Lower-than-expected natural gas inventories led Moody's Investors Service to lift its assumptions for North American Henry Hub natural gas spot prices by 50 cents to $3.50/MMBtu in 2013 and $4.00/MMBtu in 2014 and thereafter. Prices sagged in recent years on the unconventional drilling boom and mild weather, which has led to an oversupply, but prices have climbed in 2012 on coal-to-gas switching in the power generation sector and hot weather, and as companies have scaled back their dry gas drilling, Moody's said. Assumptions for natural gas liquids prices remain unchanged at $34/bbl in 2013, 2014 and thereafter, pegging prices at 40% of West Texas Intermediate prices.
An estimated 1 Tcf of natural gas has been found off the southeastern coast of the Republic of Trinidad and Tobago, according to a unit of BP plc. The London-based producer's Trinidad and Tobago unit (BPTT) said the discovery would double the estimated gas in place at the Savonette gas field to 2 Tcf. The Savonette No. 4 appraisal well, which is about 80 kilometers off the southeastern coast of Trinidad, was drilled into an untested fault block east of the original discovery well in the Columbus Basin in water depths of almost 300 feet. The well was drilled to a total depth of 18,678 feet and penetrated hydrocarbon-bearing reservoirs in two intervals with discovered gas in place exceeding initial estimates. The No. 4 gas well began producing in October, flowing at a rate of about 225 MMcf/d and ramping up to 250 MMcf/d.
New York Gov. Andrew Cuomo said the state will miss a Thursday (Nov. 29) deadline for revised rules governing high-volume hydraulic fracturing (fracking), a development that should reopen the rulemaking process to at least one public hearing. In an interview on Talk 1300-AM radio in Albany, NY, Cuomo said he didn't think a three-member panel of health experts hired by the state Department of Health (DOH) to conduct a health impact analysis of HVHF -- would finish their work by the deadline. The Independent Oil & Gas Association of New York has urged the governor to avoid further delays and release the state Department of Environmental Conservation's supplemental generic environmental impact statement on fracking.
Northern Natural Gas pipeline has asked the Federal Energy Regulatory Commission for approval to construct and operate facilities to offload liquefied natural gas (LNG) at its peak-shaving facility in Hancock County, IA, to respond more quickly in the event of outage emergencies, heightened demand and required maintenance, as well as to provide LNG liquefaction and delivery services to third parties on an interruptible basis. The MidAmerican Energy Holdings Co. subsidiary is seeking the go-ahead to offload LNG at the Garner plant in Hancock County to two LNG tractor-trailers; each holds up to 850 Mcf, or an equivalent of 10,000 gallons of LNG, which "would be able to serve a small town in emergency situations." Northern Natural called on FERC to issue a certificate by July so that its $3.7 million offloading facilities could be placed into service by October 2013.
TransCanada Corp. agreed to pay BP plc C$210 million to buy out the producer's interest in the Crossfield Gas Storage facility near Edson, AB, as well as its stakes in an affiliated marketing joint venture (JV) between the two operators. The purchases would give TransCanada 100% ownership in the Crossfield facility and add 27 Bcf of storage capacity to its existing Alberta portfolio. TransCanada has operated Crossfield, in which BP held a 40% stake, since 2011. TransCanada also wants to buy out BP's interests in CrossAlta Gas Storage & Services Ltd., their affiliated JV, which operates a 40 Bcf storage facility. The transaction is scheduled to be completed in early 2013.
Atlas Resource Partners LP (ARP) has picked up its third big leasehold this year in the Barnett Shale by agreeing to pay $255 million to DTE Energy Co. for affiliate DTE Gas Resources LLC, which owns close to 35 million boe of proved reserves in the Fort Worth Basin and in the Marble Falls, TX, area. Estimated proved reserves are 43% weighted to natural gas, 33% to natural gas liquids and 24% oil. Year-to-date average output from the acquired properties is about 3,800 boe/d; full-year 2012 output is expected to hit 4,000 boe/d. The purchase includes 261 gross producing wells on about 88,000 net acres, including about 75,000 net acres prospective for the oil and NGLs in Marble Falls, where there are about 700 identified vertical drilling locations. The acreage is 100% operated; DTE has a 99% net working interest and a 79% net royalty interest.
Of the estimated 33,000 natural gas customers who were impacted by Superstorm Sandy, New Jersey Natural Gas (NJNG) reported on Wednesday that it had restored service to about 18,000 meters on Long Beach Island in Monmouth County and parts of Ocean County. However, before gas can flow to the meters, residents have to return to their homes, have their electricity restored and hire qualified technicians to ensure the equipment is safe to operate, said a NJNG spokesman. He said it was a "little harder to quantify" how much of the distribution system's infrastructure, which was damaged by Sandy, would have to be replaced.
Canada's Atco Pipelines has launched a public information and consultation program as part of an urban pipeline replacement project, which if approved by the Alberta Utilities Commission, would shift the high-pressure transmission of natural gas out of densely populated areas in Calgary and Edmonton into provincially designated transportation/utility corridors that surround the cities. To submit input visit www.atcopipelines.com/upr or call (855) 802-7546.
CNOOC Ltd. has reportedly agreed to conditions set by the Canadian government as prerequisites to its proposed C$15.1 billion takeover bid for Calgary-based producer Nexen Inc. Two sources said CNOOC, an arm of state-controlled China National Offshore Oil Co., agreed to reserve at least half of Nexen's board and management positions for Canadians, along with other conditions recently requested by Alberta Premier Alison Redford, Bloomberg reported. Shareholders of Nexen voted 99% in favor of accepting CNOOC's takeover offer but Canadian Prime Minister Stephen Harper has repeatedly cautioned North American money managers against assuming the bid is a done deal, with some polls indicating that a majority of Canadians oppose the deal (see NGI, Oct. 29). The final Canadian say is in the hands of the federal cabinet.
Integrated producers have stepped up their game in recent years to deal with "large-scale operational lapses," but there still are sources of concern, especially oil spills, according to a risk analysis by MSCI ESG Research, which detailed the top risks for the 30 leading integrated oil and gas producers in "Large Oil Spills -- the Gordian Knot for the Risk Taker?" Norway's Statoil ASA and UK-based BG Group plc, both with extensive North American operations, are "best positioned...to manage associated environmental and social impact, including such aspects of hydrocarbon spills." However, BP plc, the largest leaseholder in the Gulf of Mexico, and U.S.-based Chevron Corp. were singled out as having "high-risk exposure to environmental risks...coupled with significant long-term evidence of operational failures."
Demand for natural gas and oil infrastructure equipment is on track to rise 6.3% a year between now and 2016 when it will total $12.1 billion, according to a report by industry market researcher The Freedonia Group Inc. Advances in the infrastructure sector are benefiting from unconventional onshore development, especially in areas that have not until recently been considered big energy producers, researchers said. These emerging areas are expected to require new or bolt-on infrastructure to economically transport new natural gas and oil resources from the well site. Low natural gas prices have caused many producers to move drill rigs from dry gas areas into the more lucrative liquid plays, but prices are expected to recover by 2016, the researchers said.
SandRidge Energy Inc., which has been under fire from investors, has adopted a rights plan "designed to assure that all of SandRidge's stockholders receive fair and equal treatment in the event of any proposed takeover of the company, to guard against tactics to gain control of SandRidge without paying all stockholders a premium for that control, and to enable all of SandRidge's stockholders to realize the long-term value of their investment in the company. " The plan "is not intended to interfere with any merger or other business combination approved by the board." Investor TPG-Axon Capital has called for replacing CEO Tom Ward, realigning the board and for it to consider a sale (see NGI, Nov. 12).
Rara Terra Minerals Corp. has acquired a 75% working interest in oil and natural gas leases in Trego County, KS, for $393,750. The transaction involves 160 acres overlying the Kansas City-Lansing formation, which sits above the Mississippian Lime formation. The company said it paid $37,031.30 in stock to undisclosed individuals as a finder's fee.
Reuters, citing unnamed sources, has reported that the report commissioned by the U.S. Department of Energy (DOE) on the domestic market impacts of exporting liquefied U.S. gas is being prepared by NERA Economic Consulting. However, neither DOE nor the consultancy would confirm the report. A DOE spokesman told NGI he had no information on what firm was preparing the report or when it would be released, only that it is supposed to be published before the end of the year. NERA is a March & McLennan company that prepares strategies, studies, expert testimony and policy recommendations for government authorities and others, according to its website.
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