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Spectra Energy Corp. has received approval from the Federal Energy Regulatory Commission to begin construction on the New Jersey-New York Expansion Project, a 20-mile expansion of the Texas Eastern Transmission and Algonquin Gas Transmission interstate pipeline systems, which would provide an additional 800 MMcf/d of transportation capacity into the region. The Commission approved the project, which is to begin service in late 2013, in May (see NGI, May 28). Spectra has to implement an archaeological monitoring plan for the Big Inch and Little Big Inch pipelines, among other requirements.

The Commodity Futures Trading Commission (CFTC) has approved the application of ICE Trade Vault LLC, a subsidiary of IntercontinentalExchange Inc., for provisional registration as a swap data repository, the first one to be approved under the Dodd-Frank Act. Swap data repositories are a category of CFTC-registered entities created by the financial reform legislation to perform a variety of functions related to collecting and maintaining swap transaction data and information. ICE Trade Vault was provisionally registered as a swap data repository for the interest rate, credit, foreign exchange and other commodity asset classes.

Calgary-based Talisman Energy is abandoning a project being considered with Sasol Canada to develop Canada's first gas-to-liquids (GTL) facility to create transportation fuels from natural gas. Talisman was granted the option to participate in the study as part of an ongoing partnership that includes two 50% working interests in two natural gas assets and associated infrastructure in Talisman's Montney Shale resources in northeastern British Columbia (see NGI, Jan. 3, 2011). Talisman's decision to exit the project will not impact the upstream partnership, the company said.

Marcellus Shale reserves may spark life into the 110-year-old Sunoco Marcus Hook Industrial Complex, which closed its doors in December, according to IHS Inc. The oil refinery south of Philadelphia was processing up to 175,000 b/d of crude oil but IHS staff thinks the complex has potential, with Marcellus Shale gas and liquids that surround it. IHS found five potential energy-based reuse options: natural gas liquids processing and fractionation facility; gas-to-liquids production and storage facility; gas liquefaction and export terminal; refined petroleum products import terminal; or gas-driven power generation. Two chemical-based options were to use the facility for ethane cracking and derivatives, or for propane dehydrogenation.

The U.S. chemical industry "feels overwhelmingly upbeat" in part because of abundant gas supplies but operators need to transform their businesses before chemical supply outstrips demand, according to report by KPMG LLP. Just two years ago the U.S. chemical industry "seemed well rationalized, but with few opportunities for significant revenue growth" and beyond research and development, "precious little expansionary investment," specialists said in a report. "However, with the commercialization of shale gas in the U.S., the industry has seen a remarkable turn of fortune." Several risks are on the horizon, with "the most problematic" likely to be the plethora of new capacity additions that may lead to an oversupply within the national market, "returning the industry to the cyclicality that was such a problem in the past."

BP plc is investigating the cause of an explosion that occurred on June 25 in western Colorado at its Pinon natural gas compressor station in which one worker was killed and two others injured. The station, which has a capacity of 30 MMcf/d, is near Bayfield, CO, and is part of a system that serves the company's San Juan Basin production. The station remained shut down on Friday (June 29), and BP was unsure of a restart date. According to BP, the incident occurred during pipeline maintenance at the station. An internal investigation has been launched, and BP also is cooperating with area officials.

Prospects for lower prices for natural gas liquids (NGL) and natural gas production have contributed to deteriorating profitability at Fort Worth, TX-based Quicksilver Resources Inc. and prompted a corporate credit rating downgrade by Standard & Poor's Ratings Services (S&P). S&P cut Quicksilver's corporate credit rating to "B-" from "B" and gave it a "negative" outlook. "The downgrade primarily reflects the prospects for weaker profitability and deteriorating credit protection measures, and the risk of ongoing negative free cash flow and liquidity burn at Quicksilver as a result of our lower natural gas liquids pricing assumptions and our lower production estimate," said S&P credit analyst Carin Dehne-Kiley. "We recently reduced our NGL pricing assumptions to 42% of West Texas Intermediate (WTI) crude oil in 2012 and 50% of WTI in 2013, from 53% of WTI in each year, previously [see NGI, June 18]. NGLs currently constitute about 18% of Quicksilver's total equivalent production, and although the company has about 60% of its NGL volumes hedged in 2012, it has no NGL volumes hedged for 2013."

Lower prices for oil and natural gas liquids have led to softening in drilling services markets and caused Pioneer Drilling Co. to dial down its operations guidance for 2Q2012. Pioneer now expects revenue growth in its production services division to be at the low end of the previous estimate of 5-10%, with margins as a percentage of revenues expected to be 40-42%. Previous guidance was for margins to be flat with 1Q2012 margins of 43.6%. Average rig utilization is forecast to be at the low end of previous guidance of 89-91% with margins of $7,600-8,000/day, versus previous guidance of $8,000-8,300/day.

Kohlberg Kravis Roberts & Co. LP and affiliates (KKR) of the groups' energy and infrastructure platform now manage $4 billion in nonprivate equity assets after the infrastructure fund closed on more than $1 billion, which, in addition to $1.3 billion of already committed accounts, brings total capital to $2.4 billion. The infrastructure fund has total commitments to $1.25 billion, which, in addition to $350 million of capital outside the fund, brings total committed capital for natural resources to $1.6 billion. KKR Natural Resources to date it has completed six transactions, acquiring more than $950 million of assets in core operating regions in the Barnett Shale, East Texas, North Louisiana, Mississippi and the Texas Gulf Coast, and it plans to purchase almost $2 billion of additional properties over the next few years.

Chesapeake Energy Corp. has agreed to pay $1.5 million to three families in Bradford County, PA, to settle a lawsuit that alleged the company's Marcellus Shale drilling operations contaminated groundwater supplies. Although an investigation by the Pennsylvania Department of Environmental Protection determined that Chesapeake was responsible for methane contamination of the plaintiffs' water wells, a Chesapeake spokesman said the investigation was hampered by a lack of pre-drill water testing data.

Consumers could save billions on their electric bills if utilities used more long-term contracts, rather than spot market purchases, for natural gas for power generation, according to nonprofit natural gas advocacy group American Clean Skies Foundation (ACSF). In "Power Switch: A No Regrets Guide to Expanding Natural Gas-Fired Electricity Generation," researchers said utilities, gas suppliers and regulators should cooperate and lock in rates at today's low natural gas prices because they are expected to climb by the mid-2010s. Under ACSF's plan, gas suppliers and power generators would both benefit if a new set of long-term gas purchase agreements and associated hedging arrangements were established; the agreements would be designed to share the risk of future price changes between them.

Pennsylvania Department of Environmental Protection Secretary Michael Krancer said a report by the Natural Resources Defense Council (NRDC) is "incorrect and inapplicable to Pennsylvania in many respects," and has urged the environmental group to reconsider its labeling of natural gas as a "dirty fossil fuel." In a three-page letter with to NRDC President France Beinecke, Krancer took issue with the group's claims in its 113-page report issued in May. The Marcellus Shale Coalition, America's Natural Gas Alliance and others have also raised questions about the scope of the NRDC's work and its conclusions.

The Pacific Institute of Oakland, CA, and Western Resource Advocates of Boulder, CO, have published separate reports claiming that water use for fracking is a serious issue. The Pacific Institute cites "growing controversy" over fracking in the past few years and said better research is needed to assess water-related risks. Western Resource Advocates is sounding alarms over how much water is used in fracking operations, and suggesting steps be taken to ensure the "most important natural resource" is not over-allocated.

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