problems in June after finding a problem on a similar installation for another producer (see NGI, July 2).

Nine companies were awarded contracts to deliver more than 91.6 Bcf, or 271,300 MMBtu/d, over five- or 12-month terms in the Minerals Management Service (MMS) royalty-in-kind (RIK) natural gas sale. Twenty-one companies tendered a total of 175 offers for the RIK gas, and nine companies were awarded contracts for the 13 sales packages offered. Winning bidders include Bear Energy LP, BG Energy Merchants, ConocoPhillips, Louis Dreyfus Energy Services, National Energy and Trade LP, PPM Energy Inc., Sequent Energy Management LP, United Energy Trading LLC, and Williams Power Co. The gas will be delivered in November to 13 offshore pipeline systems originating in the Gulf of Mexico (GOM) and will be destined for consumer and industrial use in the continental United States. The gas volume is enough to supply the average needs of nearly 1.2 million U.S. homes for one year. At the current gas price of about $7/MMBtu, the sales would equate to about $641 million in total gross revenues. Actual revenues will vary based on gas prices over the life of the contract. The gas sold in the RIK sale involves an aggregation of gas royalties taken "in kind" in the form of product, rather than "in value" or cash payments, from offshore federal leases in the GOM. MMS then sells the gas competitively in the open marketplace.

In response to what it said is growing demand to connect Columbia Gulf Transmission's diverse supply mix with growing markets in the southeast, NiSource Gas Transmission & Storage announced an open season for expanded capacity to Florida Gas Transmission. The project will expand Columbia Gulf's existing facilities near Lafayette, LA, by 180,000 Dth/day for a total deliverability of 300,000 Dth/day. The increase will be achieved through the addition of compression at Columbia Gulf's Rayne compressor station and pipeline facilities on its East Lateral in south Louisiana. The new service is projected to be available beginning June 1, 2008. Columbia Gulf is soliciting binding offers for firm contracts for transportation capacity sourced from the Columbia Gulf Mainline rate zone and delivered to the newly expanded FGT-Lafayette interconnect in Columbia Gulf's Onshore rate zone. Interested parties should submit bids for minimum contract terms of one year by Nov. 2 by contacting Beth Medlin at (713) 267-4756, bmedlin@nisource.com, or Pete Brastrom at (713) 267-4735, pbrastrom@nisource.com.

FERC gave Equitrans LP the green light to sell the bulk of its 87-mile Three Rivers Pipeline in western Pennsylvania to its distribution company affiliate, Equitable Gas Co., for an estimated $1.09 million. The pipeline subsidiary of Pittsburgh-based Equitable Resources plans to retain a 15.5-mile section of the pipeline, which it said was a "vital interconnection" with National Fuel Gas Supply Corp. The sale would involve the easternmost portion of the pipeline, which comprises 58 miles. In addition, it plans to abandon in place 13.3 miles of the pipeline, also known as Line H-156, and abandon the Pennview and Sleepy Hollow compressor stations for potential redeployment in other areas of its system. Equitrans acquired most of the pipeline from Three Rivers Pipeline Co., also an Equitable Resources' affiliate, in early 2000 for a net value of $4.2 million. The design capacity of the portion of the pipeline that it is seeking to abandon is 50,000 Mcf/d, but the actual throughput is only 35 Mcf/d, Equitrans said. The abandonment will ultimately reduce Equitrans' costs to its shippers, since it will allow the company to eliminate current operating and maintenance expenses of approximately $175,000 a year, and eliminate the potential need for estimated future capital expenditures of approximately $4.22 million for repair or replacement of these facilities, Equitrans said. Equitable Gas said it plans to operate the acquired pipeline as part of its existing local distribution network. It would become part of the company's Hinshaw pipeline, exempt from FERC jurisdiction.

The El Paso Western Pipeline Group said it will host discussions with customers that require nonuniform hourly flow rates and others that may be affected by nonuniform hourly flow rate operations, including those responsible for the operation of gas-fired electric generation facilities. The discussions are part of the company's efforts to meet the requirements of FERC's Order No. 698, which set down a number of communication protocols for interstate natural gas pipelines and public utilities, El Paso said. The FERC order required the implementation of communication protocols between interstate pipelines and power plant operators, defined as a party responsible for the gas requirements of a gas-fired electric generating facility, including the responsibility to coordinate the transportation and delivery of gas supplies to meet generation requirements. The standards also require communication protocols between pipelines and balancing authorities, defined as entities responsible for the integration of electric resource plans, the maintenance of electric load-interchange-generation balances, and the support of real-time electric interconnect frequency management. Pipelines and public utilities are required to implement the standards and file a statement demonstrating compliance by Nov. 1. El Paso said it believes its current communication procedures address most of the protocols raised in Order No. 698 but is interested in reviewing its current communication methods with customers, verifying their effectiveness and getting customer input on possible enhancements.

AGL Resources Inc. blamed lower volatility in the natural gas market for a dip in earnings from its Sequent Energy marketing division in the third quarter. The firm said that its third quarter 2007 earnings results are expected to be 16-18 cents/basic share, which is predicted to bring in full-year earnings for 2007 at the lower end of its previously announced guidance of $2.75-2.85/basic share."The reduction in natural gas price volatility has limited Sequent's opportunity to generate margins from storage and transportation arbitrage," AGL said. It expects Sequent's contribution "will be below the 2007 EBIT (earnings before interest and taxes) contribution range included in the company's previously announced earnings guidance, but will be partially offset by improved results in the company's other business segments," which have remained strong. While the company does not usually issue pre-earnings release warnings, company officials said it was important to keep stakeholders fully informed. AGL's 3Q earnings will be released on Thursday.

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