NGI The Weekly Gas Market Report / NGI All News Access

Industry Briefs

The U.S. Court of Appeals for the Third Circuit has refused to reconsider its decision to throw out a ban on oil and natural gas drilling in the Allegheny National Forest. Judge Jane Richards Roth denied a petition for panel rehearing and rehearing en banc that was requested by the Sierra Club, the Allegheny Defense Project (ADF) and Forest Service Employees for Environmental Ethics, which are appellants in the case Minard Run Oil Company v. United States Forest Service et al. (Case No. 1-09-CV-125, Appeals Docket No. 10-2332). Last September the appeals court's three-judge panel ruled that the U.S. Forest Service could not refuse to give operators permission to drill in the forest while an environmental impact study was being conducted (see NGI, Sept. 26, 2011).

Enterprise Products Partners LP said an open season has shown enough shipper support for its proposed Appalachia to Texas (Atex Express) ethane pipeline for the 1,230-mile project to move forward. The pipeline would deliver ethane from the Marcellus/Utica shale areas to the U.S. Gulf Coast. Chesapeake Energy Corp. is an anchor shipper on the project. Originating in Washington County, PA, the first leg of the system would involve construction of 595 miles of pipeline extending to Cape Girardeau, MO, closely paralleling an existing Enterprise pipeline. At Cape Girardeau, Enterprise would reverse a 16-inch diameter pipeline and place it into ethane service. Enterprise said it is negotiating right-of-way agreements and the project could be in service in early 2014.

Two Interior Department agencies have issued updated guidance to oil and natural gas companies operating in the Gulf of Mexico Outer Continental Shelf (OCS) on how to conduct archaeological resource surveys and prepare archaeological reports, based on new information about the likely location of historical resources. The new guidance (Notice to Lessee No. 2011-Joint G01) expands the number of zones in which assessment activities are required, according to the Bureau of Ocean Energy Management (BOEM) and sister agency Bureau of Safety and Environmental Enforcement (BSEE). Its focus includes areas where operators are already collecting high-resolution survey data for other purposes that can be used to further improve the understanding of archaeological resources without creating significant new data collection needs. The new guidance updates existing guidance (NTL No. 2005-G07), which was issued six years ago. The complete list of OCS blocks requiring archaeological resource surveys and reports, including the blocks added to the new NTL and other previously identified blocks, are included in Appendix 1 and published on the BOEM website (NTL No. 2011-Joint G01).

Bluescape Resources Co. LLC (BRC) has started construction of a $100 million, 52-mile natural gas gathering line from Richwood to Frametown, WV. The 20-inch pipeline will connect test wells in Nicholas County with NiSource Inc.'s Columbia WB Pipeline. The project is to be completed within 24 months. Dallas-based BRC, a private independent oil and gas company with operations targeting the Marcellus and Eagle Ford shales, has a 490,000-net acre position in West Virginia, most of which is either owned fee simple or is leased for 15 years or longer.

An apparent disparity between continued low wholesale natural gas prices and the amount Atlanta-area consumers are paying for natural gas needs to be cleared up by Georgia marketers, according to Stan Wise, chairman of the state's Public Service Commission (PSC). Consumers in the Atlanta metropolitan area paid $1.431/therm for gas in November, 37.1% more than in the average U.S. city, according to a report issued Dec. 29 by the Bureau of Labor Statistics (BLS). Wise said he sees a disconnect between the BLS data and reports of continued low natural gas prices nationally. He requested that Atlanta-area marketers file by Wednesday (Jan. 11) briefs explaining the apparent price contradiction. About 1.5 million residential customers (more than 80% of the state's residential gas customers) have purchased their natural gas directly from marketers since Atlanta Gas Light Co. was deregulated in 1998 (see NGI, Oct. 12, 1998).

A judge in U.S. District Court for Eastern California in December blocked implementation of California's landmark Low Carbon Fuel Standard (LCFS) as discriminating against out-of-state and foreign crude oil producers and fuel ethanol suppliers. On Dec. 30 the U.S. Court of Appeals for the District of Columbia Circuit stayed the U.S. Environmental Protection Agency's (EPA) Cross-State Air Pollution Rule (CSAPR) affecting major electric generation plants while legal challenges are ongoing. The EPA rule would require more than 1,000 power plants in 27 states to cut smog-creating emissions that drift downwind to neighboring states. Oral arguments are expected to be heard by April, but a final decision on the merits of the court case could be delayed for several months following that date, according to an analysis from the energy consulting firm Pace Global.

A coalition of landowners in Wayne County, PA says it has "run out of patience" with the Delaware River Basin Commission (DRBC), and is urging the organization to either enact natural gas regulations or step aside and let the states do so. "We've had hearings, votes and public uproar and, after two and a half years, the states have updated and strengthened their regulations, but we still have nothing from the DRBC," Marian Schweighofer, executive director for the Northern Wayne Property Owners Alliance LLC (NWPOA), wrote in a letter to the organization. Members of the DRBC include the governors of the four basin states -- Delaware, New Jersey, New York and Pennsylvania -- and the federal government, represented by the commander of the U.S. Army Corps of Engineers' North Atlantic division. The organization was scheduled to meet on Nov. 21, 2011 to revise its water quality regulations and possibly open the basin to Marcellus gas drilling, but the meeting was postponed indefinitely after Delaware Gov. Jack Markell said he opposed the proposal for the commission (see NGI, Nov. 21, 2011). A makeup date for the meeting has still not been scheduled.

The debate over hydraulic fracturing (fracking) in the Cumnock Formation in the North Carolina General Assembly has stalled but two municipalities have taken steps to regulate the practice. Creedmoor City Council enacted a ban on fracking within the city limits over concerns that the headwaters of Falls Lake, which provides drinking water to Raleigh and other municipalities in neighboring Wake County, could be impacted. The city's primary concern was the possible preemption of local authority by two pieces of legislation at the state level. H242, signed into law last June, directs the state's Department of Environment and Natural Resources (DENR) to conduct a review of oil and gas exploration, determine where fracking may occur and make recommendations by May 1 (see NGI, June 27, 2011). The Town of Cary's council also ordered staff to investigate the pros and cons of fracking. The town is reportedly considering some form of regulation that would not only cover the town limits but also its extra-territorial jurisdiction limits.

Range Resources Corp. is taking a southwestern Pennsylvania township to court over zoning in the Marcellus Shale. In a filing with the Allegheny Court of Common Pleas on Dec. 29, the Fort Worth, TX-based company appealed a recent ruling by zoning officials in South Fayette Township, just south of Pittsburgh. Range claimed South Fayette effectively prohibited drilling in the township by passing a strict ordinance in November 2010 (see NGI, Nov. 22, 2010). For instance, the ordinances require drilling pads to be so long that they cannot fit into the areas zoned for drilling. Range wrote in its legal filing. Range leases around 4,000 acres in South Fayette, and says the ordinance constitutes "taking" of property.

The California Public Utilities Commission (CPUC) is looking at ways to elevate safety considerations in all of its proceedings, including rate cases and has scheduled a workshop for Tuesday. In utility rate proceedings, the CPUC traditionally concentrates on the costs of various proposed programs and operations, ignoring more qualitative issues, such as impacts on the safety of various energy utility operations covering both natural gas and electricity. The CPUC has developed a straw proposal aimed at getting stakeholder input during the workshop. While recent state pipeline safety legislation mandates CPUC action on the gas utility side, the straw proposal attempts to "raise the bar for both electric and gas systems and security," the regulator said. The goal is to improve the ratemaking processes so safety initiatives are prioritized.

Portland, OR-based NW Natural has filed a $43.7 million general rate increase request with Oregon's Public Utility Commission (PUC), the first such filing in nearly a decade. If approved, the rate change would mean an increase of about 6%, or an average of $5 monthly, for residential customers and $13 monthly for business customers. Part of the proposed increase is earmarked for pipeline and system safety in the wake of new federal legislation requiring utilities to enhance pipe integrity management and safety programs.

The Pennsylvania state Senate met briefly on Jan. 3 before adjourning for two weeks, but did not discuss legislation to impose a fee on unconventional natural gas drilling. Until the Senate takes action on House Bill 1950 the bill cannot proceed to a conference committee for a process where members of both chambers and both parties will hammer out differences. Although current lawmakers are in office until November, many, including Senate President Pro Tempore Joe Scarnati have urged the General Assembly to pass something before Gov. Tom Corbett announces his annual budget priorities in early February. The six-member committee would include three senators and three representatives, with two members of each chamber coming from the majority party and one coming from the minority.

Ontario-based Epsilon Energy Ltd., which is working with Chesapeake Energy Corp. in the Marcellus Shale, said it ended 2011 with a "substantial" increase in Pennsylvania natural gas production, which was in line with its exit guidance. After achieving initial production in June 2011, the joint venture is currently producing 82 MMcfe/d gross (17.5 MMcf/d net) of natural gas. Under the JV Chesapeake is earning a half-stake in the Highway 706 gas prospect after it paid Epsilon C$5 million in cash upfront and by carrying the first C$95 million of Epsilon's share of costs in the prospect. The Highway 706 JV covers about 11,500 net acres in Susquehanna County. When the JV was set up, the prospect had 10 MMcf/d of output and related compression, pipeline and tap site facilities. The leasehold was estimated to be able to support a total of 120-150 additional drilling locations.

The Pennsylvania Department of Environmental Protection (DEP) has fined Talisman Energy USA Inc. $51,478 for a well control incident that prompted the company to shut down all North American hydraulic fracturing (hydrofracking) operations in early 2011. An investigation by DEP and Talisman of the well -- located on state forest land in Tioga County -- found that a needle valve failed on Jan. 17, 2011 and couldn't be shut off. Although the incident did not cause a fire or explosion, the well shot around 21,000 gallons of hydrofracking fluid and sand into the air for more than three hours, tearing through the secondary containment liner of the well pad. Talisman and contractor CUDD Well Control remotely closed a hydraulic valve above the master valve, allowing the fluid to flow back through the production test separator, and installed a "hammer union" as a new pipe connector.

During 2012 Goodrich Petroleum will continue to emphasize oil-directed drilling over natural gas with the majority of its focus, and spending, on the Eagle Ford Shale of South Texas, the company said. The preliminary capital expenditure budget for 2012 is $250-275 million, which includes $235-260 million in drilling and completion expenditures and $15 million allocated to leasehold and infrastructure expenses. It anticipates drilling 49-54 gross (29-32 net) wells in 2012, with 75% of the anticipated drilling and completion capital expenditures allocated to oil.

©Copyright 2012 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.

Copyright ©2019 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus