Exelon Corp. and Constellation have completed their $8 billion merger, making the combined company the second-largest residential electricity and natural gas distribution company in the nation. The closure of the merger came only days after the Federal Energy Regulatory Commission approved the deal. The Department of Justice and the Nuclear Regulatory Commission -- as well as Maryland, New York and Texas regulators and the shareholders of the two companies -- all cleared the marriage. The merger transaction was first announced in April 2011 (see NGI, May 2, 2011). The three utilities within the new company, which will retain the Exelon name, -- Baltimore Gas and Electric, Commonwealth Edison and PECO Energy Co. -- will serve 6.6 million natural gas and electric customers across Maryland, Illinois and Pennsylvania. The merged company will be the nation's largest energy provider in terms of load -- with about 164 terawatt hours -- and customers, serving millions of businesses and households across 47 states, the District of Columbia and the Canadian provinces of Alberta and Ontario. Current Exelon president and CEO Christopher M. Crane will be president and CEO of the combined company, while Mayo A. Shattuck III, who is chairman and CEO of Constellation, will be executive chairman. The newly merged firm will remain headquartered in Chicago.

San Antonio-based Howard Energy Partners said it will acquire the Eagle Ford Escondido Gathering System, which is partially owned by Laredo Energy, and the Cuervo Creek Gathering System from Meritage Midstream Services. Both systems are primarily 12-inch and 16-inch diameter high-pressure gas pipelines. The transaction is expected to close in April. The two systems, located in Webb County, TX, consist of a newly constructed rich natural gas gathering system with 83 miles of pipeline, a 102-mile lean gas gathering system, two leased amine treating plants and multiple intrastate pipeline outlets for regional processing and transportation. The systems are supported by multiple long-term, fee-based agreements with more than 180,000 dedicated acres and more than 200 Bcf of total volume commitments. The lean and rich gas pipelines have a combined capacity of 400 MMcf/d, of which 80% of the firm capacity is under contract, said Howard, which expects to expand the systems in the near term to meet increased demand for from multiple geologic formations including the Escondido, Olmos, San Miguel, Austin Chalk and Eagle Ford.

Chesapeake Energy Corp., through affiliates of Chesapeake Midstream Development LP (CMD), is partnering with M3 Midstream LLC (Momentum) and EV Energy Partners LP to develop what it claimed will be the largest integrated midstream service complex in eastern Ohio to serve Utica Shale production. The complex is to consist of natural gas gathering and compression facilities constructed and operated by CMD, as well as processing, natural gas liquids (NGL) fractionation, loading and terminal facilities constructed and operated by Momentum. The cryogenic processing facility is to be located in Columbiana County and have an initial capacity of 600 MMcf/d. NGLs would be delivered to a central NGL hub complex in Harrison County that is to feature an initial NGL storage capacity of 870,000 bbl and fractionation capacity of 90,000 b/d, as well as a rail-loading facility. Engineering and procurement has begun for the project, with the first cryogenic processing and fractionation plants scheduled to be in service by the second quarter of 2013, Chesapeake said.

The first test shipment of liquefied natural gas (LNG) to the Manzanillo receiving facility was expected in mid-March along the southwest coast of Mexico. An initial shipment of 77,000 tons of LNG was slated to come from Peru, which has a long-term contract with the Mexican federal government through Spain-based energy giant Repsol. Since late last year the opening of a 1 Bcf/d LNG receiving terminal developed by a Korean-Japanese consortium has been delayed by a variety of setbacks, including some dredging issues and the rerouting of a railroad track near the facility on the southern Pacific Coast. The shipment will mark the start of a 20-year deal Repsol has to bring LNG from Peru to Mexico's Comision Federal de Electricidad (CFE). The terminal was built and will be operated by a three-party consortium of Mitsui & Co. Ltd. (37.5%), Samsung Engineering & Construction (37.5%) and Korea Gas Corp. (25%). Sources in Mexico quoted a CFE spokesperson as estimating two shipments a month will come to the Manzanillo facility initially. The plant is scheduled to be formally opened March 28.

Despite a handful of protesters, the Susquehanna River Basin Commission (SRBC) voted to approve 42 water withdrawal permit applications, including most that it had approved at a disrupted meeting in Wilkes-Barre, PA, on Dec. 15. Anti-drilling activists had disrupted that meeting and forced testimony to be cut short (see NGI, Jan. 30). SRBC spokeswoman Susan Obleski told NGI that about 60 people attended the meeting last week, but only eight stood and held signs and shouted slogans during the vote on the permit applications. She said there were no arrests. Besides the 22 re-approved applications from the previous meeting, the SRBC ultimately voted to approve 20 new permit applications, tabled 10 for future consideration and denied three. Most of the permit applications are from operators in the Marcellus Shale.

San Antonio's CPS Energy, the country's largest municipally owned natural gas and power utility, is buying the Rio Nogales 800 MW gas-fired power plant in Seguin, TX. The 10-year-old gas-fired plant is slated to replace two coal-fired units in the utility's fleet. Combined, the 34-year-old coal-fired units generate about 870 MW. The utility previously announced plans to retire by 2018 its 871 MW JT Deely coal-fired plant to avoid the need to invest $3 billion in environmental controls to comply with federal emissions rules. The utility said it would be buying natural gas to fuel the plant from the Eagle Ford Shale of South Texas.

A state regulatory judge recommended that the California Public Utilities Commission (CPUC) give a green light to a proposal to develop a 7.5 Bcf underground natural gas storage field under a residential neighborhood in the southeast corner of Sacramento, but the assigned CPUC member has filed an alternative. The proposed 379-acre project has drawn its share of opposition locally (see NGI, Oct. 19, 2009). The full five-member CPUC cannot take up the proposal until late April due to the commission's 30-day comment period rules for proposed decisions.Commissioner Timothy Alan Simon released his alternative and a summary of differences with the recommendation of Administrative Law Judge (ALJ) Richard Smith. Like the ALJ, Simon also would grant Sacramento Natural Gas Storage LLC approval to build its storage facility, but he would add several financial and philanthropic conditions for the storage developer. Both Smith's proposal and Simon's alternative found the need for the additional gas storage and acceptable mitigation in the EIR.

The Federal Energy Regulatory Commission issued Sawgrass Storage LLC a certificate to convert a depleted natural gas reservoir in northern Louisiana to an interstate gas storage facility that would serve gas and power markets in Oklahoma, Texas, Arkansas and Louisiana. Sawgrass Storage, which is affiliated with Samson Investment Co. and Nicor Inc., proposes to site the storage facility in the depleted South Downsville Field, near Monroe, LA. The project would have 44.5 Bcf of storage capacity of which 30 Bcf would be working gas capacity. The company said it expects the project to go into service in early 2013. The project is designed to have a maximum injection and withdrawal capacity of 300 MMcf/d and would be completely cycled 1.7 times per year. The facilities would interconnect through a 30-inch diameter, 13.9-mile header pipeline, with the Midcontinent Express Pipeline near Farmerville, LA. Sawgrass said it received 14 expressions of interest for storage capacity a nonbinding open season held in late 2010. However, it said it has not signed any precedent agreements yet.

Elected officials in Delaware County, NY, are demanding that New York State and New York City pay $81.3 billion in reparations over 60 years for lost property rights, on the grounds that a proposal to ban hydraulic fracturing (fracking) in the city's extended watershed would exclude 80% of the county's land from Marcellus Shale drilling. At its meeting on Feb. 22, the Delaware County Board of Supervisors voted 12-4 on a resolution demanding the city and state reimburse county landowners who want to lease their property to oil and gas companies. The $81.3 billion figure was based upon the projected gross value of lost revenue. The county said millions more could be lost in real property tax revenues and lost employment opportunities.

After getting a first hand look at hydraulic fracturing (fracking) operations in Pennsylvania's Marcellus Shale -- and with a comprehensive study of the practice in her state due out later this spring -- North Carolina Gov. Bev Perdue said she believes fracking can be done safely. "From what I saw, fracking can be done safely if you regulate it and put fees in place to have inspectors on the ground," Perdue told WRAL-TV in Raleigh, NC, after her March 5 field trip to drill sites in Pennsylvania. "I think the challenge for us will be to determine the capacity of our supply and whether the folks in these communities are willing to move forward." The North Carolina Geological Survey believes that technically recoverable gas exists in the state's Sanford sub-basin (including Lee, Chatham and Moore counties in central North Carolina) and possibly the Dan River sub-basin (including Stokes and Rockingham counties in northern North Carolina). Recent low prices for natural gas make it unlikely that companies will be eager to invest in drilling operations in North Carolina any time soon, Perdue said.

Devon Energy and its affiliates have agreed to pay the federal government nearly $3.5 million to resolve claims made by a whistle blower that the independent producer underpaid royalties owed on natural gas produced on federal and Native American lands, according to the U.S. Department of Justice. The affiliate that allegedly underpaid royalties, PennzEnergy, formerly known as Pennzoil Co., was acquired by Devon in May 1999. Prior to the merger, PennzEnergy was involved in the production of natural gas from federal leases offshore in the Gulf of Mexico and onshore in the Gulf Coast. The resolution is one of the last in a series of settlements arising out of qui tam, or whistle blower, litigation that has been pending for more than a decade. The settlement arises from a lawsuit filed by Harold Wright under the False Claims Act (FCA). Under the qui tam provisions of the FCA, private citizens may file actions on behalf of the United States and share in the recovery. Because Wright is deceased, his heirs will receive $908,000 (26%) of the settlement with Devon.

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