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The Federal Energy Regulatory Commission has given Transcontinental Gas Pipe Line (Transco) the go-ahead to place into service the remaining facilities that are part of the first phase of its 225,000 Dth/d expansion of its system to serve growing natural gas markets in the Southeast. The Phase I project, which would add 95,000 Dth/d, is scheduled to begin service this month. Construction of Phase II, which would add 130,000 Dth/d, is expected to go into service in June 2013. Transco has estimated the capital cost of the project at $217 million. The Mid-South Expansion Project consists of five loops totaling 23 miles of new pipeline. The facilities in the first phase that were approved for service include three loops in Randolph County, AL; and Gaston County and Davidson County, NC, as well as modifications to existing compressor stations in Georgia, South Carolina and North Carolina [CP11-18]. Transco said it has entered into binding precedent agreements for 100% of the incremental firm transportation service to be provided by the project (see NGI, May 31, 2010).

The public comment period has been extended for two months on the proposed Jordan Cove liquefied natural gas (LNG) import-export facility and connecting transmission pipeline, which would be sited along the south-central coast at Coos Bay in Oregon. The Federal Energy Regulatory Commission in June began a second environmental review of the project's 230-mile, 36-inch diameter Pacific Connector pipeline (see NGI, April 16). Previously proponents gained conditional federal approval for an import terminal; backers now seek approval to export up to 1.2 Bcf/d. The project also would require approvals from the U.S. Department of Energy.

Dominion Transmission Inc. (DTI) was given the green light by the Federal Energy Regulatory Commission to place into service its Appalachian Gateway pipeline, which will loosen a bottleneck for growing markets in the Mid-Atlantic and Northeast. The facilities were to begin service on Saturday (Sept. 1), said DTI's Dan Donovan. The Dominion Resources subsidiary built 110 miles of 20-, 24- and 30-inch diameter pipeline between West Virginia and Pennsylvania, and installed four compressor stations to add about 17,000 hp and upgrades to existing compressor stations in the two states. The pipeline facilities allow DTI to ultimately deliver 484,260 Dth/d to an interconnect with Texas Eastern Transmission at its jointly owned Oakford storage facility with Spectra Energy in Delmont, PA, east of Pittsburgh [CP10-448]. The project's capacity is 100% subscribed, mostly by West Virginia producers and some producers in Pennsylvania. DTI said it has 18 contracts with supply aggregators in the Appalachian region for the full design capacity of the project. The largest customer, which has reserved slightly more than half of the capacity, is affiliate Dominion Field Services. Each of the agreements is for firm service for a primary term of 10 years.

The Marcellus Shale Coalition (MSC) released a Recommended Practice (RP) for pre-drill water supply surveys, the third in a series of shale development recommendations by the industry-backed organization. The latest RP is intended to ensure that homeowners' water is properly tested prior to oil and gas development in their areas. In its most recent RP, the MSC noted that Pennsylvania regulations require natural gas producers to sample and test -- with the owner's consent -- all water supplies within 2,500 feet of a proposed Marcellus Shale natural gas well. These pre-drill tests, which are conducted by certified laboratories, provide a baseline analysis of water chemistry prior to site preparation and development. The organization added that many producers test well beyond the 2,500 feet requirement and were doing so prior to Pennsylvania enacting these new regulations. The MSC said the tests are especially important in Pennsylvania as nearly 40% of the state's water wells do not meet at least one safe drinking water standard and another 20% of wells contain pre-existing methane, according to the Center for Rural Pennsylvania. "For years, well before shale gas production began in the Commonwealth, straightforward science has informed us that Pennsylvania's groundwater chemistry drastically varies across regions," said MSC President Kathryn Klaber. "This Recommended Practice builds upon what's required by law and lays out in great detail steps operators can take to help ensure homeowners have a clear understanding of their water quality before natural gas-related activities begin. These tests, paid for by the natural gas producer, are shared with the well owners and state regulators, serving a critical public health function in many cases."

Transwestern Pipeline Co. LLC's application to abandon by sale to affiliate Lone Star NGL Pipeline LP a nearly 60-mile segment of its system in West Texas has been approved by the Federal Energy Regulatory Commission. The Energy Transfer Partners LP subsidiary proposed to abandon by sale a 59.5-mile long segment of 24-inch diameter pipe that extends from Monument Junction to Halley Junction in Winkler County in West Texas. The pipeline segment, which is part of its West Texas Lateral, is looped by a 30-inch diameter pipeline, which Transwestern will retain [CP12-94]. Lone Star, a nonjurisdictional pipeline, is a joint venture of Energy Transfer and Regency Energy Partners LP. The existing capacity of the West Texas lateral is 585 MMcf/d for northbound flows and 550 MMcf/d for southbound flows. After the proposed abandonment, capacity for northbound flows on the lateral is expected to drop to about 500 MMcf/d and capacity for southbound flows would decrease to 480 MMcf/d. Transwestern said firm customers presently have subscribed for only 250 MMcf/d of capacity on the West Texas Lateral, all of which can be served from the 30-inch diameter loop line.

Ohio's Wayne National Forest (WNF) Supervisor Anne Carey said a supplemental information report has proved that there is no need to amend the forest's land and resource management plan nor to supplement the environmental impact statement to address possible surface impacts from unconventional drilling. Last November the U.S. Forest Service (USFS) withdrew more than 3,300 acres of public land in the WNF from a Bureau of Land Management (BLM) lease sale until a study was done. Based on Carey's decision, USFS expects the BLM to resubmit a request to hold an oil and gas lease auction. About 41% (98,858 acres) of the oil and natural gas minerals in the forest are owned by the BLM. Privately owned mineral rights underlie close to 59% (142,333 acres).

Mergers and acquisitions (M&A) within the oilfield services sector should pick up steam over the next one to two years, with most of the activity centered in North America, according to a survey by Ernst & Young. In its report "Dealmaking in Oilfield Services," the consultant said energy industry and private equity executives who deal in the sector were surveyed, with most of those responding (84%) expecting to see more M&A in 12-24 months. None of 50 who were surveyed expected dealmaking to decline. According to 80% of those asked, North America is likely to lead all regions in activity, followed by Asia-Pacific (52%), Western Europe (26%), Eastern Europe (14%) and Africa (12%). Most respondents (88%) cited access to new markets and customers as the primary driver of acquisitions, while vertical integration to extend services and access to new technology followed closely. Oilfield services companies will also look for opportunities to broaden and expand their service offerings, the survey noted. More than half of those responding (54%) cited changes in regulatory framework as the "biggest challenge" to executing their business strategy, while the second big challenge, cited by half of those responding, was identified as economic and commodity price uncertainty.

Gulf Coast petrochemicals maker TPC Group Inc. agreed to be taken private by First Reserve Corp. and SK Capital Partners in a cash-and-debt transaction valued at $850 million. TPC produces specialty chemical products that include butadiene and high-purity isobutylene for industrial use and manufacturing. Facilities are along the Gulf Coast on the Houston Ship Channel, in Baytown and Port Neches, TX, as well as in Lake Charles, LA. "As a growth equity investor, First Reserve is looking forward to helping TPC Group expand its core business to capitalize on the advent of the shale plays in North America and the resulting increase in supply of natural gas and natural gas liquids," said First Reserve Director Neil Wizel.

The Federal Energy Regulatory Commission (FERC) approved El Paso Natural Gas Co.'s request for a presidential permit to build border-crossing facilities at the international boundary between the United States and Mexico to export natural gas to northern Mexico for its expanding power generation market. El Paso's Norte Crossing facilities (1,500 feet of 36-inch diameter pipe), which would run underneath the Rio Grande River, would deliver up to 366,000 Mcf/d of natural gas to a new delivery interconnect a proposed pipeline at the border, which in turn would deliver the gas to new generation plants to be constructed in northern Mexico. Mexico's Comision Federal De Electricidad (CFE) is proposing to build five power plants over the next 15 years to serve demand in the states of Chihuahua, Durango and Coahuila. CFE already has awarded a contract for the construction of the first of the plants, the Norte II power facility, and has contracted with Tarahumara Pipeline S. de R.L. de C.V. to build the proposed Tarahumara Pipeline. CFE's Norte II power plant is scheduled to enter service in July 2013 and will consume 97,000 Dth/d, according to the FERC order [CP12-96]. El Paso, a pipeline subsidiary of Houston-based Kinder Morgan Inc., also plans to construct new upstream facilities that will connect the Norte Crossing facilities to El Paso's existing Samalayuca System located in El Paso County, TX. MGI Supply Ltd., an existing firm shipper on El Paso's system, has entered into an agreement with El Paso for capacity at the proposed Norte Crossing facility.

Calgary's Bonavista Energy Corp. plans to expand its Western Canadian operations after announcing a C$155 million agreement that would double its land position in the Deep Basin and increase estimated output by 10%. Production from the 113,000 net acres to be acquired from an undisclosed seller is estimated at 6,700 boe/d, 94% weighted to natural gas; the land is adjacent to Bonavista's existing position in west-central Alberta. Total proved reserves to be acquired are estimated at 18.2 million boe, which includes 102 Bcf and 1.52 million bbl of oil and natural gas liquids (NGL). Proved plus probable reserves, which would add 7% to Bonavista's base, are estimated 24.12 million boe. Two gas processing facilities with a total of 102 MMcf/d of gross throughput capacity also are part of the purchase. Once the transaction is completed, which is now expected by Oct. 1, Bonavista said total output would be 74,500 boe/d, which would be about 10% higher than today and 61% weighted to gas.

The New Mexico Supreme Court has upheld a state district court regarding royalties allegedly owed by ConocoPhillips and Burlington Resources Oil and Gas Co. from past production on state lands. The state district court had ruled in favor of the two operators, which challenged royalty assessments by the State Lands Commission that estimated that ConocoPhillips owed $18.9 million and Burlington $5.6 million. The district court earlier had denied the commission's motion for reconsideration on its "implied covenant to market claim." The district court reasoned that to imply a covenant that forces oil/gas operators to bear the costs of placing gas in a marketable condition would require the district court to alter the express terms of the lease, and ruled it had no power to change the lease.

In the medium- and long-term the prospects for natural gas-fired power generation look "sound" for North America, according to Frost & Sullivan (F&S). Eventually, all of the principal energy-consuming regions of the world will experience more of a push for gas, according to F&S Industry Director Harald Thaler, who authored "Global Prospects for Gas-Fired Power Generation," which calls "coal's unpopularity" a leading driver. "New analysis finds that global gas-fired power plant orders will total 537 GW through 2020," Thaler said. He listed a number of factors spurring this demand growth, including coal conversions and the "massive" availability of gas supplies around the world, led by the proposed Nabucco pipeline between Turkey and Austria in Europe, liquefied natural gas expansions in Qatar and Australia, and the U.S. shale gas boom.

New Mexico has completed hearings on modifying well site pit rules. Closing written statements from all parties are due Sept. 17, and deliberations are set to begin at the New Mexico Oil Conservation Commission (OCC) on Sept. 24. Put on hold by a state judge until hearings were completed (see NGI, May 28), the petition by the Independent Petroleum Association of New Mexico (IPA) and the New Mexico Oil & Gas Association (OGA) seeks administrative changes to state's rules for handling natural gas and oil drilling production waste. IPA and OGA representatives said costs are rising to comply with the pit rules, while local ranchers expressed environmental concerns.

Seven of eight wrongful death lawsuits related to the rupture of a Pacific Gas and Electric Co. (PG&E) natural gas transmission pipeline in San Bruno, CA two years ago have been settled, PG&E Corp. CEO Anthony Earley said. PG&E expects to pay $1-2 billion in legal settlements and regulatory imposed penalties in the next few years (see NGI, June 4). Earley reiterated that he expects a "global settlement" with the California Public Utilities Commission before the end of the year (see NGI, Aug. 13).

Houston-based Sanchez Energy Corp., which holds a 95,000 net acre position in the lEagle Ford Shale, highlighted the performance of recent wells and said they "demonstrate the progress made in substantially derisking the majority of the company's acreage position in the Eagle Ford Shale trend." The wells were completed in southern Fayette County, TX, within the company's Marquis project area. Here Sanchez has about 51,000 net acres in its Fayette and Lavaca counties. "We believe that the impact of our latest Marquis wells is significant as we have approximately 51,000 net acres with 100% working interest and thus a substantial amount of running room in this area," said Sanchez CEO Tony Sanchez III.

Fort Worth, TX-based Quicksilver Resources Inc. provided an operational update on its recently completed well in the Delaware Basin in West Texas and the completion of an eight-well pad in the Horn River Basin in British Columbia (BC). "The results from our Bone Springs completion are a very good way to kick off our oil drilling program in West Texas. We expect that future wells will have significantly longer laterals and much larger fracture treatments which should translate into greater production volumes," said Quicksilver Chairman Toby Darden. "In addition, we are highly encouraged with our latest completions in the Horn River Basin and intend to continue our efforts to integrate these gas volumes into better downstream markets, including [liquefied natural gas] exports."

A lawsuit filed by Range Resources Corp. against a Texas couple that accused the company of contaminating its drinking water may proceed, said the Texas Second District Court of Appeals in Fort Worth, which found that the lawsuit does not run afoul of a state law against litigation intended to stifle public protest. Range counter-sued the Lipskys and their environmental consultant, Alisa Rich of Wolf Eagle Environmental. Range said the Lipskys and Rich conspired to incriminate the company (see NGI, April 2; Feb. 20). Range said in its lawsuit that Rich conspired with the Lipskys' to do an end-run around the RRC, which already was investigating the alleged well contamination, to gain an audience with the EPA, which Rich believed would be more sympathetic to their cause. The Lipskys had sought to have the counter-suit thrown out, saying it violated a Texas law that prohibits "strategic lawsuits against public participation. However, Judge Trey Loftin of Weatherford, TX, sided with Range in February. In the latest action, the Second District Court of Appeals said it did not have jurisdiction to overturn Loftin's ruling. It said it would hear a petition for an order to block the lower court from enforcing Loftin's ruling.

John Lennon's widow Yoko Ono and his son Sean Lennon are trying to stop hydraulic fracturing (fracking) in New York state by assembling a coalition of artists called Artists Against Fracking. "Mass awareness and peaceful democratic action" can expose and stop "the harmful and contaminating practice" of using fracking to stimulate oil and natural gas wells, the group maintains. The group said it has more than 180 members, including many celebrities. The New York residents said they were moved to form their group by Gov. Andrew Cuomo's apparently favorable view of fracking in the Empire State.

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