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Atlas Pipeline Mid-Continent WestTex LLC and Pioneer Natural Resources USA Inc. have filed a joint application with the Federal Energy Regulatory Commission for approval by Oct. 1 to build a natural gas pipeline from a proposed Permian Basin cryogenic gas processing plant that is due to go into service in early 2013. The proposed 10.2-mile pipeline in Midland, TX, would transport 150 MMcf/d of pipeline-quality gas to interconnections with Northern Natural Gas and two intrastate pipelines owned by Atmos Energy Corp. and Enterprise Products Partners LP. The so-called Driver Plant is being built in two phases (see NGI, Nov. 21, 2011). The first phase would have the capacity to handle 100 MMcf/d and is expected to begin service in 1Q2013; the second phase would add 100 MMcf/d with a target date of 1Q2014. Completion of both phases would increase capacity at the WestTex facility from 255 MMcf/d to 455 MMcf/d at an estimated cost of about $200 million.

North American margins for Halliburton Co. likely have been impacted "more than anticipated" in the second quarter because of the increased cost of guar gum, an additive used in hydraulic fracturing fluids, the oilfield services company said. North American margins in 2Q2012 will be "300 basis points more than its previous guidance of 200-250 basis points, for a total impact of 500-550 basis points lower" than 1Q2012 levels. The operator set the previous guidance in April (see NGI, April 23). "Though the company believes these increased costs are transitory once new supplies are available in early 2013, the company is seeking to mitigate these costs in the second half of the year through seeking relief from customers and increased usage of synthetic and other guar alternatives," Halliburton said. PacWest Consulting Partners said guar gum prices have "skyrocketed" in the past year on high U.S. oilfield demand (see NGI, June 4).

Operators in Pennsylvania spud fewer Marcellus Shale gas wells in May than the year before and shifted their focus to counties in wetter areas of the play, data from the state Department of Environmental Protection (DEP) shows. According to DEP's Office of Oil and Gas Management (OOGM), operators spud 123 wells in the Marcellus in May, a decline of 15.8% from the 146 wells that were spud the previous May. The decline was noticeable in northeastern Pennsylvania, but it stood out the most in Tioga County, which led the state in terms of wells spud in May 2011 with 26 wells. One year later, only four wells were spud there, a decline of 84.6%. Lycoming and Bradford counties ranked second and third (with 24 and 22 wells spud, respectively) over the same time frame but saw their totals decline 16.7% and 18.1%. The top operator in terms of wells spud was Range Resources Appalachia LLC with 21. EQT Production Co. came in second place with 13, followed by Chesapeake Appalachia LLC with 12. Chevron Appalachia LLC, which didn't even spud one well in the Marcellus the previous May, spud 10 wells there in May 2012.

A recent analysis by the Federal Reserve Bank of Dallas quantified the drilling boom's effects in South Texas and found that since the beginning of 2010 15,773 net jobs have been created in the 23 South Texas counties that comprise the Eagle Ford Shale counties in South Texas. Those counties had in general accounted for 2% of all Texas jobs, according to the authors of the paper "Oil Boom in Eagle Ford Shale Brings New Wealth to South Texas." Wages have grown markedly in the affected counties where from 1Q2010 to 3Q2012 the area experienced an average annualized growth rate in weekly wages of 14.6%, according to the paper. "For the five counties where the job growth rate has been the strongest -- McMullen, Dimmit, La Salle, Live Oak and Lee -- seasonally adjusted retail sales grew at an annual rate of 55.1%, or $100.9 million, from first quarter 2010 to third quarter 2011. For the entire 23-county area, seasonally adjusted retail sales increased at a 15.4% annual rate, or $580.7 million. During this period, comparable retail sales rose 7.2% in the U.S. and 6% in Texas."

Growing use of gas-fired power plants in the United States is helping, to a large extent, to drive down the country's emissions of carbon dioxide (CO2), according to the International Energy Agency (IEA). Since 2006, the United States has led the world in cutting CO2 emissions, the agency said recently. CO2 emissions in the United States in 2011 fell by 92 million tons (MT), or 1.7%, primarily due to ongoing switching from coal to natural gas in power generation and an exceptionally mild winter, which reduced the demand for space heating. U.S. emissions have now fallen by 430 MT (7.7%) since 2006, the largest reduction of all countries or regions, according to IEA. "This development has arisen from lower oil use in the transport sector (linked to efficiency improvements, higher oil prices and the economic downturn, which has cut vehicle miles traveled) and a substantial shift from coal to gas in the power sector," IEA said. Global CO2 emissions from fossil fuel combustion reached a record high of 31.6 gigatons (GT) in 2011, according to preliminary estimates from the IEA. This represents an increase of 1.0 GT over 2010, or a 3.2% increase. Coal accounted for 45% of total energy-related CO2 emissions in 2011, followed by oil (35%) and natural gas (20%).

The Railroad Commission of Texas (RRC) and the Texas Commission on Environmental Quality (TCEQ) have issued an outline that attempts to clarify the responsibilities of each agency with respect to oil and gas regulation. A memorandum of understanding between them provides additional explanation of the agencies' jurisdictions and can be found in Title 16 Texas Administrative Code. The RRC has primary regulatory jurisdiction over the oil and gas industry, while the TCEQ is the environmental agency and the lead agency in responding to releases of hazardous substances, refined petroleum products and abandoned containers of unknown substances that are not leaking. Both agencies also have responsibilities for certain types of regulated waste products. For information on RRC regulated waste, call (877) 228-5740 and for information on TCEQ regulated waste, call (512) 239-6412.

Natural gas from the Marcellus Shale could be the answer to Pennsylvania's energy problems, "should we choose to embrace it," former Gov. Ed Rendell said in an opinion column published by the Philadelphia Inquirer. Natural gas could make significant strides, particularly in the Philadelphia area, as a transportation fuel, according to Rendell, a Democrat who served two terms as governor, from 2003 until he stepped down under term limits last year. Thanks to regulations put in place during his tenure in Harrisburg, Pennsylvania can tap into its natural gas resource while still protecting the environment, Rendell said. Perhaps not coincidentally, Rendell was also making appearances on television and radio programs to promote his new book, "A Nation of Wussies: How America's Leaders Lost The Guts To Make Us Great." Rendell's relationship with the natural gas industry has at times been a rocky one. In Philadelphia last year he scolded the industry, which he said had "screwed up so badly" by not offering to pay a severance tax that it brought a tide of negative public opinion on itself (see NGI, Sept. 12, 2011).

MarkWest Utica EMG LLC plans to process and transport Gulfport Energy Corp.'s natural gas volumes from three eastern Ohio counties between now and 2014. About 60 miles of gathering pipelines and associated compression would be completed this year and up to 140 miles of pipe would be built by early 2014. Gas would be processed at the partners' Harrison County, OH, complex; an interim 40 MMcf/d plant is scheduled to open this year and a 125 MMcf/d processor would start up in 2013. MarkWest Utica also is building a gas complex in Noble County, OH, which initially could process 45 MMcf/d; ramp-up is set for the end of this year to be followed by a 200 MMcf/d plant in mid-2013.

Under a new policy by the Pennsylvania Department of Conservation and Natural Resources (DCNR), operators will be required to sign a lease and make royalty payments to the state for natural gas gathered from wells adjacent to navigable streams, lakes and waterways. Pennsylvania received the mineral interests under the waterways when the Dam Safety and Encroachments Act was codified into state law in 1978. Rulings by the Pennsylvania and U.S. Supreme Courts have affirmed the designations. The DCNR has developed an interactive map and posted a partial list of the state's publicly owned streambeds on its website, but said identifying the waterways didn't equate to a final determination of navigability under state or federal law. The agency conceded that some publicly owned waterways might not be listed and said it reserved the right to add to the list.

Beginning July 1 producers that use hydraulic fracturing (fracking) on wells in Oklahoma will be required to disclose the contents of the fluids they use, save for those contents that are deemed to be trade secrets. The regulations adopted earlier this year by state lawmakers and enacted by the Oklahoma Corporation Commission (OCC) are similar to those in other states. On a well-by-well basis operators are required to disclose the type of base fluid used; trade name, supplier and purpose of substances added to the base fluid; the identity, Chemical Abstracts Service (CAS) number and maximum concentration for each ingredient in each substance added to the fluid; the API (American Petroleum Institute) number of the well; the longitude and latitude of the well; and the dates on which fracking began and ended. The information must be provided within 60 days of the completion of fracking operations. It can either be provided to the OCC directly or posted on the FracFocus website, which has become a clearinghouse for frack fluid information.

Collections from Oklahoma's gross production taxes on natural gas and oil were lower in April than they were in the same month last year, marking the fifth straight month with such a decline, according to state treasurer Ken Miller. The state has seen the percentage of gross production taxes generated by natural gas production decrease steadily as prices have fallen, Miller said in an economic report. "In October 51% of gross production collections came from gas extraction. By March the amount had fallen to 34%," Miller said. "The proportion of the tax produced by natural gas in April shrank to 32%." Gross production collections in April reflected prices and production from February, when Henry Hub spot prices averaged $2.51/Mcf; prices in April averaged less than $2, Miller said.

Pennsylvania Gov. Tom Corbett is reportedly seeking up to $1.675 billion in tax credits over the next 25 years for Royal Dutch Shell plc and other companies willing to locate an ethane cracker in the state. A spokesman for the Pennsylvania Department of Community and Economic Development (DCED) said discussions are continuing between Corbett administration officials and lawmakers over the governor's proposal to extend up to $66 million in annual tax credits starting in 2017. Under the current proposal, companies that purchase ethane in Pennsylvania would be eligible for a 5 cent/gallon tax break, up to 20% of their eligible Pennsylvania tax liability. Shell Chemical LP in March signed an option to purchase land in Beaver County for a petrochemical complex that may include a "world-scale" ethane cracker to serve the Marcellus Shale region (see NGI, March 19). Shell has said such a facility would be capable of processing 60,000-80,000 b/d of ethane.

A second Federal Energy Regulatory Commission environmental review is under way for the proposed 230-mile, 36-inch diameter Pacific Connector pipeline that would carry gas from the interstate hub in Malin, OR, to the proposed Jordan Cove LNG site at Coos Bay, OR. Under an earlier liquefied natural gas import proposal the facility and pipeline gained conditional FERC approval but backers now seek to export up to 1.2 Bcf.

Pacific Gas and Electric Co. (PG&E) voluntarily reported to the California Public Utilities Commission 180 instances in which parts of its natural gas transmission pipeline system were in rules violations related to cathodic protection. The segments needing corrections are spread over 32 counties, including 65 cities and numerous unincorporated areas and some infractions date back to 2004, a utility spokesperson said. Corrections are expected to be completed in the next 30-60 days at all of the locations.

British Columbia natural gas supplies in both proposed export terminals and unconventional natural gas plays hold the potential for substantial power demand growth over the next 20 years, according to a draft 2012 integrated resource plan (IRP) by BC Hydro. Along with mining, gas carries the potential for "very substantial demand growth," the provincial utility officials said. With special attention given to the proposals for liquefied natural gas export projects, the draft IRP expects power demand throughout the western-most Canadian province to grow from 56,838 GWh this year to 89,590 GWh annually in 2032, assuming that only two LNG export terminals slated for Kitimat, BC, are built.

Kinder Morgan Inc. last Wednesday morning declared a force majeure on a portion of its Natural Gas Pipeline Company of America (NGPL) natural gas pipeline in North Texas in the Texas Panhandle. "A pipeline failure and fire was reported in a rural area shortly after 1:00 a.m. [CDT] Wednesday morning at Highway 152 and County Road 24 in Gray County east of Pampa, TX..." the company said. "The site of the failure was isolated and the pipeline was shut down. The fire is out and there were no injuries or evacuations. Company personnel and local emergency responders responded to the site. An investigation into the cause of the failure is under way. The impact to customers and NGPL revenues are expected to be minimal, if any."

Two graduate students at The Ohio State University say state policymakers should levy appropriate taxes on the energy industry and be wary of hidden shale extraction costs to avoid the perils of boom-and-bust cycles. In a 26-page policy brief titled "Making Shale Development Work for Ohio," Michael Farren and Amanda Weinstein assert that Ohio's leaders need to look no further than places like Houston, Tulsa and Williston, ND, to see examples of local economies that are at the mercy of energy prices, a phenomenon they call a "natural resource curse." Although Ohio's severance taxes on oil (20 cents/bbl) and gas (3 cents/Mcf) are among the lowest in the nation, Farren and Weinstein said the tax increases proposed by Gov. John Kasich, but ultimately derailed by state legislators, were problematic (see NGI, April 30; March 12).

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