NGI The Weekly Gas Market Report / NGI All News Access

Industry Briefs

Newfield Exploration Co. and Hess Corp. launched plans to jointly explore 140,000 gross acres of the Marcellus Shale. Financial details were not disclosed; the terms of the transaction are dependent upon Newfield and Hess finalizing additional agreements over the next few weeks, the companies said. The equal partnership would cover acreage primarily in Susquehanna and Wayne counties, PA. Newfield, based in Houston, would operate the venture. Newfield entered the Woodford Shale in 2003 and assembled 165,000 net acres. To date the producer has drilled close to 300 horizontal wells; current gross operated production is about 300 MMcfe/d. Marcellus drilling is not expected to begin until 2010. Newfield said this year's Marcellus Shale activities would be budgeted under its existing $1.45 billion capital expenditures.

The Federal Energy Regulatory Commission (FERC) issued a favorable environmental review of an Fayetteville Express Pipeline LLP's (FEP) project which would boost takeaway capacity from Arkansas' prolific Fayetteville Shale play to markets in the Midwest, Southeast and Northeast [CP09-433]. FEP, a 50/50 joint venture of Kinder Morgan Energy Partners LP and Energy Transfer Partners LP, proposes to build a 185-mile, 42-inch diameter pipeline from Conway County, AR, eastward through White County, AR, to an interconnect with Trunkline Gas in Quitman County, MS. The pipeline would also interconnect with Natural Gas Pipeline Company of America in White County; Texas Gas Transmission in Coahoma County, MS; and ANR Pipeline Co. in Quitman County. FEP filed its FERC application for the $1.3 billion project this summer (see NGI, July 6). The pipeline would have an initial capacity of 2 Bcf/d. FEP has secured binding 10-year commitments for 1.575 million Dth/d, including 1.2 million Dth/d from Southwestern Energy Services, a subsidiary of Southwestern Energy Co., and 375,000 Dth/d with an option for an additional 125,000 Dth/d from Chesapeake Energy Marketing Inc., an affiliate of Chesapeake Energy Corp. FEP said it hopes to receive a FERC certificate by December and begin construction in early 2010. It has targeted interim service for October 2010 and full service in January 2011.

Chesapeake Energy Corp.'s natural gas production in nonshale plays peaked in late 2007, fell by 16% in 2008 and is on track to be down more than a third (36%) by the end of this year, company executives said. During an analyst meeting executives with the Oklahoma City-based producer detailed how the independent has shifted its exploration focus to shale plays. Gas shale development and production from the emerging Granite Wash play in West Texas now account for more than 60% of the independent's total output. Even as gas prices fell, Chesapeake increased the rig count to 94 in its "big four" shale plays -- the Barnett, Haynesville, Marcellus and Fayetteville -- and in the Granite Wash. Meanwhile, Chesapeake's other onshore gas leaseholds lost a total of seven rigs in the past year. The rig shift has gone to the highest rate of return projects, to deploy drilling carries and to held-by-production acreage, the company noted. Gas output this year over 2008 totals is expected to be up 5-6%, which is up from a previous forecast of 4-5%. Increased development is planned in 2010, when the company expects to see output jump 8-10% from 2009. By 2011 the producer's output could be 12-14% higher than in 2010. The producer also said it would spend more than initially budgeted this year, or $3.15-3.35 billion, compared with an August forecast of $3-3.2 billion. However, cash flow for 2009 is lower than forecast in August: $5.3-5.6 billion, compared with $5.8-6.2 billion. Exploration spending in 2010 could jump to as much as $4.7 billion, the company said.

Rockies Express Pipeline (REX) said the pilot hole for its horizontal direction drill (HDD) at the Deer Creek Crossing between Lebanon and Clarington in Ohio is complete. However, remaining work on the HDD will not be complete by Nov. 1 as previously hoped, so service to Clarington will not be available then, REX said. The pipeline had warned recently that such a delay might be possible. Except for the Deer Creek Crossing, the segment of REX-East from Lebanon to Clarington is mechanically complete, REX said, and purging and packing of applicable sections have commenced. It expects to complete the crossing and begin service to Clarington "sometime during the month of November at full contracted capacity." Near the end of June REX began serving the Lebanon Hub in western Ohio (see NGI, July 6). The pipeline was previously forced to delay service to Ohio multiple times due to inclement weather and flooding, which hindered construction. Since REX service began to Lebanon, the market has seen Rockies basis spreads compress (see NGI, Aug. 31).

Owensboro, KY-based Southern Star Central Gas Pipeline. Inc. said last Friday that due to the fully subscribed status of its existing firm storage service it is seeking to expand the capacity of its Elk City storage field near Independence, KS. Southern Star had a successful open season earlier this year to expand its existing storage capacity by 4,000,000 Dth, with an increase in daily deliverability of 40,000 Dth/d. On Oct. 9 the company filed with the FERC for authorization to build the facilities necessary for the Elk City expansion. The open season was launched because Southern Star said it has received numerous requests over the years for new storage service. Southern Star experienced a successful open season for its Ozark Advance Expansion Project earlier this year for the expansion of firm transportation service in southwest Missouri. Southern Star will be expanding portions of its pipeline system to meet incremental demand from firm transportation shippers in this growing area of the Southern Star system. Southern Star noted that it had a successful open season for its Sedalia Pipeline expansion project earlier this year for the expansion of firm transportation service along its Sedalia Line (Line Segment 235) in western Missouri. The company said it will be able to meet incremental demand from firm shippers in this growing area of its system. Southern Star operates an interstate natural gas transmission system spanning more than 6,000 miles in the Midwest and Midcontinent regions of the United States. The company's pipeline facilities are located in Kansas, Oklahoma, Nebraska, Missouri, Wyoming, Colorado and Texas.

©Copyright 2009 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