Officials from the United States and Mexico have signed an agreement that would allow for the development of oil and natural gas reservoirs along the two countries' maritime boundary in the Gulf of Mexico (GOM). The transboundary agreement removes a ban on exploration and production activities in nearly 1.5 million acres of U.S. Outer Continental Shelf, which the Interior Department estimates contain as much as 304 Bcf of natural gas and 172 million bbl of oil. The agreement also would open up resources in the Western Gap -- located in the western planning area of the GOM -- that were off limits to both countries under a previous treaty, which imposed a moratorium along the boundary through 2014. The agreement sets guidelines for U.S. producers and Mexico's state oil company Petroleos Mexicanos (Pemex) to agree to jointly develop the boundary-hugging reserves. If consensus cannot be reached, the agreement establishes a process through which U.S. producers and Pemex can individually develop the resources on each side of the border while protecting each nation's interests and resources.
Calgary-based Natural Gas Exchange Inc. (NGX), a subsidiary of TMX Group Inc., has added three natural gas hubs in the United States for physical clearing. The three newest are Ruby Malin, Transco Station 30 and TETCO M1-30 trading points, which brings the number of U.S. hubs featuring physical clearing for NGX to 43. Ruby Malin is on the California-Oregon border and is on Ruby Pipeline, which runs through Wyoming, Utah, Nevada and Oregon. Transco Station 30 is in south-central Texas and is on Transcontinental Gas Pipeline, or Transco. TETCO M1-30 is in Mississippi and Alabama and is positioned on the Texas Eastern Transmission pipeline. NGX CEO Peter Krenkel said the tree additions are part of the company's plan to increase U.S. operations. "The addition of three new venues provides our clients with increased access to our clearing services," he said. NGX, which began operations in 1994, provides electronic trading, central counterparty clearing and data services to North American natural gas and electricity markets.
The nonprofit Institute for Energy Research (IER) said oil and natural gas production on federal lands declined during fiscal year (FY) 2011, citing data from the U.S. Department of Interior (DOI). According to the IER study, the DOI's Office and Natural Resources Revenue (ONRR) reported that oil production on federal lands totaled 656 million bbl during FY2011, an 11% decline from the 736 million bbl produced in FY2010. Natural gas production, which totaled 4.98 Tcf in FY2011, fell for the second consecutive year, down 6% from FY2010 (5.28 Tcf) and 27% from FY2009 (6.82 Tcf). Conversely, the study found that oil production on private and state lands had increased 14% from FY2010 to FY2011, while natural gas production grew 12%.
Chesapeake Energy Corp. is helping to fund an effort by 3M to design, manufacture and market a "broad" portfolio of compressed natural gas (CNG) tanks for use in all sectors of the U.S. transportation market. According to the partners, the fuel tank on a CNG vehicle is the most expensive single component and less expensive tanks would enable CNG to be more widely adopted as an alternative vehicle fuel source. Chesapeake pledged an initial $10 million toward design and certification services, market development support and a commitment to use the new tanks for its corporate fleet conversion to CNG. The investment would be provided by Chesapeake NG Ventures Corp. , which plans to spend $1 billion over the next 10 years to help fund various initiatives to increase demand for natural gas. The first investments, totaling $300 million, went to Clean Energy Fuels Corp. and privately held Sundrop Fuels Inc.
Encana Corp.'s Encana Natural Gas Inc. has opened what it says is the first liquefied natural gas (LNG) fueling station in Louisiana. Located at The Relay Station in Frierson, the facility will serve the fueling needs of heavy-duty truck fleets. It also is open for public use to those with an LNG vehicle and proper safety training and will be accepting all major credit cards. The station is currently being utilized by Heckmann Water Resources (HWR), an Encana partner in water sustainability in the gas industry. HWR recently ordered 200 LNG big-rig trucks, 50 of which have been deployed to date. California-based Heckmann Corp., parent company of HWR, provides water management services to Encana and other producers in the Haynesville Shale.
El Paso Corp. is considering adding pipeline infrastructure to carry gas from northeastern Pennsylvania to an interconnection near Albany, NY, following a nonbinding open season that was held last year. "We envision a late 2014 in-service date," El Paso spokesman Richard Wheatley said. "But we're very early in the evaluation stage for a possible project and have been having initial discussions with local and state officials in advance of any initial survey work taking place." The company's interstate system in the region is operated by its Tennessee Gas Pipeline Co. LLC. "We believe that more pipeline capacity is needed in the U.S. Northeast in order to move natural gas supplies to consuming markets," Wheatley said. "In coming years, New York/New Jersey and East Coast consuming markets are predicted to experience substantial increases in average day and peak day natural gas demand that will require additional delivery capacity.
The government of Japan has asked the United States to OK the export of liquefied natural gas (LNG) so that it might benefit from greater gas supply security, according to a report in The Daily Yomiuri, which cited unnamed sources. Japan is seeking energy supplies to make up for the output from nuclear reactors shuttered following its tsunami and meltdown disaster last year. Additionally, Japan is seen as the most vulnerable to any blockade of the Strait of Hormuz that could arise from escalating tensions between Iran and the West. The U.S. and Japan have begun talks so Prime Minister Yoshihiko Noda and President Barack Obama can reach an agreement on exporting LNG during Noda's scheduled visit to the United States this spring, according to the newspaper's report, published online last week. The Japanese government is asking the U.S. to permit export of LNG produced by planned projects at existing LNG terminals in Louisiana and Maryland.
The Philadelphia-based Clean Air Council (CAC) has asked the U.S. Environmental Protection Agency to sanction the Pennsylvania Department of Environmental Protection for not adequately enforcing air quality regulations, specifically when it comes to single source determinations. The CAC said it reviewed 25 air permit reviews, but found that only five included a single source determination, all for MarkWest Liberty Midstream and Resources LLC's processing plant in Houston, PA, in southwestern Pennsylvania.
The Pennsylvania Department of Environmental Protection (DEP) has fined Catalyst Energy Inc. $185,000 and placed new restrictions on the company after several incidents at oil and natural gas wells in Forest, McKean and Warren counties. The DEP said that through the end of 2012, the Pittsburgh-based company must have permission before developing or drilling new wells, or before performing hydraulic fracturing at existing wells. The agency said it would authorize those activities if Catalyst was found to be in compliance with all applicable laws at the site. The DEP asserts that in 2010 Catalyst's drilling activities in the Yellow Hammer area of Hickory Township, which is in Forest County, contaminated 14 water supplies. The company has since restored or replaced water supplies at six wells and was given 60 days to complete the remaining eight wells. Inspectors also reported erosion and sediment control violations from December 2009 through November 2011 and spill and discharge violations from February 2010 through November 2011. The company has resolved all of these violations.
Pacific Gas and Electric Co. (PG&E) admitted in another filing with California regulators that it violated federal and state safety testing standards for a part of its distribution pipeline system in San Mateo, CA, within a few miles of the San Bruno transmission pipeline, which exploded in September 2010. PG&E said it discovered the violation on part of an eight-inch diameter distribution feeder line Jan. 26, and took "immediate corrective action" the following day. Under federal Department of Transportation standards and PG&E's state-mandated rules, pipe-to-soil measurements for corrosion must be completed every 75 days. The feeder main had last been tested Oct. 5 and should have been retested by the end of 2011.
Inspectors with the Pennsylvania Department of Environmental Protection (DEP) returned to the site of a condensate leak in Washington County to take soil and water samples near a natural gas well owned by a Chevron Corp. subsidiary. DEP inspectors were called to the site of two Chevron Appalachia LLC wells -- Robinhill 18H and 19H -- in Robinson Township on Dec. 19 to respond to a condensate leak, which the company said resulted from a crack in a two-inch underground condensate pipeline on the wellpad. Chevron spokesman Trip Oliver said contrary to some reports, there was no second spill of condensate at the site and the company had not placed absorbent material into Bigger Run, a nearby creek that is a tributary of Raccoon Creek. The state confirmed there was only one spill.
Tompkins County Supreme Court Judge Phillip Rumsey ruled that an ordinance and a zoning requirement enacted last year by the Town of Dryden, NY, which essentially bans all Marcellus Shale oil and gas activities in the municipality, are not preempted by state law and can remain in effect. Thomas West -- an attorney with The West Firm PLLC in Albany, NY, who is representing Anschutz Exploration Corp. (AEC) in the case -- said the company has yet to decide on an appeal. The West Firm is also involved in the legal battle with the Town of Middlefield, NY, which also used a zoning law to ban drilling operations (see NGI, Sept. 19, 2011). A decision in that case could be announced within months.
Independent power giant NRG Energy Inc. CEO David Crane predicted that the entire energy sector would be impacted by continuing low natural gas prices this year as part of a keynote speech at the Jefferies 2012 Global Clean Technology Conference in New York City. The onslaught of record low gas prices is "steam rolling" everything in its path, said Crane, noting that even renewables are being impacted by the low price of natural gas. Crane called gas prices "the overriding theme" for the energy sector, which he sees creating more opportunities, not just for gas-fired displacement of coal-fired electric generation, but also renewables moving more aggressively into the transportation space. "I call it the 'tyranny of natural gas,'" he said. Crane reiterated that while NRG will maintain a fleet of fossil fuel generation plants long into the future, he thinks the world is going through an energy turning point in which renewables, energy efficiency and distributed generation will become more of the "model" for the 21st century.
Infrastructure, water and housing upgrades remain priorities in western North Dakota to keep up with the continuing robust growth in oil and gas development, according to a report released by Gov. Jack Dalrymple. The report, "Tour Findings and State Response," details the need to spend $806.2 million more through the 2012 fiscal year on energy and road infrastructure, water infrastructure and supplies, and housing. Nearly half that amount -- $391 million -- was spent through the end of January, mostly for infrastructure. Ultimately, North Dakota is prepared to spend up to $1.2 billion to meet local needs in the western region, Dalrymple said. Transportation would take most of the spending, given that 70% of the state's crude production gathering is transported by truck.
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