The Federal Energy Regulatory Commission (FERC) approved a National Fuel Gas Supply Corp. request to begin construction of compressor and meter stations associated with its Northern Access Project in Pennsylvania and New York. The project, which was approved by FERC in October, is designed to transport 320,000 Dth/d of gas from the Ellisburg Compressor Station in Potter County, PA, to its connection with the Niagara Spur Loop Line (NSLL) at East Aurora, NY [CP11-128]. FERC also approved National Fuel's request to begin construction of its Line N 2012 Expansion Project, which would increase the takeaway capacity from the Marcellus to serve Northeast markets [CP11-512]. FERC also approved a Texas Eastern Transmission request to begin construction of its Philadelphia Lateral Expansion in Delaware County, PA [CP11-508].
California regulators have denied Pacific Gas and Electric Co. (PG&E) appeal of a a $16.7 million staff-imposed pipeline fine and assessed a separate $3 million penalty for shoddy record-keeping by the utility. The fines are payable by PG&E shareholders to the state's general fund. The $16.7 million penalty stems from a citation issued under newly acquired powers by the California Public Utilities Commission's (CPUC) Consumer Protection and Safety Division for PG&E's alleged failure to conduct gas leak detection surveys in seven cities in Contra Costa County in the San Francisco's East Bay. The missed surveys involved some facilities installed as long ago as 1993. PG&E also was fined $3 million for failing to comply with a CPUC pipeline records search directive. PG&E had already agreed to pay the fine in a settlement reached in 2011.
The Sierra Club has lodged an out-of-time protest with the U.S. Department of Energy Office of Fossil Energy challenging an earlier decision to conditionally authorize Sabine Pass LNG to export domestic gas (see related story). The environmental group, which was overruled in its protests by the Federal Energy Regulatory Commission, claims that exporting domestic gas would lead to expanded hydraulic fracturing use.
Strategic cooperation agreements inked last week worth an initial $3.2 billion with ExxonMobil Corp. will give Russian state-owned OAO Rosneft its first investments in North American oil and gas fields. In return, ExxonMobil gains expanded access to Russia's technically challenging offshore fields in the Kara and Black seas of the Arctic (see NGI, Sept. 5, 2011). Rosneft's Neftegaz Holding America Ltd. is to acquire a 30% equity in the La Escalera Ranch project in the Delaware Basin; RN Cardium Oil Inc. a 30% interest in in the Harmattan acreage in the Cardium formation in the Western Canadian Sedimentary Basin; and Neftegaz the right to acquire a 30% interest in 20 blocks in the western part of the Gulf of Mexico.
Encana Corp. has sold close to a one-third stake in its Alberta coalbed methane gas fields in the Horseshoe Canyon Fairway of Alberta, including production from 5,500 existing wells, for C$602 million to Toyota Tsusho Wheatland Inc., a unit of Toyota Tsusho Corp. Toyota Tsusho paid C$100 million at closing and would invest C$502 million over seven years to acquire a 32.5% royalty interest, before deductions. The Japanese unit would acquire gas output from close to 4,000 existing wells and 1,500 potential future drilling locations.
Oneok Partners LP plans to invest $340-360 million to construct a gas gathering and processing plant and related infrastructure in the Cana-Woodford Shale in Oklahoma. The investments are to include $190 million for the construction of a 200 MMcf/d gas processing facility, the Canadian Valley plant, in Canadian County, OK, which are to be in service by 1Q2014. The partnership also expects to invest $160 million to expand and update its existing gathering and compression infrastructure, increasing capacity to 390 MMcf/d in the Cana-Woodford. The Canadian Valley plant would increase its processing capacity in the state to 690 MMcf/d.
Dow Chemical Co. plans to build a world-scale ethylene production plant at its Dow Texas Operations in Freeport, TX, as part of a plan to capitalize on low-cost feedstocks available from growing U.S. shale gas supplies. Dow's operations in Freeport represent the company's largest integrated manufacturing site and the largest single-company chemical complex in North America, the company said. Facilities at the site manufacture 44% of Dow products sold in the United States and more than 20% of Dow products sold globally. The new ethylene production unit project is on track for start-up in 2017. Dow said it is continuing to develop feedstock supply arrangements for the unit. Projects announced as part of Dow's U.S. Gulf Coast investment plan are proceeding according to schedule, the company said.
Despite an ongoing struggle to clear a blockage on its Davy Jones prospect, considered one of the biggest natural gas discoveries in the Gulf of Mexico's shallow waters, McMoRan Exploration Co.'s exploration results "remain positive," the New Orleans-based producer said. The No. 1 well, on South Marsh Island Block 230, is expected to produce measurable flow rate by the end of June, followed by commercial production shortly thereafter, McMoRan said. McMoRan's total gas and oil production averaged 156 MMcfe/d in 1Q2012, compared with 195 MMcfe/d in 1Q2011, and output is expected to average 135 MMcfe/d for the year -- up from a previous estimate of 130 MMcfe/d. However, 2012's output is likely to increase once commercial production is established at Davy Jones, officials said. Workover operations to clear blockage on Davy Jones continue after six weeks of production delays (see NGI, April 16). McMoRan reported a 1Q2012 net loss applicable to common stock of $4.9 million (minus 3 cents/share), compared with a loss of $27.6 million (minus 17 cents) in 1Q2011.
An analysis of resources in 171 geologic provinces, including Canada and Mexico and several Arctic provinces -- but excluding the United States -- found that the world holds an estimated 5,606 Tcf of undiscovered, technically recoverable conventional natural gas, according to a new U.S. Geological Survey (USGS) report. Beyond the United States, there is an estimated 167 billion bbl of undiscovered, technically recoverable natural gas liquids (NGL) and 565 billion bbl of undiscovered, technically recoverable conventional oil, the report said. The assessment represents technically recoverable resources, which are those quantities of oil and gas producible using currently available technology and industry practices, regardless of economic or accessibility considerations. It does not include the reserve base that already has been discovered, is well-defined and considered economically viable, nor does it include unconventional oil and gas resources. The study included 313 assessment units, significantly more than the 246 included in USGS's last World Petroleum Assessment, which was completed in 2000. At that time USGS estimated 4,669 Tcf of gas, 207 billion bbl of NGL and 649 billion bbl of oil in 128 geologic provinces.
A sidetrack appraisal well at the Anadarko Petroleum Corp.-operated Heidelberg prospect in the deepwater Gulf of Mexico (GOM) successfully confirmed an extension of up to 1,500 acres, which may provide "support for the option of a standalone development, said worldwide operations chief Chuck Meloy. The Woodlands, TX-based producer has begun front-end engineering and design work to develop the Green Canyon Block 859 in anticipation of sanctioning the project later this year (see NGI, March 19). The sidetrack well was drilled about 1.3 miles from the Heidelberg discovery in Green Canyon Block 903 to a total depth of about 30,440 feet in water depths of 5,260 feet.
Consol Energy Inc. said by itself through its joint ventures it drilled 22 Marcellus Shale wells in 1Q2012 and brought four online; it also participated in four wells drilled by Noble Energy Inc. In southwestern Pennsylvania Consol is currently running four rigs. The company drilled five wells in Westmoreland County, three wells at its new development in Jefferson County and 10 wells at its full-scale development in Greene County. One of the Greene County wells, the Morris 9D, peaked on April 9 at 10.5 MMcf/d. Consol is also running one rig in northern West Virginia, where it drilled four wells in Upshur and Barbour counties, and it expects to complete those wells in 2Q2012. Those operated wells come in addition to the five Noble-operated wells in Marshall County, WV.
Rex Energy Corp. has spud it first Utica Shale well, the Brace 1H well, in Carroll County, OH. Two additional horizontal wells are to be drilled in the Warrior Prospect this year. The company recently closed on the 15,000 net acre prospect and continues to "actively" lease in the region. Rex estimates the total resource potential of Warrior to be around 48 million boe. In addition to its Warrior prospect, the company holds around 9,300 gross (3,400 net) acres in Mercer County, PA.
Abandoned coal mines in Pennsylvania may be a technically viable source of water for hydraulic fracturing (fracking) operations, but economics and regulations will ultimately decide whether operators find the solution feasible, according to a recent report by the Rand Corp. A typical Marcellus Shale well may require between 3.9 million and 5.6 million gallons for completion activities, and the industry is eager to reduce its consumption for economic and environmental reasons. The report, funded by the Marcellus Shale Coalition, found that the amount of available coal mine water in Pennsylvania likely exceeds the amount of water required for fracking operations over the coming decade "by a large margin," but the chemical composition and the location of each source will determine viability on a case by case basis. The composition is crucial because improper chemistry may damage shale formations and reduce productivity.
Ohio University announced that its campus heating and power facility, the Lausche Heating Plant, will use natural gas instead of coal for the next five months. The switch is essentially a pilot program for the university's full conversion to natural gas, which is expected in 2015. Lausche, built in 1967, has four boilers -- one natural gas-fired, two coal-fired and one that can be switched between the two fuels -- producing 1 MW of electricity from a steam capacity of 330,000 pounds per hour. The university said the boilers would run near full capacity during the five-month program.
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