Occidental Petroleum Corp. (Oxy) has agreed to acquire the interest it didn't already own in some Permian and Piceance basin fields from Plains Exploration and Production Co. (PXP) for $1.29 billion. The transaction frees up cash that would allow PXP to develop its joint venture with Chesapeake Energy Corp. in the Haynesville Shale (see NGI, July 7). The Oxy agreement, which is expected to close by the end of the year, follows transactions announced late last year in which Oxy paid PXP $1.55 billion for half stakes in the West Texas and Colorado plays (see NGI, Dec. 24, 2007). The Permian and Piceance assets currently have net production of around 52 MMcf/d of gas and 4,300 bbl of liquids, or 13,000 boe/d. The properties have about 92 million boe of proved reserves weighted 69% to gas. About 45% of the properties are developed. In the first six months of 2008 Oxy produced more than 50 MMcf/d in the Piceance Basin. The Los Angeles-based producer said that with the PXP purchase, gas output would grow to at least 200 MMcf/d by 2010. Oxy's net acreage position in the Piceance Basin now totals 129,000 acres.
With a northeastern expansion of its Transcontinental Gas Pipe Line (Transco) recently approved, Williams filed an application with FERC to expand the pipeline to serve markets in the southeastern United States. New service from the proposed Mobile Bay South project would be available in the second quarter of 2010, subject to FERC approval. The project is designed to create 253,500 Dth/d of southbound, year-round firm transportation capacity on the Mobile Bay Lateral from Transco's mainline at Station 85 near Butler, AL, to its interconnect with Gulfstream Natural Gas System in Coden, AL. Last year Williams successfully concluded three open seasons, including one for expansion of Transco's 85 North pool (see NGI, Nov. 5, 2007). That project will provide customers in the Southeast with access to growing supplies at Station 85. The target in-service date for the 85 North project is May 2011 (see NGI, Sept. 24, 2007). The Mobile Bay South project will require construction of a new 9,470 hp compressor facility at Station 85. Williams estimates that the project facilities will cost approximately $37 million. In August, FERC approved William's Sentinel project to expand Transco to serve markets in the northeast. The Sentinel project was designed to increase Transco firm capacity by 142,000 Dth/d in two phases. Phase I would provide 40,000 Dth/d as early as Nov. 1; Phase II would provide 102,000 Dth/d by Nov. 1, 2009. The project requires adding or replacing approximately 18 miles of pipe at various locations in Pennsylvania and New Jersey, in addition to compressor facility modifications at Transco Station 195 in Delta, PA. Transco estimated the Sentinel project cost at $155 million.
SGR Holdings LLC subsidiary SG Resources Mississippi LLC (SGRM) closed a $100 million credit facility for its Phase III expansion of the Southern Pines Energy Center high-deliverability natural gas storage facility in Greene County, MS, and Phase II work is on schedule. SunTrust Robinson Humphrey was the sole lead arranger for the financing of Phases I and II as well as for the syndication of the new $100 million credit facility. The first cavern began commercial operation on May 1 and a second cavern is scheduled for service early in the second quarter of 2009. When completed, Southern Pines will provide 30 Bcf of storage in three caverns and will be capable of supporting withdrawal rates of up to 3.0 Bcf/d and injection rates of up to 1.5 Bcf/d to provide reliable high-deliverability peaking and balancing services to markets in the Gulf Coast, Southeast and Northeast regions of the United States. Southern Pines was positioned so that it would have direct interconnects to Destin Pipeline Co., Gulf South, Florida Gas Transmission Co. (FGT) Zone 3 mainline, Transcontinental Gas Pipe Line Corp.'s Transco Mobile Bay Lateral 4a and the Southeast Supply Header System. Each of the interconnections uses bidirectional metering facilities. In addition, the storage facility provides indirect access to Southern Natural Gas (Sonat), Gulf South Pipeline, Gulfstream Natural Gas System and Tennessee Gas Pipeline by way of Destin and another new interconnection with Gulfstream via the Mobile Bay Lateral. In June SG Resources Mississippi asked FERC for permission to further increase the capacity of Southern Pines to about 43 Bcf (see NGI, June 16). The company asked FERC to amend its original certificate that was issued in October 2002, which authorized the construction of a combined 12 Bcf of working gas capacity in two underground caverns at its Southern Pines Energy Center and to amend a subsequent certificate issued in January 2007, which added a third cavern and raised the combined working gas capacity of the facility to 24 Bcf (see NGI, Jan. 29, 2007; Oct. 14, 2002). Houston-based SGR Holdings owns a 60% interest in SG Resources Mississippi. An entity owned by ArcLight Capital Partners LLC holds the remaining 40% interest.
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