Northern Natural Gas Co. on behalf of its business, Southern Natural Gas and Florida Gas Transmission, has asked the Federal Energy Regulatory Commission for approval to abandon in place the Matagorda Offshore Pipeline System (MOPS), which includes offshore facilities and onshore facilities in Texas because they are "grossly underutilized." During April, the MOPS system transported less than 6,500 Dth/d, a fraction of the system's original design capacity of 480,000 Dth/d, Northern Natural said. In August 2012, FERC approved Northern's request to abandon the MOPS Phase III facilities; Northern now wants authority to abandon the first two phases, which consist of about 55 miles of 24-inch diameter pipeline that begin at Matagorda Block 686 and continue to onshore facilities at Tivoli, TX. In addition to dwindling pipeline volumes, evidence demonstrates that production declines are permanent, Northern said. FERC denied Northern's original plea to abandon the Phase I and II facilities in an April 2011 order. At that time, there were 17 production points (out of the original 30), and now there are only four production points tied into the MOPS system, Northern said.
The Federal Energy Regulatory Commission has imposed more than $700,000 in civil fines on two subsidiaries of Michigan-based DTE Energy for violating capacity release regulations and misclassifying firm transportation, and park and loan agreements. DTE Gas agreed to pay $15,000 for engaging in flipping, and storage facility Washington 10 is to pay $725,000 for misclassifying 32 transport and storage, and 72 park and loan agreements as intrastate rather than interstate. Washington 10 also agreed to disgorge $2.5 million in unjust profits, plus interest. The two subsidiaries admitted to the violations [IN13-10]. From September 2001 through March 2006, FERC said DTE Gas released 17.755 million Dth of capacity to WPS Energy Services Inc. (now Integrys Energy Services Inc.) and its affiliates. Between March 2001 and October 2002, capacity also was on an alternative monthly basis to affiliated customers.
Kodiak Oil & Gas Corp. agreed to pay $660 million in cash to Liberty Resources Inc. for 42,000 net acres and associated production in North Dakota's Williston Basin, which would expand Kodiak's position to about 196,000 net acres. The transaction includes oil and natural gas production, which recorded an average net output of about 5,700 boe/d in May. The leasehold also includes 35 controlled drilling spacing units, based upon 1,280-acre units, and is 90% held by production. The deal is subject to conditions and adjustments, with an effective date of March 1. Upon closing, Kodiak would assume Liberty's contract for one drilling rig.
Devon Energy Corp. plans to form a midstream master limited partnership (MLP) to hold some of its natural gas gathering and processing assets in Texas, Oklahoma and Wyoming. A registration statement is to be filed with the Securities and Exchange Commission in the third quarter, and subject to market conditions, an initial public offering would follow. Once launched, Devon would own the general partner of the MLP, the incentive distribution rights and most of the common units. Proceeds from the common units sale would be used to fund continuing operations.
Gulf of Mexico explorer McMoRan Exploration Co. (MMR) is no longer a publicly traded stock after shareholders on June 3 approved a merger with a subsidiary of affiliated conglomerate Freeport-McMoRan Copper & Gold Inc. Under a friendly agreement in late 2012, Freeport agreed to pay close to $3 billion for MMR and more than $9 billion including debt for Plains Exploration & Production Co.; the Plains deal closed at the end of May (see NGI, Dec. 10, 2012). Freeport Chairman Jim Bob Moffatt co-chaired McMoRan with Freeport CEO Richard Adkerson. MMR shareholders are to receive $14.75/share in cash, or $2.2 billion for shares not owned by Freeport, as well as 1.15 units in Gulf Coast Ultra Deep Royalty Trust, which would hold a 5% overriding royalty stake in future output from 20 specified ultra-deep exploration targets.
Canadian National Railway (CN) has ordered four liquefied natural gas (LNG) tenders, which carry fuel for the locomotives, from Westport Innovations Inc., the first of which are to be delivered this year. CN in 2011 collaborated with Westport and Gaz Metro Transportation Solutions to test replacing diesel with LNG, and last fall CN retrofitted two locomotives to run on a mixture of 90% LNG and 10% diesel; the gas is being supplied by Encana Corp. (see NGI, Feb. 4).
U.S. District Court Judge Robert Mariani of the Middle District of Pennsylvania has ruled against a Lycoming County, PA, landowner who had argued an oil and gas lease could not be extended because he was unaware of an extension clause. In a 41-page ruling, Mariani said Good Will Hunting Club Inc. failed to meet the burden of proof that the five-year lease it signed with Great Lakes Energy Partners LLC in June 2006 had expired (Good Will Hunting Club Inc. v. Range Resources Appalachia LLC, No. 4:11-CV-1152). Great Lakes became Range Resources Appalachia LLC in 2007. The club was bound by an authorized consultant's decision to sign the lease, said Mariani. He also ruled for Range on a counterclaim for declaratory relief.
GE Oil & Gas has signed an $84 million agreement with the exploration and production arm of Mexico's Petroleos Mexicanos (Pemex) to provide and install subsea high-capacity wellheads for deepwater and ultra-deepwater drilling projects in the Gulf of Mexico (GOM). The GOM is estimated to hold more than half of Mexico's prospective energy resources, but it needs advanced technology to tap the oil and gas, according to GE. The high-technology subsea wellheads would provide a larger load, pressure capacity and a full-bore design, helping drillers reach greater depths. Pemex is to receive SMS800 and DWHC 700 wellheads, similar technology that GE already has installed at several Mexican oilfields including Perdido, Lakach and Kunah.
Western Canadian operator Penn West Petroleum Ltd. has hired a new CEO and is reducing overall staff by about 200, or 10% of the workforce. CEO and President Murray Nunns, who has run the former energy trust for the past eight years, resigned from his position, said Chairman Rick George, who took over in early May. George retired as CEO of oilsands giant Suncor. Former Marathon Oil Corp. executive David Roberts is to take over as CEO and president on June 19. Penn West's dividend also has reduced to C14 cents/share from C27 cents. "We will be looking for a huge step change in both where capital is spent as well as the efficiency of each dollar invested," George said.
The Ohio Department of Natural Resources (ODNR) ordered Harch Environmental Resources Inc. to cease operations in the state after finding evidence that the company illegally dumped oilfield waste at a farm in St. Clairsville, in Belmont County. Regulators also took aim at Gulfport Energy Corp., which had contracted with the brine hauler. Both companies may face civil or criminal penalties from the Ohio Attorney General's Office. Harch was ordered to begin containment and remediation efforts at the site, cease operations at a temporary storage facility, and show cause over why the state should not revoke its brine hauling permit.
The Ohio Buckeye Water District (BWD) agreed to supply water for at least three years to a subsidiary of Rex Energy Corp. for drilling in Carroll County, OH. R.E. Gas Development LLC is purchasing at least 30 million gallons of water annually for three years at a rate of $6.60/1,000 gallons, with anoption to continue the agreement annually at a rate of $8.00/1,000 gallons. Rex has has paid about $198,000 for water to work in Ohio this year, according to BWD.
Portland General Electric has signed deals to develop a 440 MW natural gas-fired electric generation plant in Oregon, along with new wind power and electric transmission. Moody's Investor Services called the deals "credit positive," noting they add about $1 billion in capital expenditures to $1.5 billion already planned for the 2013-16 period. Projected to cost $440-455 million, the gas-fired baseload combined-cycle generation plant would be built near its existing Boardman coal-fired plant, slated for retirement.
The first compressed natural gas fueling station has opened in Newark, NJ, as part of a nationwide partnership between Clean Energy Fuels Corp. and Covanta Energy Corp., which plan to establish fueling infrastructure nationwide. Clean Energy is to build and operate the stations using Covanta's energy-from-waste process that recycles municipal solid waste into renewable energy.
Illinois-based Dillon Transport is adding 25 liquefied natural gas (LNG)-fueled Kenworth T800 short-hood tractors with Cummins Westport ISX12 G natural gas engines to its fleet operating from Dallas. The trucks would haul asphalt, sand and other bulk products with a range of about 600 miles and would be refueled in Dallas at a Clean Energy Fuels Corp. facility.
Energy development and conservation/environmental mitigation are coexisting in Wyoming, and resource development doesn't have to mean "ruin," said Gov. Matt Mead, who recently issued the state's revamped energy strategy (see NGI, May 20). Wyoming is trying to create a framework to balance energy and conservation needs, he said. Applying the "right reclamation science, in the right places, and at the right time" results in "a net increase in overall natural resource conditions." Wyoming has shown this is not only possible, but it is "proven and should be expected."
The Mahoning Valley Midstream (MVM) group in northeastern Ohio has a proposal to create a network of wet gas gathering lines and other infrastructure in the Utica Shale, using the region's steel industry, abandoned or partially used rail lines and existing highways. MVM identified seven rights-of-way in Ashtabula, Geauga, Mahoning, Portage and Trumbull counties that could be used to bring the gas to market. The group added that although the seven rights-of-way were privately owned or owned by the government, their owners and controllers had either verbally or contractually agreed to make their property available for midstream development.
Under a five-year memorandum of understanding, Sandia National Laboratories and SRI International have partnered to explore, test and evaluate hydrogen and natural gas fuel systems and components for transportation in Sandia's Center for Infrastructure Research and Innovation (CIRI). The collaboration also plans capitalize on research at Sandia's Combustion Research Facility (CRF) at its Livermore Valley Open Campus in California.
Portland, OR, Mayor Charlie Hales in a speech called for Oregon state investment funds to purge themselves of fossil fuel holdings. Along with divesting itself of fossil fuel stock investments, Portland plans to implement a 2012 resolution directing all city bureaus to buy 100% of their energy needs from renewable sources. Hales contends that fossil fuel assets are concentrated in about 200 publicly traded companies, and eventually all of them will "burn through their entire reserves."
The Australian Council of Learned Academies (ACOLA) said shale gas development in Australia will be an expensive proposition, with infrastructure costs double those in the United States. According to the group, Australia's growing shale gas industry, which researchers said was "very small" by North American standards, will spend more than $500 million on exploration in the country over the next one to two years. ACOLA said estimates over how much natural gas was locked in Australia's shale plays varied widely and "have a high degree of uncertainty attached to them." The most commonly cited figure was 396 Tcf, but researchers said that figure was based on only four basins. If all prospective basins were considered, the figure could be more than 1,000 Tcf.
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