The federal government's budget sequestration has hit the Energy Information Administration (EIA), forcing the agency to suspend publication of its Annual Energy Review (AER) and its companion publication, Energy Perspectives. The publications, which were to be released later this year, were to have included data compiled during 2012. EIA said it will expand its Monthly Energy Review (MER) to incorporate annual data as far back as 1949 for data series from about 70 key tables currently included in AER and MER. The expanded monthly publication will combine historical data usually published in the AER with up-to-date data from the MER. The announcement comes just weeks after EIA said it hoped to expand its monthly 914 survey to include individual reports on 14 states (see NGI, April 8). EIA's ability to expand its reporting of gas production would hinge on several factors, including the federal government's budget sequestration, Barbara Mariner-Volpe of EIA's Office of Energy Statistics said at the time.

Before leaving for recess Friday, Sen. Lindsey Graham (R-SC) was unable to reach a deal with the White House to remove his hold blocking a Senate vote on the nomination of Ernest J. Moniz as secretary of the Department of Energy. The senator placed the hold to protest the $120 million spending cut for a nuclear processing facility in his home state. It could be several weeks before Moniz, a physical professor at the Massachusetts Institute of Technology, is confirmed, given that the Senate is not expected to return until May 6. The Senate Energy and Natural Resources Committee overwhelmingly voted out his nomination (see NGI, April 22). The nomination of Gina McCarthy to head up the Environmental Protection Agency has not yet been voted out of the Senate Environment and Public Works Committee. Sen. Roy Blunt (R-MO) is seeking to block her nomination over a water project in his state (see NGI, March 25).

The Department of Interior is offering more than 21 million acres in the proposed Western Gulf of Mexico (GOM) oil and gas Lease Sale 233 in August, the third offshore auction under the Obama administration's Outer Continental Shelf (OCS) leasing program for 2012-2017. The sale is to include 3,953 blocks that are nine to 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet. The Bureau of Ocean Energy Management estimates that the proposed sale could result in production of 938 Bcf of natural gas and 116-200 million bbl of oil. The Energy Policy Act (EPAct), which provides for royalty relief on natural gas production from deep wells in waters that are more than 200 meters deep, but less than 400 meters, will sunset on May 3 and would not be offered, but ultra-deep gas royalty relief for wells deeper than 20,000 feet would still be available. The final terms and conditions are to be published in the Federal Register at least 30 days before the sale.

Driven by a sharp increase in natural gas prices, gas for electric generation year/year dropped nationwide in February, except in Florida, according to the Energy Information Administration's (EIA) Electricity Monthly report. Overall gas consumption in February fell 11.8%, with a total of 593.8 Bcf burned for generation, or 21.21 Bcf/d on average. There was a 32% jump in gas prices in February from February 2012, with Henry Hub prices averaging $3.45/MMBtu, and the average daily spot gas price delivered in New York City was "relatively high" for a second straight month, increasing from $10.36/MMBtu in January to $10.46/MMBtu on "a cold snap that affected the region" (see NGI, April 15). Of total power generation in February of slightly more than 309 million MWh, gas-fired generation provided 80.2 million MWh, compared with 91 million MWh in February 2012. Coal produced 123.9 million MWh in February, versus 113.9 million MWh a year earlier.

Mississippi Gov. Phil Bryant has signed into law several energy bills passed by state lawmakers this spring, including HB 1698, which enacts a 1.3% reduction in the severance tax for oil and gas extracted from every horizontally drilled well over a period of 30 months, or until the well pay out. The legislation applies to all qualified wells drilled between July 1 and June 30, 2018. Encana Corp., which is the biggest leaseholder in the state's Tuscaloosa Marine Shale, said the tax cut will translate to roughly $700,000 to $800,000 for cash flow uplift for each well drilled. SB 2564, also enacted, provides an energy infrastructure revolving loan fund that allows local governments to borrow at a low interest rate to invest in major economic development. Any area that has a new economic development project of more than $50 million in private investment is eligible to receive funding. Legislation in SB 2913 extended the $15 million fund until 2016.

United LNG LP has conditionally agreed to supply at least 4 million metric tons per year of liquefied natural gas (LNG) from the Main Pass Energy Hub, 16 miles off the Louisiana Coast in the Gulf of Mexico, to Petronet LNG Ltd., India's largest LNG importer. Work is progressing on a final 20-year contract, the parties said. Main Pass is being jointly developed by United and Freeport McMoRan Energy. Petronet is considering purchasing a stake in the project in order to reduce project risk.

The Interior Department's Office of Natural Resources Revenue has slapped Oxy USA Inc. with a $947,200 fine for the "knowing or willful failure" to allow New Mexico to audit the company's oil and gas leases on federal lands. The state asked for documents on volumes, values and royalties for four federal leases and two agreements, but when Oxy allegedly failed to comply, federal officials intervened. The penalty covers the period from Sept. 16, 2011 through March 8, 2012. Oxy may request a rehearing of the penalty; it has denied the claims. The state audit found that Oxy had underpaid royalties by $4,700, which it said it had since paid.

The U.S. Department of Justice (DOJ) has fined SG Interests Ltd. and Gunnison Energy Corp. for allegedly rigged the bidding in a government lease sale in Colorado, according to documents filed in the U.S. District Court for the District of Colorado. Each producer agreed to pay $275,000, in addition to $206,250 by SG and $245,000 by Gunnison in a separate but related action involving False Claims Act violations. The companies would also be required to provide notice of any joint bidding at auctions conducted by the Bureau of Land Management for five years.

With a month to go in the regular session, Texas lawmakers are moving toward changing the Railroad Commission of Texas (RRC) with two bills being considered based on recommendations by the Texas Sunset Advisory Commission (see NGI, Nov. 26, 2012). State Rep. Dennis Bonnen's (R-Angleton) HB 2166 and state Sen. Robert Nichols' (R-Jacksonville) SB 212 were identical when filed. HB 2166 was gutted in the House Energy Resources Committee, where it was pending last Friday. SB 212, voted out of the Senate Committee on Natural Resources intact, would change the name of the RRC to the Texas Energy Resources Commission, restrict the ability of the three commissioners to receive campaign contributions from parties with contested cases, and require a commissioner to resign before seeking another office more than 18 months before the end of term. The Texas Oil & Gas Association, the Texas Independent Producers & Royalty Owners Association, the Permian Basin Petroleum Association, the Panhandle Producers & Royalty Owners Association, and the Texas Alliance of Energy Producers all have said they support SB 212.

The Committee on Regional Electric Power Cooperation, includes representatives of 12 western states and two Canadian provinces, has authorized a study of the level of coordination among the natural gas and electrical systems in the region. A motivating factor is the prospect that more gas-fired generation would be crucial to replace aging coal-fired power plants and smooth out a regional grid that is adding renewable resource. The study will look at how much interface between the two systems exists now and how much will be needed in the future.

The continuing shale gas boom is having a "massive impact" on the U.S. energy market, particularly a revival for various smart grid developments, according to a report by IMS Research, a unit IHS. The report predicts that shale gas will "play a key role" in developing a smart electricity grid by facilitating various aspects of natural gas as a source of power generation. Author Donald Henschel, an IHS senior analyst in metering and energy manager, said gas is "optimal" for use in smaller distributed-generation operations, which can form the basis of microgrids in the power sector.

Kansas Sens. Pat Roberts and Jerry Moran are renewing an effort to shift from federal officials to the states the responsibility to monitor underground natural gas storage facilities.The Underground Gas Storage Facility Safety Act of 2012 (S 763) would authorize states to enforce pipeline safety requirements related to wellbores at interstate storage facilities. State inspection plans would require the approval of the Federal Energy Regulatory Commission. The bill would fill a void by allowing states to step in when the federal government fails to monitor natural gas storage sites, Moran said. The Pipeline and Hazardous Materials Safety Administration (PHMSA) is said to be exploring regulations specific to storage facilities associated with gas transmission pipelines.

A whitepaper by the Senate Finance Committee has suggested eliminating some or all existing energy sector tax expenditures, including intangible drilling costs and those for wind and solar, and a recommendation to replace most or all existing taxes with a new federal excise tax on selling or importing fossil fuels. The Congressional Budget Office has estimated that energy-related tax expenditures will cost $16 billion in foregone revenue in fiscal year 2013, while federal spending on energy will be $3 billion.

Gastar Exploration Ltd. has agreed to sell its East Texas assets to Cubic Energy Inc. for $46 million to deploy capital to higher-return projects in the Marcellus Shale and Hunton Limestone. Meanwhile, Cubic views its acquisition as an entry point to the oil-rich Eagle Ford and Woodbine formations. The assets to be sold include 31,800 gross (16,300 net) acres in the Hilltop area of East Texas in Leon and Robertson counties. During the fourth quarter, net production from the Hilltop area averaged 12.4 MMcfe/d, Gastar said. At year-end, proved reserves attributable to the Hilltop area were 27.4 Bcfe, of which 100% are classified as proved developed and represented about 15% of Gastar's total proved reserves. According to Cubic, production of 2,050 boe/d from the assets has been 97% natural gas and 3% oil.

The Phobos-1 exploration well in the deepwater Gulf of Mexico has encountered 250 feet net of "high-quality oil pay," said Anadarko Petroleum Corp. The discovery in Sigsbee Escarpment Block 39 was drilled to a total depth of 28,675 feet in 8,500 feet of water. It is about 11 miles from Anadarko's Lucius discovery and south of ExxonMobil Corp.'s Hadrian project, both now under development. Data from the Phobos well is being incorporated to determine how to proceed. Anadarko operates and has a 30% interest in Phobos, which is a partnership with Plains Exploration & Production Co. (50%) and ExxonMobil (20%).

A settlement among federal authorities, the Sierra Club and Wisconsin Power and Light (WPL) utility may result in replacing 270 MW of coal-fired electric generation with natural gas-fired units. The U.S. Environmental Protection Agency (EPA) agreement dates back to 2009 when WPL was served with a notice of violation, alleging that past modifications to three coal-fired plants bypassed the appropriate pre-construction requirements. WPL as part of the settlement agreed to retire by the end of 2015 three coal units and either convert to natural gas or retire another unit by the end of 2018.

Idaho regulators have taken steps to ensure that Intermountain Gas Co.'s current projected surplus of liquefied natural gas (LNG) sold to nonutility customers includes benefits for the retail regulated customers. The Idaho Public Utilities Commission (PUC) approved a plan that allows for sales to nonutility customers, but requires utility customers share at least 50-70% of the revenues.

Ohio's Muskingum Watershed Conservancy District (MWCD) approved two agreements to provide water to energy operators in the Utica Shale for three months. MWCD is providing Antero Resources with up to 2 million gallons/d, at a rate of $6.00/1,000 gallons, from Seneca Lake for 92 days. Gulfport Energy Corp. is to receive with up to 25 million gallons of water from Clendening Lake through June 12, at a rate of $8.00/1,000 gallons. If lake levels get too low, the state may rescind the agreements.

Elected officials in Ellwood City, PA, voted o devote $250,000 from the sale of Marcellus Shale eases to repay a 10-year-old bond to renovate the borough's swimming pool. According to the Ellwood City Ledger, the borough, located in Beaver and Lawrence counties, received $370,000 from leasing borough property. The borough spent about half of the remaining $120,000 on repairs at the pool.

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