Vanguard Natural Resources LLC agreed to acquire natural gas properties in South Texas for $53.4 million in cash and stock from an affiliate of the Lewis Energy Group. The properties have estimated net proved reserves of 20 Bcfe, of which approximately 98% is natural gas and 65% is proved developed. Lewis will continue to operate the wells and the undeveloped portion of the properties, which Vanguard and Lewis will jointly develop. Upon closing, Vanguard will assume from Lewis natural gas swaps and collars based on Houston Ship Channel pricing for approximately 85% of the estimated gas production from existing producing wells for the period July 2008 through December 2011. Vanguard expects to finance the cash portion of the acquisition with borrowings under its existing credit facility. The transaction is scheduled to close before the end of July.
Houston-based Enstor Inc., a unit of Spain's Iberdrola SA, will begin accepting binding bids on Aug. 6 for firm storage capacity at its Caledonia Gas Storage Field in northeast Mississippi. Bidding will close at 5 p.m. CDT on Aug. 20. Earlier this month FERC approved Caledonia Energy Partners LLC's (CEP) proposal to expand to 16.9 Bcf its 11.7 Bcf storage facility in Lowndes County, MS (see NGI, July 21). The facility directly connects with Tennessee Gas Pipeline's 500 Leg, which delivers 2 Bcf/d to markets in the Northeast, Southeast and Ohio Valley regions. Caledonia proposed constructing and operating facilities in two phases in order to expand the Caledonia Field storage facility. In the first phase the company will develop the County Line Field, a depleted reservoir approximately two miles northeast of the Caledonia Field, as an additional field capable of storing approximately 1.6 Bcf of working gas. Caledonia plans to construct one injection and withdrawal well with two horizontal lateral sections and about 1.8 miles of eight-inch diameter pipeline to connect the County Line Field to the Caledonia Field. In the second phase, Caledonia plans to install 10,000 hp of compression in a new compressor building within the existing compression station at the Caledonia Field. Caledonia went into service last year (see NGI, May 7, 2007). At start-up the facility had an initial maximum withdrawal capacity of 330 MMcf/d and a maximum injection capability of 260 MMcf/d. The Federal Energy Regulatory Commission (FERC) gave environmental clearance for CEP to convert what was then a nearly depleted natural gas reservoir into the Caledonia storage facility more than three years ago (see NGI, Feb. 14, 2005). Interested parties should contact Tom Van Matre at (281) 374-3054 or e-mail email@example.com. Information about the open season will be available at www.enstorinc.com by Aug. 6.
Chesapeake Energy Corp. is underwriting www.Shale.tv, an on-line video channel which will "provide a platform for in-depth information, discussion and analyses about the Barnett Shale and other shale natural gas plays in the U.S.," according to the website. Despite Chesapeake's role, the site's creators "hope to provide thorough, accurate and independent information about the complex issues and opportunities of developing natural gas domestically." The television-style programming on Shale.tv will be led by managing editor Tracy Rowlett, who was previously a news anchor at KTVT-TV in Dallas. Chesapeake has promised not to meddle in the project and journalists set to work on the site's three hours of new programming each day have been promised editorial independence, according to a story in The Wall Street Journal. Last year Chesapeake CEO Aubrey McClendon and Chesapeake founded the American Clean Skies Foundation and put former Oklahoma Corporation Commission Chair Denise Bode in charge (see NGI, July 23, 2007). Earlier this year the organization published the first issue of its magazine and unveiled Clean Skies TV, an Internet-based television channel (see NGI, April 14). Earlier this month Chesapeake sold its interests in 90,000 net acres of leasehold and natural gas properties in the Arkoma Basin of the Woodford Shale to BP America Inc. for $1.75 billion, enabling it to redeploy capital to its Barnett, Haynesville and Marcellus shale plays and improve its capital structure (see NGI, July 21).
The Black Warrior Storage Project in Mississippi has been slated for an environmental assessment, FERC said. The project, which would provide up to 24.7 Bcf of working gas capacity, is being developed by Southeast Gas Storage LLC (SGS), an affiliate of El Paso Corp.'s Tennessee Gas Pipeline Co. Black Warrior would use a nearly depleted oil and gas reservoir in Monroe and Lowndes counties, MS. "These facilities would consist of new natural gas pipeline, abandonment by removal of existing pipeline, new existing injection/withdrawal wells, new gathering pipelines, a new salt water disposal pipeline, conversion of existing gas wells to observation wells, a new salt water disposal well, a new compressor station and a new meter station," staff of FERC said. Southeast held an open season for the project last spring and at the time said the facility would connect with Tennessee's 500 Line, downstream of its Columbus Compressor Station in Zone 1, through a new 24-inch diameter pipeline. Based on the initial project design, the high-deliverability, multi-cycle facility would provide up to 333 MMcf/d injection rates and 375 MMcf/d withdrawal rates (see NGI, April 21). FERC's scoping process, during which it will gather information from the public and interested agencies on the project, will close on Aug. 20. The company is seeking certification of the project by Dec. 31 to achieve in-service in June 2010. Spokesman Richard Wheatley told NGI that the company received expressions of interest in more than 60 Bcf of working capacity during the open season. The company is currently negotiating precedent agreements, he said.
The Kern River Gas Transmission Co. 2010 Expansion Project has been set for environmental assessment by the FERC. The project would involve new facilities as well as improvements to existing facilities in Lincoln and Uinta counties in Wyoming and San Bernardino County, CA. Proposed modifications would increase summer design capacity on the Kern River system from 1,731,126 Dth/d to 1,876,126 Dth/d. The company held a supplemental open season earlier this year for the project (see NGI, Feb. 25), which followed an open season held late last year. According to FERC, Kern River is proposing one new 20,500 hp gas-powered compressor unit and the restaging of five compressor units at the existing Muddy Creek Compressor Station in Lincoln County. The company also is proposing to restage two compressor units at the Painter Compressor Station in Uinta County and install additional metering facilities at the Opal Meter Station in Lincoln County and at the Kramer Junction Meter Station in San Bernardino County. Kern River also would increase the maximum allowable operating pressure (MAOP) of its 1,380 miles of pipeline from 1,200 pounds per square inch gauge (psig) to 1,333 psig and increase the MAOP of the meter and compressor stations along its system from 1,250 psig to 1,350 psig. Kern River's pipeline runs between southwestern Wyoming and Southern California and delivers more than 1.7 Bcf/d to markets in Utah, Nevada and California. Kern River is a subsidiary of MidAmerican Energy Holdings Co.
The Public Utilities Commission of Ohio (PUCO) approved Columbia Gas of Ohio's request to implement demand-side management (DSM) programs, subject to approval of a DSM cost recovery rider proposed in the company's pending rate case. The DSM program was part of a stipulation filed in Columbia Gas of Ohio's gas cost recovery audit proceeding and adopted by the PUCO in January. In addition to the DSM program, the stipulation provided for a $36.5 million credit to customers and a wholesale gas supply auction. The agreement required Columbia to file a DSM application developed by the company, PUCO staff, the Ohio Consumers' Counsel and other stakeholders by July 1. The program would be in effect from 2009-2011 and would implement energy efficiency programs for all residential and commercial customers. At the end of 2011 the program is expected to achieve an energy usage reduction of 0.75-1% of Columbia's total annual residential and commercial jurisdiction tariff sales, adjusted for weather. Included in the package approved by PUCO this week were programs that will provide low-cost energy audits and rebates to residential customers to offset the cost of energy efficiency upgrades; provide free training to builders on ways to best build efficient homes in Columbia's service territory; offer rebates of $25 for Energy Star programmable thermostats and $10 for ultra-low-flow shower heads; and provide rebates to small businesses moving to higher-efficiency models of existing or newly purchased equipment. A copy of the PUCO finding and order and the stipulation is available at www.PUCO.ohio.gov in the "Docketing Information System" under Case No. 08-833-GA-UNC.
Missouri and Kansas regulators have agreed to settle two natural gas leak disputes with Southern Star Central Gas Pipeline Inc. for $9.6 million, regulators said. Southern Star owns and operates a 6,000-mile pipeline that transports gas from the Rocky Mountain and Midcontinent regions to metropolitan areas in Kansas and Missouri. Several of the company's pipelines enter Missouri to serve the Kansas City metropolitan area, as well as St. Louis, St. Joseph, Springfield and Joplin, MO. In a filing before FERC, Southern Star sought to recover costs from two gas leaks: at one of its main transmission pipelines near Hutchinson, KS, in January 2007; and from a ruptured pipeline at Southern Star's McLouth Storage Field in August 2007. According to the Missouri Public Service Commission (MPSC), losses of small amounts of natural gas in transmission systems are not unusual, and these costs are typically absorbed in the overall price for gas charged by local distribution companies. Pipeline companies annually file requests with FERC to pass on costs of lost gas to the company's natural gas transportation customers, MPSC noted. However, because the Southern Star losses involved "major" leaks and ruptures, the MPSC and the Kansas Corporation Commissionintervened in the FERC case and won. According to the MPSC, the settlement will save Missouri consumers an estimated $4 million in future natural gas costs.
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