As natural gas production in Michigan posts its 14th consecutive year of decline, a Michigan Public Service Commission (PSC) report projects interstate pipeline deliveries to the state will be 664.2 Bcf in 2011, a 14.2% increase. The state's production is projected to decline by 5.5% to 133.5 Bcf in 2011, according to the PSC's "Summer 2011 Energy Appraisal." Gas sales in the state are projected to be 780.7 Bcf this year, an increase of 2.4% over 2010 sales and 11.3% over 2009 sales, based on an assumption of normal weather. Residential home heating is seen as the driver for consumption growth as the 2010-2011 winter season was 3% colder than normal, the PSC report said. Despite increased sales, prices should remain relatively flat, the report said. "...[T]he continued growth in estimated and proven natural gas reserves is having a dampening effect on inflationary forces."

Cabot Oil & Gas Corp. passed the 400 MMcf/d mark in the Marcellus Shale recently thanks capacity additions brought on by an upgrades at its compression station in northeastern Pennsylvania. Because of additional compression and dehydration, and a second suction line at its Lathrop Compressor Station, Cabot increased its Marcellus production to 420 MMcf/d from 69 wells, up from 310 MMcf/d from 67 wells, in a single day. Infrastructure bottlenecks continue to hamper production growth, though. Cabot CEO Dan Dinges said production in the Marcellus will likely remain flat until the Williams Springville Gathering System comes online sometimes around the end of the year and other pipeline capacity additions come online in 2012.

Mexico national oil company Petroleos Mexicanos (Pemex) has drilled the deepest well in its history at the deepwater Lakach field in the Gulf of Mexico, and estimates the field may contain 400 to 600 Bcf in gas and condensates. In a translated statement, Pemex said the Piklis-1 well is located about 144 kilometers (89 miles) northwest of the city of Coatzacoalcos in the state of Veracruz. The well was drilled to a water depth of 1,928 kilometers (6.33 million feet) and a total depth of 5,431 kilometers (17.8 million feet), both record depths for the company.

The Texas Senate passed SB 20, creating a natural gas-fueled vehicle transportation corridor in what is known as the "Texas Triangle." The region encompasses Austin, Dallas/Fort Worth, Houston and San Antonio. Within the triangle vehicle refueling stations are to be eligible for grants to be awarded by the Texas Commission on Environmental Quality (TCEQ). Stations with the capability to offer compressed natural gas and liquefied natural gas are to enjoy a preference in grant decisions. The bill was previously passed by the House. The legislation is aimed at cutting vehicle emissions in the region and boosting the Texas economy. According to an analysis of the bill, "TCEQ would be required to establish and administer the Texas natural gas vehicle grant program to encourage an entity with a heavy-duty motor vehicle to repower the vehicle with a natural gas engine or replace the vehicle with a natural gas vehicle."

Louisiana parishes overlying the Haynesville Shale "are awash in money;" others, not so much, an economist told NGI. As producers set their sights on more lucrative shale plays, beneficiaries of the North Louisiana shale boom would be wise not to build the shale revenue into their budgets, said economist Loren Scott of Baton Rouge, LA-based Loren C. Scott & Associates Inc. DeSoto, Red River, Bossier and Caddo parishes (and to a lesser extent Webster Parish) have enjoyed a significant bump in property tax revenue. Scott said he "...tried to caution [parish officials]...to primarily use this money for one-time types of expenditures, like improvements in your school buildings, your roads and things like that and to be very careful about building this into your salary structure." There's reason for caution because producer interest has turned away from the Haynesville as acreage is held by production and other plays offer more attractive returns, Scott said. Because the Haynesville is deep (read, expensive to drill) and dry (no higher-priced natural gas liquids to boost revenue), the economist has projected that activity in the Haynesville will be declining through about 2013.

The Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) released the results of a nearly year-long investigation into the cause of a September 2010 fire aboard a Mariner Energy Inc. oil and natural gas platform that forced its crew to evacuate. A BOEM accident investigation panel concluded that the fire was caused by the collapse of a fire tube located inside the platform's heater-treater -- a nearly 30-year-old piece of equipment, which uses heat from a fire tube as well as chemicals and electricity to separate oily water emulsions into oil and water. The fire occurred approximately a month before Houston-based Apache Corp. merged with Mariner Energy (see NGI, Sept. 6, 2010).The accident team said the fire tube had been weakened over time by several factors, including heat, corrosion and pitting. Moreover, the investigators found that after the platform lost primary power due to the fire, the emergency generator failed to start and supply power to the firewater pump, leaving the 13-member crew without a system to fight the fire. As a result, investigators said, the crew was forced to evacuate the platform but was safely rescued by the U.S. Coast Guard. The BOEM panel recommended that several "Incidents of Non-Compliance" be issued to Mariner Energy, which may be used as the basis for future civil penalties, the agency said.The Mariner Vermilion 380 platform was located 100 miles south of Vermilion Bay, LA. It served seven natural gas and oil wells that were producing 9.2 MMcf/d of gas and 1,400 b/d of oil and condensate prior to the fire.

Moving their $8 billion stock-for-stock merger deal another step closer to the finish line, Exelon Corp. and Constellation Energy have filed an application for approval by the Federal Energy Regulatory Commission, which contained a list of divestitures aimed at eliminating any market power concerns held by regulators. First announced in late April, the merger would create a combined company that would have the nation's cleanest power generation fleet, with about 55% relying on nuclear power, 24% on natural gas and 8% on renewables, the partners said (see NGI, May 2). In the filing, the Exelon and Constellation commit that the combined company will, within 180 days after the closing of the transaction, enter into contracts to divest three Constellation generating stations totaling 2,648 MW of generating capacity. The facilities are located in the PJM market, which is the only market where there is a material overlap of generation owned by both companies. The generating facilities planned for divestiture are: Brandon Shores (Anne Arundel County, MD) -- 1,286 MW, primarily coal-fired; H.A. Wagner (Anne Arundel County, MD) -- 963 MW, coal-, natural gas- and oil-fired; and C.P. Crane (Baltimore County, MD) -- 399 MW, coal-fired. In addition, the combined company commits to sell 500 MW of baseload energy under contracts that will extend until 2015. The companies plan to seek shareholder approval for the transaction in the third quarter of 2011 and anticipate closing the merger in the first quarter of 2012.

The collapse of a strategic alliance between BP plc and Russia's largest producer, OAO Rosneft, would limit the options for the UK-based company and its other Russian partnership, TNK-BP, and would result in a negative impact on credit, according to Moody's Investors Service. In January BP agreed to swap $7.8 billion in stock with Rosneft and set up a joint venture to explore about 125,000 square kilometers in the South Kara Sea in the Arctic region, which may hold 100 billion boe of oil and gas reserves (see Daily GPI, Jan. 18). Talks collapsed after members of the TNK-BP consortium won a legal challenge blocking the alliance (see Daily GPI, May 10). BP and Rosneft agreed to continue to negotiate, but Rosneft also is said to be seeking an alternate partner. Among the likely suitors are ExxonMobil Corp., Royal Dutch Shell plc, Chevron Corp. and ConocoPhillips.

While the Pennsylvania Department of Environmental Protection (DEP) doesn't know if any companies are still delivering Marcellus Shale wastewater to treatment facilities in the state, it won't tolerate any "slackers," Secretary Michael Krancer told an audience in Pittsburgh. "We're going to put a scarlet letter on your chest," Krancer said during Steel Business Briefing's Shale Plays Tubular Conference. With stricter total dissolved solids (TDS) regulations in place since last year, most treatment facilities don't have the technical capability to keep accepting Marcellus wastewater, but 15 grandfathered facilities across the state kept taking the fluids (see NGI, May 23; April 25). To close that loophole, the DEP recently gave all drilling operators in the state until May 19 to voluntarily stop delivering wastewater to those facilities. The DEP is still verifying whether any companies are still making deliveries, Krancer said, but plans to ostracize any "outliers."

General Electric (GE) unveiled an advanced turbine technology that it said will allow greater flexibility and efficiency in combined-cycle natural gas-fired power plants. GE said its latest advance provides the flexibility of quick-start gas-fired peaking technology with the high efficiency of the state-of-the-art combined-cycle power plants. Those advantages currently exist only in separate plants, but GE claims it has developed an "unprecedented" combination of both and trademarked it as "FlexEfficiency 50," which is designed for a 510 MW combined-cycle power plant with a 61% fuel efficiency. It is the first product that GE has rolled out under its initiative to push clean energy technology advances.

The Republican-controlled Ohio House of Representatives has passed HB 133 by a 54-41 vote, which would open land owned by the state -- including state parks -- to oil and gas leasing and creates a five-member Oil and Gas Leasing Commission. The bill now moves on to the state Senate, which is also controlled by Republicans. Republican Gov. John Kasich reportedly supports HB 133 and said it would help Ohio handle an $8 billion deficit.

Norway's Norse Energy Corp. ASA has received regulatory approval from the New York Public Service Commission to sell two natural gas pipeline subsidiaries -- Norse Pipeline LLC and Nornew Energy Supply Inc. (NES) -- to Appalachian Transportation and Marketing LLC for $20.7 million. The deal is expected to close within the next week or two. Norse Pipeline is a 320-mile gathering system able to connect to more than 6,500 wells in Erie, Crawford and Warren counties in northwest Pennsylvania and neighboring Chautauqua and Cattaraugus counties in western New York. The network was originally constructed as the Project Penny gathering system by Columbia Gas Transmission Corp., and connects to Tennessee Gas Pipeline at Mayville, NY, and the National Fuel Gas Supply pipeline at Little Valley, NY. Meanwhile a 28-mile segment of the NES Pipeline connects Mayville and Jamestown, NY, and a four-mile-long gathering line runs to Faulkner, NY.

Triangle Petroleum Corp. said it has acquired about 42,000 net acres prospective for the Bakken and Three Forks formations in the Williston Basin, bringing its total net acreage position in the basin to 72,000 net acres and its net operated acreage to 51,000. The 42,000-net acre acquisition, called the Station Prospect, is in an undisclosed area of Montana prospective for both the Middle Bakken and Three Forks formations, Triangle said. It is largely contiguous and Triangle said anticipates operating 100% of all acquired acres. Due to ongoing leasing efforts and competitive concerns, Triangle said it is not disclosing the location of the Station Prospect or the price paid. Denver-based Triangle has assets in North Dakota, Montana and Eastern Canada.

Bellevue, WA-based Westmont Resources Inc. has purchased 3,400 total leasehold acres and 120 existing oil wells in the Marcellus Shale from AFDA Limited LLC, a UK-based lease consolidation firm. The leasehold spans southwest Pennsylvania and northwest West Virginia and contains 11 operational wells currently producing 0.6-0.9 b/d of oil per well, with total production averaging 7.7 b/d. The company plans to reopen another 33 orphaned oil wells and put them into production by the end of May, which could generate gross revenues of more than $105,000 per month. Westmont said its long term plans are to open 170 of the 212 oil wells it owns in the Marcellus and Chattanooga shale plays; use its technology to increase production six-fold to more than 5 b/d of oil per well, and to generate gross revenue of more than $2.29 million per month.

Bayswater Exploration & Production LLC said that it will partner with another Denver-based firm, Meagher Energy Advisors, to sell Niobrara shale acreage located in Banner County, NE at auction on June 23. The package includes 100% working interest (81% delivered net revenue interest) over 37,000 gross acres (35,000 net acres) in a contiguous block. A majority of the leases have five-year terms with an optional five-year extension. Bayswater currently has control in 50 sections with more than 50% working interest.

A Pennsylvania Senate committee has approved a bill (SB 995) that would require companies to provide to state and local authorities detailed emergency contact information for all of their wells in the state. Well operators would be required to register with the Department of Environmental Protection and local emergency management organizations unique global positioning satellite (GPS) coordinate addresses for each gas or oil well. Emergency response plans would also have to be filed with state and local authorities, and emergency information, including contact information for the operator and the address and GPS coordinates, would have to be posted at the entrance to every well site. The bill was introduced less than a week after a Chesapeake Energy Corp. well blowout in the Marcellus Shale in northeast Pennsylvania (see NGI, April 25).

In comments filed with the U.S. Environmental Protection Agency (EPA), Oklahoma Gas and Electricity (OG&E) strongly rejected the federal agency's plan to reduce haze in the state in favor of Oklahoma's own plan. EPA's approach would create billions of dollars of unnecessary utility costs, resulting in the largest rate increase in the utility's history, OG&E said. The utility comments were submitted in response to the proposed EPA rule that if adopted, would force Oklahoma's two largest utilities to add scrubbers to their coal-fired electric generation plants rather than adopt what OG&E considers a "more sensible" state plan for addressing the air pollution issue. In lieu of scrubbers, the state plan calls for the use of low-sulfur coal and gives the utilities flexibility to burn more natural gas and less coal as a means of meeting more stringent air pollution requirements. The proposed haze regulations pertain to visibility in national parks and wilderness areas and not to public health, the utility stressed in its filing, asking EPA to "rethink" its position and adopt the Oklahoma plan. OG&E said it expects an EPA final decision later this year.

Nonprofit gas marketer Citizens Energy Corp. gained California Public Utilities Commission (CPUC) approval to take a stake in San Diego Gas and Electric Co.'s (SDG&E) $1.9 billion Sunrise Powerlink transmission project, which would run from Imperial County into North San Diego County. At a cost of $83 million, Citizens Energy has an option to lease transportation rights on a 30-mile stretch of the Sunrise project, now under construction in Imperial County. The deal approved by the CPUC runs for 30 years, after which the transmission line capacity reverts back to the San Diego-based Sempra Energy utility.

The California Energy Commission has approved $16 million to fund a variety of projects demonstrating the state's continuing commitment to cleaner transportation fuel choices and added jobs in that emerging sector. State funds will leverage $9.6 million in private-sector matching money. Under the CEC's Alternative and Renewable Fuel and Vehicle Transportation program created by state law (AB 118), the projects are expected to reduce petroleum consumption, provide jobs, examine new technologies and lower the cost of alternative-fuel vehicles, a spokesperson said.

San Diego Gas and Electric Co. (SDG&E) has filed for state regulatory approval of three new power purchase contracts covering up to nearly 450 MW collectively from separate natural gas-fired peaking projects. With the gas-fired sources, SDG&E said it has supplies it can call on that reach full capacity in 10 to 15 minutes when there is an immediate need for the power. The projects include the three-unit, 300 MW Pio Pico Energy Center LLC project by the Apex Power Group; the 100 MW Quail Brush Generation Project by Cogentrix Energy LLC; and the 45 MW Escondido Energy Center LLC by Wellhead.

The Independent Oil & Gas Association of West Virginia (IOGAWV) has launched a new alliance, Just Beneath the Surface (JBTS), to provide the public with information and debunk myths about the industry. The launch took place at the University of Charleston's Triana Field -- a reclaimed gas well site that is now an athletic field -- and was attended by Democrats and Republicans from the state House of Delegates and the state Senate. JBTS said it has more than 1,000 businesses and individuals as members and it is encouraging others to register and join the alliance at www.justbeneaththesurvacewv.com. Membership in the alliance is free and open to the public, businesses and government officials.

Williams Partners LP (WPZ) has been awarded a contract by Hess Corp. to provide production handling services in the Tubular Bells field of the deepwater Gulf of Mexico (GOM). The partnership said it would use its proprietary Gulfstar FPS, a floating production system (FPS), which would be able to process up to 60,000 b/d of oil and 200 MMcf/d of gas. WPZ would design, construct and install the system, which could serve as a central host facility for other deepwater prospects in the area. The spar-based FPS uses traditional three-level topsides mated to a "classic" spar hull, which is expected to allow customers to reduce their cycle time from discovery to first production, said the partnership. Hess has a 40% stake and is operator of the Tubular Bells field, while BP plc owns a 30% interest and Chevron Corp. owns the remaining stake.

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