Natural gas will remain the most affordable heating option for most residential customers this winter, with mild temperatures expected to keep any increase in gas bills at no more than 5-10% compared with last winter, according to the American Gas Association (AGA). Customer bills are likely to rise slightly as a result of various market forces, but an abundant supply of domestic natural gas has contributed to lower production prices that, combined with robust storage levels, is poised to help ensure a steady supply at a lower cost than other home heating fuels, AGA said in its Winter Fuel Outlook (see related story). Customers who heated their homes with natural gas during the 2011-2012 winter heating season saw average savings of 70% compared to those using heating oil and 32% compared to those using electricity, AGA said.
Chevron Phillips Chemical Co. LP is proceeding with the US Gulf Coast Petrochemicals Project first announced in 2011, which would add an ethane cracker at the Cedar Bayou plant in Baytown, TX, and two polyethylene units in Old Ocean, TX, near the Sweeny plant. The project is expected to begin construction in early 2014 and create about 400 long-term direct jobs, and 10,000 engineering and construction jobs. No information was disclosed about projected natural gas consumption of the facilities or what pipelines might service them. The project received federal and state permits in August.
The Federal Energy Regulatory Commission (FERC) approved an uncontested settlement resolving allegations that Wyoming Interstate Co. (WIC) pipeline over-recovered costs from its shippers, resulting in unjust and unreasonable rates. FERC initiated an investigation in November 2012 based on Form 2 cost and revenue information that WIC filed in 2010, which FERC staff said indicated a substantial over-recovery its actual cost of service. Staff estimated WIC's return on equity (ROE) to be 19.55% for 2010 and 18.51% for 2011, higher than typically allowed (see NGI, Nov. 19, 2012). WIC, which is owned by Kinder Morgan Inc., submitted its uncontested settlement in June on behalf of itself and its shippers, which include Anadarko Energy Services, Bill Barrett Corp., BP Energy Co., Chevron U.S.A. Inc., Occidental Energy Marketing Inc., Public Service of Colorado, Pioneer Natural Resources USA Inc., Shell Energy North America (US) LP and WPX Energy Marketing LLC. The settlement establishes new base rates that became effective on July 1 and will take effect on Jan. 1, 2014; provides how refunds will be calculated and processed; and stipulates that costs attributable to the Echo Springs Lateral be rolled into the cost of service for WIC's mainline service effective Feb. 1, 2015.
Transcontinental Gas Pipe Line (Transco) has filed an application at the Federal Energy Regulatory Commission to build and operate its Leidy Southeast expansion to supply an additional 525,000 Dth/d of capacity from the line in Pennsylvania as far south as Choctaw County, AL (seeNGI, July 8). The Williams pipeline asked the Commission to act on its application by Aug. 1, 2014 to place the expansion into service by Dec. 1, 2015. The proposed project would expand currently subscribed firm transportation capacity of 1.7 MMDth/d by about 30% and provide firm transportation from as far south as existing Station 85 Zone 4 and 4A Pooling Points in Choctaw County. Binding precedent agreements have been completed with Capitol Energy Ventures Corp. (20,000 Dth/d), South Carolina Electric & Gas Co. (40,000 Dth/d), Anadarko Energy Services (50,000 Dth/d), MMGS Inc (50,000 Dth/d), Piedmont Natural Gas Co. (100,000 Dth/d), Public Service Company of North Carolina Inc. (100,000 Dth/d) and Washington Gas Light Co. (165,000 Dth/d).
EQT Gathering LLC's request for a limited certificate to provide jurisdictional compression service through the nonjurisdictional Derry Compressor Station planned for Westmoreland County, PA, has been given the green light by the Federal Energy Regulatory Commission. Also approved was a waiver of all filing and reporting requirements that would otherwise apply as a result of providing interstate service. The proposed Derry facilities would compress natural gas gathered in southwestern Pennsylvania and thereby increase capacity and operational reliability of EQT's gathering system in the Marcellus Shale region. Initially, the Derry facilities would receive locally produced pipeline-quality unprocessed gas from EQT's Three Rivers gathering system. A 12-inch diameter line running 3.5 miles would connect the Three Rivers gathering system to the Derry facilities, according to EQT Gathering. EQT also is seeking to obtain a limited quantity of natural gas at the Derry facilities from a new interconnect with the Peoples Natural Gas Co.'s pipeline.
Antero Resources LLC has opened its doors to public investment after gaining approval to launch an initial public offering (IPO) of 30 million shares, or more, of common stock expected to sell for $38.00-42.00/share. The Denver-based operator in June filed with the U.S. Securities and Exchange Commission for approval to prepare the IPO. If the 30 million shares are sold out, Antero has set aside 4.5 million additional shares for sale. Shares are to be listed on the New York Stock Exchange under the symbol "AR. The Warburg Pincus LLC-backed producer develops property in Ohio, Pennsylvania and West Virginia, with more than 325,000 net acres in the southwestern core of the Marcellus Shale and 100,000 net acres-plus in the core of the Utica Shale.
Pennsylvania State University researchers monitoring 21 seismograph stations reportedly are studying the geological structure of the South Newark Basin. The $269,000 study is part of a federal program to research earthquakes nationwide, and was contracted by the Department of Conservation and Natural Resources, according to Philadelphia's Intelligencer newspaper. In 2012 the U.S. Geological Survey (USGS) said the South Newark was one of three Mesozoic shale basins along the East Coast with the "most resource potential" for oil and gas producers (see NGI,June 25, 2012). There is a 95% chance that at least 363 Bcf of undiscovered natural gas is locked in the formation, along with 1 million bbl of undiscovered natural gas liquids, USGS said. Following the USGS report, the General Assembly days later adopted a drilling moratorium for the South Newark Basin, which is located across upscale, ex-urban Philadelphia counties forbidding the state'sDepartment of Environmental Protection from issuing well permits until completing a study of "the practical resource recovery implications" of the report and the fiscal impact of oil and gas operations in the basin. Oil and gas operations in the South Newark Basin are already restricted by theDelaware River Basin Commission's de facto moratorium on exploration and development.
The University of Tennessee's Institute of Agriculture (UTIA), which had spent months in search of an industry partner to investigate the impacts of natural gas and oil exploration, as well as development from shale formations, has put the project on hold after receiving no bids for the proposed research project. A request for proposals (RFP) that was issued by UTIA in June to lease oil and gas interests in 8,600 acres in Tennessee's Morgan and Scott counties was "intended to identify a potential industry source to conduct the drilling component" of the research project at the university's Forest Resources AgResearch and Education Center (see NGI, June 17). UTIA said it received a single, "no-bid" response to the RFP, from CNX Gas Co. and subsidiary Consol Energy, "citing that the project would not be economically viable for the company under the terms outlined in the request for proposals."
Sen. Lisa Murkowski (R-AK) expressed support for approving a transboundary agreement between the United States and Mexico that would govern the development of oil and natural gas resources along the two countries' maritime boundary in the Gulf of Mexico (GOM). Her remarks came during a Senate Energy and Natural Resources Committee hearing to consider legislation (S 812) that would give the Interior Department secretary authority to implement the agreement. The Mexican Senate ratified the agreement in April 2012, and the U.S. House passed legislation in June. the transboundary agreement would lift the moratorium on leasing in the Western Gap and provide access to more than one million new acres on the Outer Continental Shelf. The Obama administration has said it supports the overarching goal of the transboundary agreement, but it cannot support the House bill passed in June because it violates a requirement under the Dodd-Frank law (see NGI, July 1).
Colorado Interstate Gas Pipeline (CIG) has returned to full operation on the 4,300-mile system following record floods in Colorado. Inspection and recovery have been completed on two buried laterals exposed by flooding and runoff in areas north and west of Denver. CIG Lines 59A and 252A had been taken out of service; 59A delivers to the Young Gas Storage Co., and 252A transports gas to the Tritown delivery point. CIG includes 4.5 Bcf capacity pipelines linked to gas production areas in the Rockies and the Anadarko Basin. It also owns interests in five storage facilities with 35 Bcf of working capacity in Colorado and Kansas.
AES Corp. has canceled the Sparrows Point liquefied natural gas import project and associated pipeline after seven years of stakeholder opposition and a change in market conditions. AES had won Federal Energy Regulatory Commission approval for the project, but had asked the Commission to vacate the authorization and certificate granted in December 2009 [CP07-62-000] (see NGI, Dec. 21, 2009). "To date, no construction activities have been undertaken, and thus there are no facilities in service," AES noted.
Five separate class action cases have been certified as one by U.S. District Judge James P. Jonesof the Western District of Virginia against EQT Corp. and Consol Energy Corp. alleging that thousands of landowners in southwestern Virginia were cheated out of royalty payments for coalbed methane production dating back 23 years (see NGI, Sept. 23). The lawsuits involve $30 million of royalty payments managed by the Virginia Oil and Gas Board. Consol said it is considering its legal options. EQT intends to appeal.
At least two electric utilities and others are beginning preliminary discussions to build a large diameter natural gas pipeline that would connect Marcellus Shale supplies with Philadelphia customers.Philadelphia Energy Solutions LLC (PES) CEO Philip Rinaldi is chairing the as-yet unnamed group working under the auspices of the Greater Philadelphia Chamber of Commerce to drum up interest in a pipeline. He confirmed that Sunoco Logistics LP, Braskem America and utilities UGI Corp. and PECO Energy Co. were members. Discussions are in the "way in the early stages" to discuss the size and capacity of a proposed pipeline, but "it would great to have an anchor tenant....There's no one identified user that could consume all of the gas, so our group is going to try to coalesce users together and create that attractive mass. Hopefully we will get the attention of the Marcellus producers and the politicians along the way to help bring all of the pieces together."
Wyoming regulators have proposed expanded rules for volatile organic compounds and methane emissions under the fugitive leak detection and repair programs. The proposed rules would require operators to inspect new and modified facilities with more than four tons/year of fugitive emissions in the nonattainment area of the Upper Green River Basin, which does not meet current federal health-based standards.
Stabilis Energy and Flint Hills Resources LLC plan to build up to five liquefied natural gas (LNG) liquefiers to serve oilfield fuel consumers in the Eagle Ford Shale. The first facility is slated for January 2015 in George West, TX with planned production capacity is 100,000 gallons/day. The partners, which are looking for suppliers, are also finalizing land procurement in North Dakota and West Texas for facilities scheduled to begin production in 2015 and 2016.
PPL Corp. utilities Louisville Gas & Electric (LG&E) and Kentucky Utilities (KU) expect to file with the Kentucky Public Service Commission to build a second natural gas-fired baseload combined-cycle and solar generation facility in Muhlenberg County, KY. The proposed $700 million, 700 MW gas generating project would include a 10 MW solar generator. The new plant would replace coal-fired power plants at LG&E's Cane Run, and KU's Green River facility in Muhlenberg County and KU's Tyrone facility in Woodford County. The utilities plan to have the gas-fired plant online by 2018.
A 12-inch diameter, 38-mile natural gas liquids (NGL) pipeline to be built in a portion of Ohio's Utica Shale would be capable of delivering 90,000 b/d, according to Pennant Midstream LLC. The $60 million link would connect the Hickory Bend Cryogenic Processing Plant in New Middletown to the Utica East Ohio Midstream LLC (UEO) Kensington facility in Columbiana County. NiSource Midstream Services LLC operates Pennant, which is jointly owned by Hilcorp Energy Co.'sHarvest Pipeline Co.The pipeline, scheduled to be completed in July, initially would deliver wet gas to the UEO line that originates in Columbiana County. Existing UEO infrastructure would transport the liquids to the fractionator at the UEO Harrison Hub in Harrison County.
About 435 acres in northern Pennsylvania, some paying Marcellus Shale royalties, are scheduled to be sold on Oct. 30, according to United Country Real Estate, which has seven separate tracts in Bradford and Susquehanna counties. A live auction is to be held at 1 p.m. EDT and online bids would be accepted. Information is available at InvestmentAuctionPA.com or (877) 565-3491.
Gastar Exploration Ltd., which has turned its attention to the Marcellus Shale and Hunton Limestone, expects to receive $39.2 million in addition to a $4.7 million deposit for selling its East Texas properties to Cubic Energy Inc. (see NGI, April 29). The deal sends Cubic 16,300 net acres in the Hilltop area of East Texas in Leon and Robertson counties.
Nuevo Midstream LLC has completed an expansion of an amine treating capacity and begun construction of the third phase of a natural gas processing system in the Delaware Basin near Orla, TX. The amine treating plant has a capacity of 1,300 gallons per minute (gpm), bringing total treating capacity to 1,800 gpm. Nuevo completed its interconnect to DCP Midstream's Sand Hills natural gas liquids pipeline to Mont Belvieu, TX. Further expansions are expected to bring cryogenic processing capacity up to 910 MMcf/d and treating capacity to up to 3,800 gpm.
The Chevrolet Cruze will have a natural gas vehicle (NGV) version available for the 2014 model year as an after-market NGV conversion. Indiana-based IMPCO Automotive offers a bifuel conversion for the 1.4-liter, four-cylinder turbocharged Cruze engine. Chevrolet is promoting its the model as the only one with an EPA-approved bifuel conversion. The Cruz, with a base price of under $20,000 for its gasoline version, would offer "Cruz Eco" for an additional $5,000-6,500.
The Pennsylvania Department of Environmental Protection (DEP) has a well managed regulatory program for oil and gas operations but it should change hydraulic fracturing (fracking) regulations, according to a report by the nonprofit State Review of Oil and Natural Gas Environmental Regulations Inc. Among other things DEP should maintain consistent standardized data for tracking violations and enforcement actions; evaluate adequate surface casing depths for drillers; and set criteria for collecting pre-drill water samples.
The United States is on track to become net oil independent by 2020, if production continues on its current path in the Permian and Williston basins, and in the Eagle Ford, according to Raymond James & Associates Inc. The analyst's U.S. crude production forecast for 2013 was increased to about 275,000 b/d, while the natural gas liquids outlook was cut by 120,000 b/d because of infrastructure constraints. All of the out-year domestic oil supply estimates also were increased. Raymond James has initiated a decade-ending U.S. crude and liquids supply forecast of 16.4 million b/d, more than two-thirds above their current forecast of 10 million b/d.
ZaZa Energy Corp. and joint venture (JV) partner EOG Resources Corp. have revised an agreement to develop and expand their Eaglebine/Eagle Ford Shale East assets. "This is a significant step forward for our company as we establish our production base and create the right platform for growth," said ZaZa CEO Todd Brooks. "Through this transaction we've successfully increased our contiguous JV acreage footprint, established $16.1 million in PDP [proved developed producing] value across interests in 23 producing wells and will see an influx of $16.5 million in net cash."
A national opinion poll of voting-age residents and one in New York found support for hydraulic fracturing (fracking) is slipping. A Siena College Research Institute poll released on Sept. 30 found 45% are opposed, 37% support and 18% are undecided about to unconventional drilling being approved by the New York Department of Environmental Conservation. A Pew Research Center poll from late September also found growing national opposition to fracking, with 49% opposed and 44% in favor.
Chevron Corp. and Australian units have signed binding long-term agreements with Tohoku Electric Power Co. Inc. to supply liquefied natural gas from the Wheatstone Project in Western Australia. Subsidiaries and units of Apache Energy and Kuwait Foreign Petroleum Exploration Co. would supply Tohoku with 0.9 million metric tons a year (mmt/y) of gas for up to 20 years. The project is to consist of two rains with a combined capacity of 8.9 mmt/y and a domestic gas plant.