NGI The Weekly Gas Market Report / NGI All News Access

Industry Briefs

Natural gas continued to drive the strong drilling pace in the United States during the first quarter of the year, according to a report issued by the American Petroleum Institute (API). Of the 13,497 wells and dry holes completed in the first quarter, natural gas wells accounted for more than half -- 7,459 wells, the API said. While natural gas activity was down 1% from year-ago levels, it was nearly double the drilling activity of a decade ago, the producer group reported. An estimated 4,577 oil wells were completed during the first quarter, up 12% from last year's comparable period. It was the highest first-quarter estimate of oil activity since 1986, the API said. Total oil well, natural gas well and dry hole activity rose 4% to 13,497 wells during the first three months of the year, it noted. Total estimated exploratory well completions, accounting for nearly 15% of total estimated well completions, rose 37% in the first quarter from the comparable period in 2007, according to the API. Estimated exploratory natural gas wells and dry holes increased 60% and 20%, respectively, during the quarter from year-ago levels. API also reported that total estimated drilling footage rose 1% to 79,804,000 during the first quarter from the same period in 2007. This was the highest estimated first-quarter footage ever, it said.

Enterprise Products Partners LP said operations at its Pioneer cryogenic gas processing facility in Lincoln County, WY, resumed have following completion of repairs. Operations at the facility were suspended following a release of natural gas and subsequent fire in a small gas handling area within the plant on March 27 (see NGI, March 31). No injuries resulted from the incident. The Pioneer cryogenic facility is currently processing approximately 560 MMcf/d and extracting approximately 20,000 b/d of natural gas liquids (NGL), Enterprise said. Prior to the incident, the facility was processing about 550 MMcf/d and extracting approximately 26,000 b/d of NGL. Located near the Opal Hub in southwestern Wyoming, Pioneer is designed to process up to 750 MMcf/d of natural gas and extract as much as 30,000 b/d of NGL. NGL extracted at the Pioneer facility is transported on the partnership's Mid-America Pipeline and ultimately to Enterprise's NGL fractionators in Hobbs, NM, and Mont Belvieu, TX. While repairs were being made natural gas was diverted to Enterprise's adjacent silica gel processing plant. Those volumes have now been redirected back to the cryogenic facility.

Colorado Gov. Bill Ritter said he will push for a ballot measure this November to levy higher severance tax on state oil and natural gas development to fund college scholarships and protect wildlife habitat. The proposal, if enacted, would increase Colorado's total effective taxes on the oil and gas industry to between 8% and 9%, up from the current 5.7%, according to the governor. The proposal would eliminate a credit for property taxes that energy companies now deduct from their severance tax bills. Colorado now estimates the property tax credit. Colorado Oil and Gas Association President Meg Collins said it was "awfully risky to raise taxes, particularly when it looks like the economy nationwide and in Colorado could be slipping toward a recession." The initiative needs 76,047 registered voters' signatures before it is put on the ballot.

Devon Energy Corp. and BP plc have exercised their rights of first refusal and blocked Anadarko Petroleum Corp.'s plans to sell StatoilHydro a quarter stake in a promising deepwater Gulf of Mexico (GOM) discovery. Instead, Devon, now with a 26.67% stake, and BP, which will own 73.33%, will share the Kaskida discovery. Kaskida, which is about 250 miles southwest of New Orleans, is located in the Lower Tertiary trend of the GOM on Keathley Canyon Block 292 in 5,860 feet of water. Anadarko held a nonoperated 25% stake, and the sale to StatoilHydro was part of an agreement announced in March (see NGI, March 10). As joint stakeholders in Kaskida, BP and Devon were given preemption rights. No financial details were disclosed. StatoilHydro had agreed to pay Anadarko $1.8 billion for the Kaskida Unit interest as well as some assets in Brazil. Anadarko said the Brazil asset sale remained on track. Devon's Stephen J. Hadden, senior vice president of exploration and production, said the Lower Tertiary Trend "is an important part of Devon's long-term exploration program..." The Kaskida discovery, he said, "is the largest of our four Lower Tertiary discoveries to date." By 2010, Devon expects to begin production from is Cascade discovery, which also is part of the trend.

Idaho regulators have suspended a requested effective date for Spokane, WA-based Avista Utilities' proposed natural gas and electricity rate increases for its Idaho customers. The Idaho Public Utilities Commission (PUC) set May 9 as the deadline for intervenors filing in the case in which Avista is seeking overall increases of 15.4-16.5% for electricity and no more than 3.3% for gas. The PUC, which calculates the request at 15.8% (electric) and 5.8% (gas), has scheduled a prehearing conference on the case for May 14 to outline who the intervening parties are, the issues to be covered and the schedule for filing testimony and hearings. Avista serves 120,000 electric customers and 71,700 natural gas customers in northern Idaho. In seeking the increases, Avista has pointed to its higher costs for power supply, capital investment in upgrading aging infrastructure, hydroelectric relicensing and installation of advanced metering systems. In its April 4 announcement of the Idaho filing, Avista said its request would increase residential bills 15.9% (electric) and 6.5% (gas), resulting in average monthly increases of more than $10 (electric) and nearly $5 (gas). What Avista called "significant increases in fuel and purchased power" are the primary drivers for the higher electric rates, the utility said. Since the fall of 2004 power system expenses in Idaho are up $94.3 million, Avista said. A primary driver for the higher gas costs is the utility's share of the ongoing upgrading of Jackson Prairie storage field in southwest Washington state. PUC staff have begun their review and investigation, which the regulatory commission estimates will take at least six months.

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus