The Pipeline and Hazardous Material Safety Administration (PHMSA) has proposed changes to its Part 190 procedural rules to broaden enforcement powers as called for in a bill that President Obama signed into law earlier this year (see NGI, Jan. 9). Congress passed the legislation following fatal pipeline explosions in San Bruno, CA, and Allentown, PA (see NGI, Feb. 14, 2011; Oct. 18, 2010). Key proposed changes include: increase in the administrative civil penalty caps to $200,000/violation/day and up to $2 million for related violations; authority to seek civil penalties for obstructions of inspections or investigations; more power to issue subpoenas; prohibits ex parte communications; and adds references to PHMSA's new authority under the Clean Water Act to enforce its oil spill plan regulations. Comments on PHMSA's notice of proposed changes are due on Sept. 12.
The Commodity Futures Trading Commission's $25 million swaps threshold level for trades involving "special entities," such as publicly owned utilities, will drive nonbanking firms out of the natural gas and electricity markets, leaving trading to big banks, according to the Natural Gas Supply Association (NGSA). The current special entity de minimis threshold would label a nonbank a swap dealer if it engages in a transaction of more than $25 million with a public utility, making it subject to the regulations under the Dodd-Frank Walls Street Reform Act. This could cause an exodus of nonbanks from the natural gas and electricity markets, and "stands to further reduce liquidity in what is a naturally illiquid market for utility operations-related swaps," wrote NGSA and the National Corn Growers Association (NCGA) in a letter to the CFTC. The two groups expressed their support for a petition filed in July by the American Public Power Association, the Large Public Power Council (LPPC), the American Public Gas Association, the Transmission Access Policy Study Group and the Bonneville Power Administration, which asked the CFTC to exclude utility operations-related swaps from the special entity $25 million sub-threshold.
The Alaska Department of Natural Resources (DNR) plans to hold its annual sale of lease tracts in the Beaufort Sea, North Slope and North Slope Foothills, which encompasses a 14.7 million acre area, on Nov. 7. The 2011 lease sale netted more than 300 bids for North Slope and Beaufort tracts, with a total high bid value of $21 million, DNR said. Similar to last year, the sale will include tracts adjacent to federal acreage in the National Petroleum Reserve-Alaska (NPRA). Bids are due Nov. 5. For information, visit http://dog.dnr.alaska.gov.
Upstream exploration and production (E&P) spending in North America is leading the world for the seventh consecutive year, according to a report by GlobalData. Increased activity in the E&P sector will be the primary driver in lifting capital expenditures (capex) to $1.039 trillion this year, the natural resources data service predicted. Total global capex is expected to jump by 13.4% from 2011's $916 billion as operators "intensify" upstream activity in the Gulf of Mexico, Brazil and the Arctic region. North America is expected to witness the highest capex spending this year at $254.3 billion, which is almost one-quarter (24.5%) of the global total. Compared to a global average capex growth rate year/year of 13.4%, North America's is forecast to grow 15.7%. North America has increased its capex for this year at a rate of 14.3% over 2011 investments.
Boardwalk Pipeline Partners LP and an affiliate have agreed to pay $625 million in cash to buy PL Midstream, whose Choctaw and Sulphur salt dome hubs in southern Louisiana provide salt dome storage, pipeline transportation, fractionation and brine supply services for petrochemical producers in Louisiana. The midstream operator was acquired from PL Logistics LLC, a portfolio company of Lindsay Goldberg LLC. The Choctaw Hub is in the Mississippi River Corridor and the Sulphur Hub is in the Lake Charles, LA, area. The acquisition is expected to close by early October.
Operators working in Alaska's Chukchi Sea area would have a negligible effect on polar bears and walruses, according to a three-judge panel of the Ninth Circuit Court of Appeals, which backed rules issued by the U.S. Fish and Wildlife Service (FWS). The panel said the FWS correctly issued rules to provide legal protection for energy operators if small numbers of polar bears or Pacific walruses were incidentally harmed (Center for Biological Diversity, et al v. Kenneth L. Salazar, et al; No. 3:07-cf-00141-RRB). The original lawsuit was filed in July 2008, before Ken Salazar was appointed Secretary of the Interior, and there are related cases linked to the lawsuit. The Center for Biological Diversity took the FWS to court over the habitat rules by claiming that both individual animals and entire populations had to be analyzed for protection. The appeals court concluded that the FWS had done sufficient separate analyses.
Morgan Stanley Infrastructure Partners (MSIP) is taking full ownership in Southern Star Central Gas Pipeline, the primary natural gas transmission and natural gas storage facility provider for several of the biggest cities and power generation providers in Kansas, Missouri and Oklahoma. MSIP in March 2010 had acquired a 40% economic stake with 50% governance rights in Southern Star. The latest transaction, for an undisclosed amount to GE Energy Financial Services Inc., would give the fund 100% of the common equity in Southern Star Central Corp., the parent company.
ATP Oil & Gas Corp., which has filed a voluntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of Texas, said the Macondo well blowout in April 2010, followed by the federal deepwater drilling moratorium, were the primary levers in its decision to restructure. The Houston-based producer said oil and natural gas operations would continue "in the ordinary course throughout the reorganization process and sees the reorganization as a helpful step toward deleveraging the company to position it for future development of its assets" (In re ATP Oil & Gas Corp., No. 12-36187). The voluntary filing gives the company "time and flexibility" to address financial challenges and to position itself for long-term viability. ATP said it had lost the equivalent of $1.1 million a day over the past three years because of equipment failures and challenges in the Gulf of Mexico, which has spurned efforts to produce oil and gas.
Sempra U.S. Gas & Power LLC has received authorization from the Federal Energy Regulatory Commission to place a second underground natural gas storage cavern into service at its Mississippi Hub Storage facility in Simpson County, MS (see NGI, Sept. 12, 2011). The second cavern's 7.5 Bcf capacity expands total working gas storage capacity to 15 Bcf. The facility has injection capability of 450 MMcf/d and a withdrawal capability of 1,200 MMcf/d. While the facility is permitted for four storage caverns holding up to 30 Bcf of working gas, the company said it expects to complete construction on a third 7.5 Bcf cavern in 2013, which would expand the site's storage capacity to 22.5 Bcf.
Boardwalk Pipeline Partners LP's Gulf South Pipeline Co. LP has received sufficient binding commitments for its proposed Southeast Market Expansion and plans to move forward with the permitting process with the Federal Energy Regulatory Commission within the month. At an estimated cost of $300 million, this phase of the Southeast Market Expansion is expected to be in service in 4Q2014 and add 450 MMcf/d.
The Pennsylvania Department of Environmental Protection has notified Cabot Oil & Gas Corp. that it has satisfied the terms of a 2010 settlement and may resume hydraulic fracturingand completion activities at seven natural gas wells in Dimock Township. However, the producer is still barred from drilling new wells in the area. Several rounds of testing by the U.S. Environmental Protection Agency had determined that water from private wells in Dimock was safe to drink (see NGI, July 30; March 19). Separate testing by the state arrived at the same conclusion (see NGI, Jan. 30; Jan. 23).
Japan's Inpex Corp. has disclosed that it was the mystery buyer of a stake in the promising Lucius deepwater development. Subsidiary Teikoku Oil (North America) Co. Ltd. purchased the 7.2% participating stake from operator Anadarko Petroleum Corp. Anadarko in early July said it had sold some of its Lucius stake to an undisclosed party in exchange for $556 million to help fund the project to first production in late 2014 (see NGI, Aug. 6). Anadarko, which now holds a 27.8% interest with the sale, also partners in the project with Plains Exploration & Production Co. (23.3%), ExxonMobil Corp. (15%), Apache Deepwater LLC (11.7%), Petroleo Brasilerio (9.6%), and Eni SpA (5.4%).
Royal Dutch Shell plc's decision to invest $1 billion a year in unconventional natural gas exploration in China won't alter plans to export liquefied natural gas (LNG) from British Columbia (BC) to Asia Pacific markets, according to affiliate Shell Canada Ltd. The oil major said it plans to invest billions into China's unconventional fields and in infrastructure; it also is moving its global coalbed methane business to China to establish an unconventional research hub. However, Shell Canada said it still plans to develop with its Asian partners a 24 million ton/year LNG export facility near Kitimat, BC, the largest North American export facility proposed (see NGI, Aug. 6).
A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit voted 2-1 to vacate the Environmental Protection Agency's disapproval of the Texas Commission on Environmental Quality's flexible permits program. In a 33-page ruling Judges E. Grady Jolly and Leslie Southwick said the EPA's objections violated the Administrative Procedure Act and were based on regulatory language of its own choosing, not the federal Clean Air Act. The state challenged EPA's ruling in July 2010 (see NGI, Aug. 2, 2010; July 5, 2010). One year later, all 136 of the companies holding flexible air permits had agreed to apply for permits approved by EPA (see NGI, July 18, 2011).
A Siena College Research Institute poll shows New Yorkers are still almost evenly split on the issue of hydraulic fracturing (fracking), but it contains some surprising numbers. According to the poll, released on Aug. 21, most respondents in upstate New York (48%) oppose the state Department of Environmental Conservation (DEC) moving forward with fracking in parts of upstate New York. Meanwhile, most registered voters in New York City (39%) support such a move. All responses to questions asked in the poll have a margin of error of plus/minus 3.8%. Overall, 39% of respondents support a possible move by the DEC while 38% are opposed, up from the 37-36% support for fracking from a similar poll in May. Fracking supporters outnumbered opponents in New York City (39-30%) and the suburbs (41-37%), but upstate voters opposed it (48-36%).
Health care providers Guthrie Health and Geisinger Health System have formed a partnership to study the health impacts of Marcellus Shale gas drilling, saying it will be "the first large-scale, scientifically rigorous assessment of the health effects of natural gas production. A team from Guthrie and Geisinger will lead the effort to utilize their electronic health records to investigate the health effects of Marcellus gas drilling. The study will look at detailed health histories of hundreds of thousands of Geisinger and Guthrie patients who live near the Marcellus Shale.
Changes in fossil fuel use in recent decades contributed to methane and ethane levels in the atmosphere dropping, according to a research report by University of California at Irvine professors that was published in the journal Nature. Since 2007, however, methane levels have begun to climb again. Senior author Donald Blake concluded that increased capture of natural gas from oilfields probably accounted for up to 70% of the substantial leveling off seen in atmospheric methane at the end of the 20th century. The more recent increases in methane levels have renewed the urgency to understand what happened during the 20- to 25-year decline. Methane has 20 times the global warming potential of carbon dioxide (CO2), although CO2 is filling the atmosphere in far larger amounts, Blake said.
Houston-based Midstates Petroleum Co. agreed to pay Eagle Energy Production LLC $650 million in cash and stock for acreage in the Mississippian Lime and Hunton plays. The transaction would give Midstates 37 million boe of proved reserves (35% oil and 23% natural gas liquids), 114 gross producing wells and net current daily production of 7,000 boe/d. The deal would also add 103,000 net acres, including 84,000 in the Mississippian Lime (78,000 in Oklahoma and 6,000 in Kansas) and 19,000 in the Hunton play in Oklahoma. Closing is expected by Oct. 1.
Elected leaders in Garfield County, CO, agreed to have university researchers proceed with a study of emissions from natural gas drilling operations in parts of the nearby Piceance Basin. County commissioners directed staff to develop a draft agreement with Colorado State University (CSU), which is proposing a nonpartisan scientific study to examine air emissions from gas extraction operations in the county from development through well completion. Almost half of the $1.76 million study would be funded by operators, with the rest from the county-administered oil/gas mitigation fund.
CBS News reported the New York Department of Environmental Conservation (DEC) will announce sometime after Labor Day that high-volume hydraulic fracturing will be allowed to move forward in the state, but DEC spokeswoman Emily DeSantis said the report was "premature." Meanwhile Robert Hallman, deputy secretary for the New York State Energy Research & Development Authority's Energy and the Environment division, said the administration of Gov. Andrew Cuomo supports natural gas and called it a "bridge fuel" to cleaner energy sources.
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