President Obama has accused Republicans of being responsible for restricting oil and natural gas production on federal lands, rather than Democrats, during the government shutdown (see NGI, Oct. 7). “You know, the Republicans say they’re very concerned about drilling,” the president said at a news briefing. “They say Obama’s been restricting oil [and gas] production, despite the fact that…production is at its highest levels it has been in years and is continuing to zoom up. They say, you know, the Democrats are holding back oil production in this country.” Senate Energy and Natural Resources Committee Republicans quickly fired back. “Forgive us for thinking it slightly insincere of the president to suddenly claim concern about federal oil and natural gas permitting.” The shutdown, which went into effect on Oct. 1, has halted the Interior Department‘s processing of onshore permitting and slowed processing for offshore drilling. “So why would the Republicans say to the folks who are interested in drilling for oil, sorry, we can’t let those things be processed…That doesn’t make sense,” Obama said.

Two Dominion Marcellus Shale-related projects in Pennsylvania and New York have been given the green light to go into service by the Federal Energy Regulatory Commission: the Tioga Area Expansion Project and the Sabinsville-to-Morrisville Project. Tioga, estimated to cost $67 million, consists of building 15 miles of 24-inch diameter pipeline in Tioga County, PA, and minor modifications to existing facilities, to provide a total of up to 270,000 Dth/d of firm transportation. About 150,000 Dth/d of the capacity would be delivered to Leidy in north-central Pennsylvania at an existing interconnect with Transcontinental Gas Pipe Line, Transco, while the remaining capacity would be delivered to a new interconnect with Texas Eastern Transmission at Dominion’s Crayne Compressor Station in Greene County, PA. Sabinsville-to-Morrisville would allow Tennessee Gas Pipeline to move its receipt point from Dominion south from North Sheldon, NY, to Sabinsville, PA, also in Tioga County. The estimated $17 million project would provide up to 92,000 Dth/d to Tennessee [CP12-19, CP12-20].

BP America Inc. and affiliates contend Federal Energy Regulatory Commission enforcement staff has failed to make a case that they manipulated the physical and financial markets at the Houston Ship Channel (HSC), and have asked the agency to dismiss the proceeding. FERC in August ordered BP to show cause (IN13-15) involving the alleged gaming of physical and financial markets at the HSC, to which BP responded in October. Commissioners proposed a near-$29 million penalty for transactions taking place from mid-September 2008 through Nov. 30, 2008. If the Commission chooses not to dismiss the proceeding, BP said it will seek a full evidentiary hearing to address the contested issues of material fact. “Enforcement staff attempts to make its case solely on circumstantial evidence that does not withstand scrutiny,” BP argued.m”Enforcement staff’s allegations that BP traders built up a supply of ‘new gas’ after Sept. 18, 2008 to facilitate the imagined manipulative scheme misread the relevant data. There are more plausible alternative explanations for the long position at Katy.”

New England electric power generation is heavily dependent on natural gas and now, one town at a time, utilities and pipelines are expanding their systems to add more residential, commercial and industrial natural gas customers. Vermont Gas Systems recently announced that it is seeking regulatory approval for Phase 2 of its Addison Natural Gas Project (ANGP), which would extend service to portions of Addison and Rutland counties and the International Paper mill in Ticonderoga, VT. The company anticipates filing a formal petition with the Vermont Public Service Board in mid-November. Further south, the New Canaan, CT, Utilities Commission heard from representatives of Yankee Gas and Connecticut Natural Gas (CNG) at a public hearing Wednesday to discuss bringing natural gas to the town. An initial overview performed by the commission concluded that switching the town and its schools from oil to natural gas would save at least $250,000 a year. Earlier this year, Yankee, CNG and Southern Connecticut Gas filed a comprehensive joint gas expansion plan in June with the state’s Public Utilities Regulatory Authority and Department of Energy and Environmental Protection outlining a structured approach to add approximately 280,000 new gas heating customers over the next 10 years.

With the start-up of Texas Eastern Transmission’s (Tetco) New Jersey-New York expansion coming within weeks, a request to increase Tetco’s initial reservation recourse rate for service on the expansion based on a projected 40% hike in its first-year cost of service has been approved by the Federal Energy Regulatory Commission. In May 2012 Commissioners authorized a firm reservation recourse rate of $18.666/Dth/month as an initial resource rate for service based on Tetco’s then-projected first-year total cost of service of $179.2 million (see NGI, May 28, 2012). However, Tetco and partner Algonquin Gas Transmission LLC sought an OK to increase the rate to $26.060/Dth/month to reflect the anticipated larger first-year cost of service of $250.2 million, which would include $243 million for new facilities and the annual cost of leased capacity. When completed, the expansion would provide an additional 800 MMcf/d of transportation capacity into the New Jersey-New York region, with 730,000 Dth/d able to be sourced from receipt points on Algonquin’s system near Ramapo, NY, and Mahwah, NJ. Up to 100,000 Dth/d could be sourced from a receipt point on Tetco’s system in Lambertville, NJ.

American Energy-Utica LLC (AEU), an affiliate American Energy Partners LP, created byformer Chesapeake Energy Corp. chief Aubrey McClendon, plans to begin drilling in eastern Ohio before the end of the year after clinching close to $1.7 billion in private equity financing. Lead equity investor is The Energy & Minerals Group (EMG), with additional equity provided by First Reserve Corp. and AEU’s management team. McClendon founded American Energy Partners in April shortly after he retired from Chesapeake (see related story). The financing initially is being used by AEU to secure 110,000 net acres in the southern portion of the Utica. One rig is being installed this quarter, with plans to bump up drilling activity with at least 12 rigs over the next two to three years. The outlines of the project and the financing had been confirmed in early October (see NGI,Oct. 7). Midstream operations for about 80% of the acreage is being handled by MarkWest Utica EMG, a joint venture between MarkWest Energy Partners LP and EMG. The other processing is to be done by Utica East Ohio Midstream LLC, a joint venture of M3 Midstream LLC, Access Midstream Partners LP and EV Energy Partners LP.

With production, takeaway capacity and employment all on the rise in the Appalachian Basin, theMarcellus Shale Coalition (MSC) issued a list of recommended practices for drilling and completing oil and natural gas wells in the play. The four-page document was developed through MSC working committees and designed to guide operators. The recommendations cover planning, health/safety, well control; high pressure equipment; drilling operations, and hydraulic fracturing (fracking) and flowback operations. The latest is one of a best practices series that MSC officials have published for more than a year (see NGI, Sept. 3, 2012; May 7, 2012). MSC encouraged operators to make plans for water management, traffic and waste management such as maximizing the recycle/reuse of produced water, giving consideration to alternative water sources (i.e. reclaimed mine water; effluent), multi-well pad drilling, and using closed-loop fluid management systems. The MSC also recommended operators “consider developing and using more environmentally benign ingredients in [drilling] fluids and minimizing the volume of additives used, to the extent practicable.” Operators were also encouraged to address air emission, noise and visual impacts from drilling.

The California Public Utility Commission has ordered Pacific Gas and Electric Co. (PG&E) to keep the Line 147 transmission pipeline lateral closed until staff verifies the safety of the 20- and 24-inch diameter, 3.8-mile pipe that runs through San Carlos south of San Francisco. An investigation by the Safety and Enforcement Division will determine whether “any immediate safety concerns are posed by the pipeline.” A California Superior Court judge ordered PG&E to shut the line, and subsequently the utility asked the court to vacate the injunction, citing state regulators’ exclusive jurisdiction. Regulators said the latest investigation will result in public findings and required corrective action, if necessary, along with citations for any violations of law or regulation.

If a project to construct a liquefied natural gas (LNG) export project for Alaska’s North Slope is constructed, it most likely will be on the Kenai Peninsula, according to potential sponsorsExxonMobil Corp., BP plc, ConocoPhillips and TransCanada Corp. (see NGI, June 3). The consortium selected a site in the Nikiski area after evaluating more than 20 locations. Senior project manager Steve Butt called the announcement a “step forward for the Alaska LNG project and shows continued progress toward building Alaska’s energy future…The Nikiski site also results in a pipeline route that provides an access opportunity to North Slope natural gas by the major population centers in Fairbanks, Mat-Su Valley, Anchorage and the Kenai Peninsula.”

Chevron Corp.’s U.S. upstream production is holding steady from a year ago, the operator said in an interim 3Q2013 report. The San Ramon, CA-based major reported preliminary results that cover July and and August; full results are to be issued on Nov. 1. U.S. upstream net output in July and August totaled 651,000 boe/d net, which included 1,227 MMcf/d of natural gas and 455,000 b/d of liquids. From July through September 2012, Chevron produced 637,000 boe/d net in the United States, which included 1,184 MMcf/d and 440,000 b/d of liquids. Chevron earned $3.30/Mcf for its U.S. natural gas in July and August, versus $2.63/Mcf for July-September 2012. It has earned $96.73/bbl on average for its liquids in the two-month period, up from $90.77 for the full three-month period a year ago.

Gubernatorial candidates in Pennsylvania who call for severance taxes on the state’s shale natural gas industry are embracing “misguided, job-crushing policies, hat would throw a wet blanket on this positive, widespread progress,” the Marcellus Shale Coalition (MSC) said. Shale development has generated more than $1.8 billion in state taxes and more than $400 million in impact fees to date, and it supports nearly a quarter-million jobs in the state, according to MSC. The remarks came one day after U.S. Rep. Allyson Schwartz (D-Jenkintown), who has declared her candidacy for the gubernatorial race in 2014, laid out a plan to finance transportation and other construction through a “state infrastructure bank,” which she said would be funded through the establishment of a 5% severance tax on natural gas production. Schwartz unveiled her proposal for a severance tax on natural gas last month, saying that it could generate $13.2 billion in revenue for the state over the next 10 years (see NGI, Sept. 9).

Pennsylvania’s status as “a major energy producing state,” and the possible impacts the state may see from climate change have not changed significantly over the last four years, according to a report commissioned by the Pennsylvania Department of Environmental Protection (DEP). Researchers cautioned that there remains uncertainty over how gas may replace other fuels and the best method for calculating greenhouse gas (GHG) emissions over the life cycle of wells. The 156-page report is DEP’s second since passage of the Pennsylvania Climate Change Act in 2008.

The Colorado Oil and Gas Conservation Commission has found no evidence of contamination from oil or natural gas spills in water samples taken from rivers and streams affected by September’s flooding. Inspectors recently had visited about 80% of the area impacted by the floods and were keeping track of a combined 30 locations where produced water from hydraulic fracturing operations had leaked into floodwaters. The impacted area comprises a portion of the Niobrara formation of the Denver-Julesburg (DJ) Basin (see NGI, Sept. 30; Sept. 23). Additional sampling to determine any changes in pollutant levels is planned.

A unit of FirstEnergy Corp. has deactivated two coal generators in Pennsylvania, Hatfield’s Ferry Power Station in Masontown and Mitchell Power Station in Courtney, which together had capacity of 2,080 MW. The decision to close the plants was based on the cost to keep them compliant with environmental regulations.

The Kentucky Public Service Commission gave conditional approval for the Kentucky Power Co. to purchase a 50% stake in AEP Ohio‘s 780 MW Mitchell Power Plant in Moundsville, WV, for about $536 million. The move would help Kentucky Power replace 800 MW of generating capacity after shuttering a coal-fired unit at the Big Sandy Power Plant by 2015 (see NGI, March 4).

Industries dependent on the Marcellus Shale employed 231,969 workers in Pennsylvania during 1Q2013, according to the state’s Department of Labor & Industry‘s Center for Workforce Information & Analysis. According to the report, from 1Q2009 to 1Q2013 employment in the “core” industries of the Marcellus increased 162.1%, with 17,414 new jobs created. The number of total business establishments related to the Marcellus also increased 45.2% to 14,109. By comparison, during the same time frame Pennsylvania saw a 1.6% growth rate for all industries in the state.

The Ohio Department of Natural Resources (ODNR) is drafting rules governing centralized earthen impoundments to hold wastewater temporarily for oil and gas drilling. ODNR expects the draft to be completed by the end of the year, with public hearings and legislative approval to follow, as required under the state’s biennial budget bill, HB 59, which called for surface impoundment rules. Permit applications as designed by ODNR would cost $2,500.

Researchers at Rice University, as well as in Hungary, Slovenia and India, may have found a way to reduce the weight of metal tanks used to hold compressed natural gas, one of the hold backs some believe has prevented more widespread adoption of natural gas vehicles. The findings on an enhanced polymer material that could make tanks more impermeable to pressurized gas and lighter than the metal now used are published in the American Chemistry Society journal ACS Nano. By adding modified, single-atom-thick graphene nanoribbons to thermoplastic polyurethane, the Rice lab claimed that it made it 1,000 times more difficult for gas molecules to escape because of the ribbons’ even dispersion through the material.

Negotiations were ongoing between New Brunswick officials and anti-drilling protesters who erected a barricade near Rexton, NB in late September. Authorities had closed a portion of a highway near the town after protesters blocked the entrance to a Southwestern Energy Co. facility. A provincial court ordered the removal of the barricades, but early Friday they remained in place.