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Natural Gas Pipeline Co. of America (NGPL) has kicked off an open season for space on its Sabine Henry Hub Project for deliveries to a proposed new delivery point to be located in Cameron Parish, LA -- the site of an existing liquefied natural gas terminal and proposed export facility. The pipeline, which is a subsidiary of Kinder Morgan, proposed the $8.6 million project after it received a request from a shipper, which NGPL declined to identify, for 225,000 Dth/d of firm capacity to transport gas to the proposed delivery point at Cameron Parish. The shipper has subscribed the entire capacity of the expansion for a primary term of 10 years and has agreed to bear the full cost of the project. Depending on the open season reason, NGPL will "evaluate whether a bigger project makes economic sense based on the bids received in response to the open season," said Kinder Morgan spokesman Joe Hollier. As part of the expansion, new meter facilities would be installed at the the interconnection between NGPL and Sabine Henry Hub to allow the bi-directional flow of up to 500,000 Dth/d in each direction. The open season will run through Oct. 15.

Tennessee Gas Pipeline Co. got the go-ahead from the Federal Energy Regulatory Commission to provide interim firm transportation service on its Northeast Supply Diversification (NSD) Project beginning Oct. 1, one month ahead of the in-service date for the entire project, which provides more takeaway capacity from the Marcellus Shale region along Tennessee's 300 Line system in New England and the Niagara Falls area of New York [CP11-30]. The Commission approved the pipeline's request to place into service a seven-mile, 30-inch pipeline looping segment and pig receiver facilities at Compressor Station 317 in Tioga and Bradford counties, PA, to provide interim firm service to Anadarko Energy Services Co., MMGS Inc. and Seneca Resources Corp. A precedent agreement also was signed with Cabot Oil & Gas Corp. but the contract does not require it to offer it interim firm transportation service in advance of Nov. 1. From Oct. 1 to Oct. 31 the three shippers will receive on an interim basis a total of 105,000 Dth/d of the entire 250,000 Dth/d to be created by the Northeast Supply Diversification Project. The entire project is set to be completed and in service by Nov. 1.

The Federal Energy Regulatory Commission (FERC) should reject outright or suspend for the maximum five months the proposed rate hike of CenterPoint Energy-Mississippi River Transmission Co. (MRT), which would "drastically increase" costs for both transportation and storage service on its system and make other tariff changes, said industrial users, municipals, distribution companies and the state of Missouri. In the rate case, which MRT filed in August, the pipeline proposed an overall annual cost of service of approximately $104 million, which is $47.3 million more than the cost-of-service that was established in its Section 4 rate case in 2001. Moreover, MRT is "proposing further changes, such as allowing an affiliate [CenterPoint Energy Gas Transmission Co., CEGT] to walk away from maximum rate contracts, and redesigning its rate zones (again, for the benefit of affiliates), that seem clearly designed to penalize captive customers rather than set a just and reasonable rate," U.S. Steel Corp. told the FERC in its protest [RP 12-955]. In a companion joint capacity release application, MRT is seeking permission to excuse CEGT from its currently effective long-term maximum rate contracts and replace a portion of the contracts with a long-term lease of 330,000 Dth/d of firm field zone capacity at a very low $0.03 Dth rate [CP12-503]. MRT is proposing to credit shippers with just the $0.03/Dth lease payment rather than the approximately $10 million (at the current rate) that CEGT otherwise would be contributing to the system through maximum tariff rate revenues.

ExxonMobil Corp. has increased its Bakken Shale leasehold to nearly 600,000 net acres after agreeing to acquire Denbury Resources Inc.'s 196,000 net acres. The North Dakota and Montana properties had average production in the first six months of this year of about 15,400 boe/d, with an estimated 96 million boe of proved reserves at the end of 2011. Denbury is to receive $1.6 billion in cash and would acquire ExxonMobil's stakes in the Hartzog Draw in Wyoming and the Webster field in Texas, which together now produce about 3,600 boe/d net. ExxonMobil, the No. 1 natural gas producer in North America, had "moved into a development phase" in the Bakken leasehold, investor relations chief David Rosenthal said in late July (see NGI, July 30). The transactions are set to close by the end of this year.

PDC Energy Inc. received several development proposals for its Utica Shale position in southeast Ohio from potential joint venture (JV) partners, but they "do not meet PDC's value expectations," so the Denver-based company will pursue development in the play independently. PDC said it believes developing its 45,000 net acre Utica position on a standalone basis will produce greater long-term value, particularly given the high initial production rates and liquids content from recent well results announced by other exploration and production companies in close proximity to PDC's acreage positions. Late last year PDC agreed to sell its Permian Basin assets and said it intended to focus on the Wattenberg Field in Colorado, the Marcellus Shale in West Virginia and the Utica Shale in Ohio (see NGI, Jan. 2). The plan was to seek a working interest partner in the Utica. PDC said the Utica is exceeding its expectations in several key areas, including initial production rates, liquids mix, the pace of de-risking and the delineation of the gas condensate window of the play, which encompasses a substantial portion of PDC's leasehold position.

Midland, TX-based Escondido Resources II LLC said its Spohn Ranch 1H well in the Hawkville Field in Webb County had initial production (IP) exceeding 16 MMcf/d, and it produced more than 400 MMcf of gas in its first 30 days, a record for the play. The well was completed with a 6,975-foot lateral and 25 fracture stages. Escondido plans to further develop the area.

Hess Corp. is acquiring the commodity business of Delta Energy LLC, a regional natural gas marketing company with commercial and industrial (C&I) and small business customers in Ohio, Pennsylvania and five other states. Terms of the agreement, which is expected to close this fall, were not disclosed. New York-based Hess would acquire Delta's natural gas marketing business and associated operations. Delta Energy Services LLC, a separate entity that provides energy management consulting services for industrial clients, is not included in the deal. Most Delta commodity employees would join Hess at offices in Dublin, OH. "Hess Energy Marketing has been a supplier in Ohio since 2000 and with this acquisition will become the No. 1 natural gas C&I supplier in the state," Hess said.

The Federal Energy Regulatory Commission issued a favorable environmental assessment of Creole Trail Pipeline Co. LP's proposal to modify its system to accommodate the delivery of raw gas to a liquefaction project that Cheniere Energy affiliates Sabine Pass LNG and Sabine Pass Liquefaction are planning to build at the existing import terminal in Cameron Parish, LA [CP12-351]. The project would provide 1,530,000 Dth/d of firm reverse flow capacity on the Creole Trail Pipeline for the delivery of feed gas to the proposed Sabine Pass Liquefaction Project, which was approved in April (see NGI, April 23). The Creole Trail project, which has an estimated price tag of $104 million, calls for the construction of the 53,125 hp Gillis Compressor Station, modifications to three existing meter and regulation stations to allow bi-directional flow and increased capacity, and a 42-inch diameter pipeline lateral connecting the Gillis Compressor Station to the existing Creole Trail Pipeline, all in Beauregard Parish, LA.

The California Independent System Operator is making plans for a long-term loss of the 2,200 MW San Onofre Nuclear Generating Station (Songs), now in its eighth month out of service. One stopgap measure used this summer -- firing up two idle natural gas-fired generation units at Huntington Beach -- will not be available next year because of the units' emissions credit transfers taking place Nov. 1. The two units would be used in a nonpower production role supporting the grid's transmission flow in the southern half of the state as "synchronous condensers," meaning instead of generating power they are used through their transmission grid connection to "push power" through the grid, a key role in the midst of peak summer day demand. The governing board on Sept. 13 approved a rule to allow the grid operator to prevent mostly gas-fired generation plants from permanently shutting down in the event they are needed to maintain adequate grid reliability.

The Louisiana Department of Conservation (DEC) is working with companies operating on the Napoleonville Salt Dome in the southern part of the state where a sinkhole has been threatening energy infrastructure and area residents for weeks (see NGI, Sept. 10). Salt Dome owner Texas Brine Co. LLC has been drilling an exploratory well that soon is expected to reach the top of the salt dome. The DEC has expressed concern about natural gas trapped in pockets in the area of the salt dome. "The Office of Conservation committed from the start that we would maintain close oversight over this project to ensure it continued to move forward as swiftly as possible, without sacrificing the safety of the public and the workers on site," said Commissioner of Conservation James Welsh. "The focus will now be on completing the well and assessing the status of the cavern and its contents to establish what role it may play in the nearby sinkhole and the natural gas that has been detected in the area."

Caballo Energy LLC is building a cryogenic gas processing plant to serve expanding production in the Mississippian Lime and Cana Woodford Shale plays. The Carmen Gas Processing Plant, to be sited near Carmen, OK, is set to be in service by the end of 1Q2012, with capacity to process 60 MMcf/d, bringing processing capacity in the region to about 100 MMcf/d. The 160-acre site would allow for the construction of a second cryogenic plant at the same location. The Carmen plant and Caballo's existing Eagle Chief plant serve the company's Eagle Chief system, which includes more than 600 miles of gathering pipelines and compression facilities in Alfalfa, Blaine, Garfield, Major and Woods counties in Oklahoma.

State of Texas tax revenues during fiscal year 2012, which ended Aug. 31, were considerably higher than the prior year, in part to energy activities in the state, according to the state comptroller's office. Taxes collected on natural gas production were $1.5 billion, a 38% increase from the prior year while oil production taxes were $2.1 billion, up nearly 43%. Sales tax revenues have also been climbing as consumers -- including the oil and gas industry -- spend more. August sales tax revenue was $2.34 billion, an 18.5% increase over August 2011.

Calumet Specialty Products Partners LP plans to expand its existing refinery in Karns City, PA, to include a natural gas-to-liquids (GTL) plant with a nominal processing capacity of 1,000 b/d. The processing company has commissioned Ventech Engineers LLC to design and build the GTL plant as truckable modules at its fabrication facility in Pasadena, TX, which then would be transported to Karns City, with an in-service date in the second half of 2014. The GTL plant would use an autothermal reformer from Haldor Topsoe Inc. to reform natural gas into synthesis gas, a mixture of hydrogen and carbon monoxide.

A University of Minnesota research team is working on a biotechnology-based process to purify wastewater from hydraulic fracturing (fracking) operations. The effort recently received a $600,000 grant from the National Science Foundation's Partnerships for Innovation (NSF-PFI) program. Researchers are using naturally occurring bacteria embedded in porous silica materials to biodegrade contaminants in fracking wastewater, a technology they originally developed to remove agricultural pesticides from soil and water. They now have the ability to customize the technology to degrade chemicals in water used for fracking and have a goal to make the water suitable for re-use in fracking other wells and reduce the amount of water used by industry.

Houston's Rice University, a longtime locus of energy research, has formed the Energy and Environment Initiative (E2I) to pair university researchers with the city's energy industry leaders to make the most of hydrocarbons while preparing for a future of alternative energy sources. "This is about building a bridge from today's fossil fuel economy to an all-of-the-above energy future in which all sources of energy are used in concert," said Rice Provost George McLendon. E2I researchers are to study energy policy and markets, finance and management, as well as the cultural and societal values that underpin and sometimes undermine public discussion about energy and the environment.

Altoona, IA, will be home to the state's first liquefied natural gas (LNG) fueling stop for long-haul trucks and other vehicles operating on LNG, following recent approval of a site plan by city officials. The Pilot Flying J Travel Plaza long-haul trucking stop on Interstate 80 is part of the 150-station network announced last year (see NGI, Aug. 29, 2011). The Altoona facilities would be linked to two other LNG fueling stations, the closest being 250 miles away in LaCrosse, WI, and a second farther away in Ohio.

Rising crude oil prices pumped up the drilling rig count (53) in California to a 22-year high in July, with a lot of the action in "urban plays," such as Whittier and Carson, two Los Angeles suburbs that have put together more than 90 requirements that drilling operators have agreed to adhere to for the opportunity to do some new exploration and production (E&P) work in old fields, according to the Los Angeles Times. Whittier has sought to have environmental improvements made to the oilfield lands at the same time it develops an added revenue stream for the city. Royalties of 30-50% are included in the settlement, which the city characterized as "both parties feeling that their efforts and goals are now best served through the consummation of this settlement." Los Angeles County elected officials will have to ratify the agreement. In Carson, Occidental Petroleum Corp. has proposed "disguising" its drilling rig around a warehouse-like facade. In addition, pumps would be placed underground.

The Natural Resources Defense Council (NRDC) has launched a project to offer communities in five states help in blocking hydraulic fracturing (fracking). The first focus would be on Pennsylvania and Ohio, and would extend to New York, Illinois and North Carolina. NRDC plans to work with "local partners to evaluate the lay of the land and identify the opportunities that are most promising, effective, and potentially precedential in each of these states. For example, in three of these states where fracking is not yet widely practiced, there is an opportunity for communities to arm themselves with appropriate protections before serious community impacts occur," a spokesperson said.

Pittsburgh City Council President Darlene Harris said the city council has unanimously voted in favor of submitting an amicus curiae brief in the legal challenge to Act 13, Pennsylvania's new omnibus Marcellus Shale law. The decision was made despite the state Public Utility Commission finding four sections of the city's ordinance, enacted in 2010, run afoul of Act 13 and need to be amended (see NGI, Sept. 17). The Pennsylvania Supreme Court is scheduled to hear oral arguments on the constitutionality of Act 13 on Oct. 17 in Pittsburgh (see related story).

French President Francois Hollande, who became president earlier this year, said a ban on hydraulic fracturing (fracking) would remain in place during his five-year term. The ban on fracking, which was initiated in 2011 by predecessor Nicholas Sarkozy, will remain in place due to health and environmental concerns, Hollande said at an environmental conference in Paris. The government plans to reject seven applications for exploration permits, which reportedly require fracking operations and which "legitimately raised concern in several regions of France."

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