Lower 48 gas production in January climbed 0.36 Bcf/d to a record 72.85 Bcf/d mostly on production gains in the "other states" category in the Energy Information Administration's (EIA) Monthly Natural Gas Gross Production report. EIA said the other states contributed an increase of 0.38 Bcf/d, or 1.8%, partly due to continued drilling activity in the Marcellus Shale and Colorado. New Mexico output rose by 0.10 Bcf/d, or 2.8%. Louisiana posted the greatest production decrease at 0.16 Bcf/d, or minus 1.8%, as some operators reported curtailed production. In Texas production was flat compared with December's level, which was revised to a 1.2% decline from November. Oklahoma's January production fell by 0.6% from December. Production in the federal offshore Gulf of Mexico was flat with December. Wyoming was up 0.9%, and Alaska was up 3.4%.
Gulf Crossing Pipeline Co. LLC is proposing to add an enhanced service to its tariff for growing natural gas demand of power generators, industrial customers and local distribution companies (LDC) with an Enhanced Firm Transportation (EFT) service that would provide accelerated hourly firm service to customers' primary delivery points, the pipeline told the Federal Energy Regulatory Commission. Customers of the Boardwalk Pipeline Partners LP subsidiary would receive delivery of gas on a firm basis at a 1/16 hourly rate of flow, similar to services previously approved by FERC for two other Boardwalk subsidiaries, Texas Gas Transmission LLC and Gulf South Pipeline Co. LP (see NGI, March 19). Gulf Crossing's proposed EFT rate schedule "is designed for a variety of customers desiring to consume gas at hour rates of 1/16 of customers' maximum daily quantities, particularly end-use markets such as power generators, industrial customers or [LDCs]." The pipeline said the 1/16 service would only be available at a customer's primary delivery point but noted that a customer may continue to use secondary delivery points on a 1/24 hourly rate of flow.
BP plc has accused the U.S. government of withholding evidence that could show the Macondo well blowout in the Gulf of Mexico was smaller than federal officials claim. BP faces civil penalties under the Clean Water Act based on the amount of oil that was spilled into the GOM following the April 20, 2010 explosion, which killed 11 men. Federal experts have estimated that Macondo spewed around 4.9 million bbl of oil before it was capped, which would put a maximum civil fine -- with gross negligence -- at about $17.6 billion. In a filing in U.S. District Court for the Eastern District of Louisiana, BP claims that more than 10,000 documents held by government officials have not been turned over to BP, which "appear to relate to flow rate issues" at the Macondo well (No. 10-md-02179). "The United States' invocation of the deliberative process privilege here sweeps too broadly" shielding evidence concerning "a factual issue, namely, the amount of oil discharged," states the 21-page filing. "Fundamental fairness" should allow BP access to this evidence to prepare its defense, the filing states.
Seven Pennsylvania municipalities are challenging Act 13, which is to take effect this month, giving some counties the ability to impose a 15-year impact fee on unconventional gas wells (see NGI, Feb. 20). The lawsuit, filed in Commonwealth Court in Harrisburg, PA, claims that the law supersedes local authority and violates the state and U.S. Constitution. Robinson Township, Township of Nockamixon, South Fayette Township, Peters Township, Cecil Township, Mt. Please Township and the Borough of Yardley, brought the lawsuit, along with the Delaware Riverkeeper Network, township officials and a private individual. Defendants named were the Commonwealth of Pennsylvania; Robert F. Powelson, chairman of the Pennsylvania Public Utility Commission; Attorney General Linda L. Kelly, and Michael L. Krancer, secretary of Pennsylvania's Department of Environmental Protection.
Natural gas for power generation could jump this summer in California if temperatures soar, following action by federal regulators to keep Southern California Edison Co.'s (SCE) San Onofre Nuclear Generating Station (SONGS) closed infinitely, pending work on equipment failures at the 2,200 MW, two-unit facility. The Nuclear Regulatory Commission (NRC) sent SCE a confirmatory action letter outlining what is needed to be done before it allows one or both of the SONGS units (2 and 3) to be restarted. Prospects for a summer without SONGS in operation prompted the California Independent System Operator (CAISO) to call for restarting an idle gas-fired plant in Huntington Beach in Southern California, as well as other contingencies (see NGI, March 26). Gas plants account for about two-thirds (67.5%) of the state's 50,341 MW of available capacity, CAISO noted.
U.S. District Judge Sean McLaughlin in Erie, PA, on March 23 refused to overturn a U.S. Forest Service (USFS) ban on surface and groundwater withdrawals in the Allegheny National Forest for oil and gas operations, asserting that laws protecting access to mineral rights are not applicable to water rights (Minard Run Oil Company v. United States Forest Service et al. (Case No. 1-09-CV-125). McLaughlin also denied an industry request to hold the USFS in contempt, but he told the agency that it is required to process its Notice to Proceed documents within 60 days. Failure to do, he warned, could marginalize the USFS. Plaintiffs Minard Run Oil Co. (MROC), the Pennsylvania Independent Oil and Gas Association, the Allegheny Forest Alliance and Warren County, PA argued that the USFS should be held in contempt for refusing to follow McLaughlin's order from Dec. 15, 2009 to process requests by operators to drill in the forest (see NGI, July 25, 2011).
Denver-based Anschutz Exploration Corp. has halted an environmental assessment of possible drilling in the Red Blanket Butte area northwest of Browning, MT, in the face of possibly disturbing cultural resources associated with the Blackfeet Tribe. The impacts were spotted as potentially arising in response to plans to drill the Red Blanket 1-13 well, Anschutz said. The company holds leases across a wide swath of the Blackfeet Indian Reservation's western edge, and the proposed drill site was close to a ridge considered to have sacred value to the tribe. Other options are now being investigated by the company, the Tribal Historic Preservation Office and the Bureau of Indian Affairs' Blackfeet agency. The area on which Anschutz has suspended activity is about 640 acres, but the entire federal exploratory lease area encompasses roughly 50,000 acres.
California Administrative Law Judge (ALJ) Burton Mattson has rejected Pacific Gas and Electric Co.'s (PG&E) appeal of a safety staff-imposed $16.8 million fine levied in January for its admitted failure to conduct natural gas pipeline leak surveys (see NGI, Feb. 6). Mattson recommended that the California Public Utilities Commission (CPUC) set aside PG&E's contentions that the fine is excessive, the number of violations was miscalculated by the CPUC's Consumer Protection and Safety Division (CPSD) and that the staff citation process for self-report violations should be suspended. A PG&E spokesperson said the utility plans to file by April 9 comments on the ALJ's recommendation but is not commenting about whether it might appeal the fine in court if it is upheld by the CPUC. CPSD levied a fine of $20,000 per violation and calculated 838 violations by the utility dating back to 2004. PG&E argued the number of violations should be much smaller.
The Maryland House of Delegates passed a 7.5% state severance tax on natural gas production on March 26, which if adopted would become the highest severance tax rate for natural gas produced in states with Marcellus Shale activity. Legislators voted 82-51 to pass HB 907, which if approved by the state Senate and signed into law by the governor, would take effect Jan. 1. The law would tax the wholesale market value of natural gas produced at the wellhead. It would not apply to wells that produce gas for domestic or agricultural purposes on the property from which the gas is produced, wells that produce less than 5 Mcf/d, or to gas withdrawn from storage wells. The bill would direct the Maryland Department of the Environment (MDE) to set up a separate account for the severance tax revenue within the state's Oil and Gas Fund. The MDE would use the revenue to fund a statewide oil and gas regulatory program.
"Profitable and widely applicable" practices have the potential to reduce methane emissions in the United States by more than 80%, and the captured methane could "bring in billions of dollars in revenue while benefiting the environment," according to a report from the Natural Resources Defense Council (NRDC). The oil and gas industry lost an estimated 623 Bcf of methane to the atmosphere in 2009, accounting for about 37% of total methane emissions in the United States, according to the report, with natural gas systems contributing most of those emissions (547 Bcf). NRDC recommended the use of 10 technologies that it said have the ability to capture more than 80% of the industry's methane emissions: green completions, plunger lift systems, tri-ethylene glycol dehydrator emission controls, desiccant dehydrators, dry seal systems, improved compressor maintenance, low-bleed or no-bleed pneumatic controllers, pipeline maintenance and repair, vapor recovery units, and leak monitoring and repair. Nearly 40% of methane emissions could be handled by two of the technologies -- green completions and plunger lift systems -- according to NRDC.
Pennsylvania's shale development could realistically contribute a 3% annual increase in jobs through the remainder of the decade, according to Wells Fargo Securities LLC, whose economists compared a modest outlook of future growth from shale to employment trends before the shale boom began. Economists found an additional 250,000 jobs could be created from shale-related production by 2020. The economists said they didn't have the environmental or social expertise to determine whether that gain would be "worth it," but said 3% growth over eight years is "clearly a benefit." If the state's job growth continues at its current rate, the researchers projected that nonfarm employment in Pennsylvania would jump by 825,000, or 15%, through the end of 2020. Of that, shale country would add 165,000 jobs and would induce another 400,000 jobs across the state. That scenario could easily be tempered by low gas prices and reduced operating programs. "The risk is that if gas prices remain depressed due to factors beyond just warmer weather, our optimistic scenario could prove to be, well, way too optimistic." If job growth continues at its pre-shale levels, Pennsylvania would gain only 325,000 jobs through the end of the decade: 45,000 in shale country and 100,000 across the rest of the state.
Energy Transfer Equity LP (ETE) completed its buyout of Southern Union Co. (SUG), a mega merger that creates a midstream powerhouse with more than 44,000 miles of interstate natural gas pipelines and an estimated 30.7 Bcf/d of transportation capacity. The $7.9 billion debt and equity tie-up was overwhelmingly approved by SUG shareholders in December; SUG will operate as a subsidiary of ETE (see NGI, July 25, 2011). ETE sold SUG's former subsidiary CrossCountry Energy LLC to gas pipeline partnership Energy Transfer Partners LP for $2 billion. CrossCountry owns an indirect half-stake in Citrus Corp., which in turn owns the Florida Gas Transmission System.
Continental Resources Inc. has made a $340 million pitch to buy Bakken Shale-focused Wheatland Oil Inc., a company controlled by Continental CEO Harold Hamm. Wheatland's operations are spread across 37,900 net acres of North Dakota and Montana. The Enid, OK-based producer has interests in more than 1,000 gross wells, with net proved reserves of 17 million boe at the end of 2011. At the end of December production was about 2,500 boe/d. Hamm holds a 75% stake in Wheatland through a trust in which he is the sole trustee and beneficiary. Continental COO Jeff Hume owns the other 25% interest in Wheatland. Hamm also owns more than two-thirds (68%) of Oklahoma City-based Continental, which has a market cap of nearly $16 billion. To evaluate the transaction Continental plans to set up a "special independent and disinterested committee."
From 2005 through 2011 the share of natural gas in the Texas power generation market declined while the use of out-of-state coal increased, causing a $7.7 billion economic loss to the Lone Star State, according to a study by University of Houston professor Michael J. Economides and petroleum engineering consultant Philip E. Lewis. The study, commissioned by industry-backed America's Natural Gas Alliance, compared the direct and value-added economic impacts from the three dominant power generation energy sources in Texas: coal, natural gas and wind. Since virtually all the natural gas used for power generation in Texas is produced in the state, this divergence represented a loss of more than $7.7 billion to the state since 2005, the researchers said. In 2011 alone $2.5 billion was lost in potential revenue, including leasehold improvements, production royalties, severance taxes to state and local governments, sales taxes and local property taxes, as well as $530 million in lost wages. The state also forfeited about 8,600 jobs that otherwise would have been created by the Texas natural gas industry, according to the study.
Funding for a proposed study of the health impacts of hydraulic fracturing (fracking) was not included in a $132.5 billion state budget that the New York State Legislature and Gov. Andrew Cuomo agreed to in March. A proposal to fund a $100,000 State University of New York study of the potential health effects of fracking was left on the table during final budget negotiations. Assemblyman Robert Sweeney (D-Lindenhurst) introduced a bill (A 2924) in January that would require the state to prepare "an environmental impact statement for any natural gas or oil drilling involving the use of hydraulic fracturing fluid." Still under study is the New York Department of Environmental Conservation's (DEC) revised supplemental generic environmental impact statement on fracking (see related story).
The Pennsylvania Environmental Council (PEC) is pushing for the Pennsylvania Department of Environmental Protection to begin implementing aspects of the state's new drilling law that require new rulemaking, and for the Pennsylvania General Assembly to address recommendations from the Marcellus Shale Advisory Commission (MSAC) not handled by the law. The law requires DEP to draft criteria for water management plans, well site containment standards, tracking and reporting requirements for wastewater and air emissions, and chemical disclosures. The PEC also wants policymakers to address issues not taken up in the MSAC report, such as establishing construction standards for private water wells, promoting the use of nonfreshwater for hydraulic fracturing, establishing adaptive best management practices and benchmarking, identifying areas of high ecological value to improve planning efforts and strengthening public health evaluation and reporting.
An investigation has been launched into an apparent flash fire that occurred late Thursday morning (March 29) at the Lathrop compressor station in Springville Township in Susquehanna County. The 12,000-square-foot facility, operated by Williams Partners LP, houses seven natural gas compressors. Cabot Oil & Gas Corp., which sold the Lathrop station to Williams in 2010, and which often works with Williams in the Marcellus Shale, said it had been notified of a flash fire, "which extinguished itself immediately." The fire's cause is being investigated, said Cabot CEO Dan O. Dinges. At the time of the incident Cabot was moving about 365 MMcf/d through the station, he said.
A nonprofit economic and public policy research firm is warning policymakers in Western Canada that shale gas development in British Columbia (BC) and oilsands development in northern Alberta are "stress points" that could negatively impact water quality and supplies if not properly regulated. In a 36-page report, "Stress Points: An Overview of Water and Economic Growth in Western Canada," written by senior policy analyst and water researcher Larissa Sommerfeld, the Calgary-based Canada West Foundation (CWF) urged provincial governments to make water policies a top priority. The CWF report identified water quality issues as "perhaps the most perplexing," and predicted that they would likely worsen. With shale gas development, Sommerfeld said researchers are left to wonder what precisely happens to the majority (60-70%) of the fluids used in hydraulic fracturing (fracking) and how it could potentially impact groundwater supplies.
Terra Energy Corp. said it is targeting international, especially Asian, companies for a possible joint venture, and is considering the sale of its natural gas-rich Montney Shale portfolio in British Columbia as it shifts toward more oil and natural gas liquids production. The Calgary-based junior explorer said its advisers -- Macquarie Capital Markets Canada Ltd. and Scotia Waterous Capital Inc. -- spent the first three months of this year developing a comprehensive technical and marketing package geared toward "strategic international players with an added focus on Asia." Terra also said "several large international players [have] already expressing interest" in their approximately 140,000 net acres in the Montney.
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