West Virginia Department of CommerceSecretary Keith Burdette said Thursday at an industry conference in Pittsburgh that the state expects Odebrecht SA affiliateBraskem SA to acquire additional tracts of property in Parkersburg in the coming weeks for its proposed multi-billion dollar ethane cracker. In April 2015, the companies said plans for the ethane cracker in Wood County, WV, would be postponed pending further project analysis amid the commodities downturn (see Shale Daily, April 23, 2015). But Burdette, who supports the facility, noted that neither Braskem, nor PTT Global Chemical (PTTGC) pcl and Shell Chemical Appalachia LLC, which have also proposed crackers in Ohio and Pennsylvania, respectively, have scrapped plans for their projects. Burdette said his office expects Braskem to acquire more land sometime by the end of 1Q2016. He added that his office stays in close touch with the company and others that have made similar proposals for the region. He said that Braskem, Shell and PTTGC have each “expressed a desire” to push final investment decisions until 2017. Braskem has filed for certain permits for the cracker and has been acquiring land in Wood County since about 2013, when the facility was first announced (see Shale Daily, Aug. 27, 2014; May 19, 2014; Nov. 14, 2013).
Chesapeake Energy Corp.said it has stopped paying dividends on each series of its outstanding convertible preferred stock. The Oklahoma City-based independent, the second-largest natural gas producer in the United States after ExxonMobil Corp., has faced financial pressure under persistently low commodity prices. In addition to continuing to look for buyers for some of its assets, last July it scrapped its common dividend (see Shale Daily, July 21, 2015). Suspending the preferred stock dividend “does not constitute an event of a default” under the revolving credit facility or outstanding bond indentures, the company said. “The board and management believe this decision is in the best long-term interest of all company stakeholders,” CEO Doug Lawler said. The decision to suspend the preferred stock dividends “will allow the company to retain approximately $170 million of additional cash per year and use these funds to purchase debt at significant discounts in the near term. Given the current commodity price environment for oil, natural gas and natural gas liquids, we believe that redirecting this cash toward debt retirement provides better returns for the company. We currently have senior debt securities trading at significant discounts, and we will continue to take advantage of that within the coming year.”
Kinder Morgan Inc. (KMI) has closed on a three-year, unsecured $1 billion term loan and a $1 billion expansion of its unsecured revolving credit facility, increasing the facility’s capacity to $5 billion. Proceeds from the term loan are to be used for general corporate purposes, including debt repayment. Pricing for both facilities is consistent with KMI’s existing revolving credit facility and includes a floating interest rate calculated based on the company’s credit rating that currently equals the London Interbank Offered Rate (LIBOR) plus 150 basis points. The term loan contains the same covenant package as the existing revolving credit facility. The move provides incremental liquidity and refinances 2016 long-term debt maturities. “We see no need to access the capital markets in 2016,” said CFO Kim Dang. “Combined with continued high-grading of our backlog of growth projects, this insulates us well in the face of sustained unfavorable financial markets.” KMI has reduced its planned 2016 spending and recently cut its dividend (see Daily GPI, Jan. 21; Dec. 9, 2015).
Regulations for railroad transportation of crude oil and the quality of Bakken crude will be the subject of a half-day seminar hosted by the North Dakota Safety Council (NDSC) and the North Dakota Petroleum Council (NDPC) Monday (Feb 1). The results of independent volatility tests of Bakken crude will be presented, along with state crude conditioning rules, federal crude oil transportation rules, and an investments/safety update from BNSF Railway. In the aftermath of a number of major rail accidents involving crude oil tank cars, federal and state officials called for studies of the content of Bakken oil (see Shale Daily,Aug. 5, 2014). Tests ultimately showed that Bakken crude was no different than other crudes being shipped via rail. A Tyco Williams representative will report the results of the company’s test on volatility, while a BNSF hazardous materials manager will update what the railroad is doing to raise the level of safety in crude-by-rail transport (see Shale Daily, March 31, 2015).
The Public Utilities Commission of Ohio (PUCO)has fined Columbia Gas of Ohio $200,000 for a March 2015 home explosion in Upper Arlington, a suburb of the state capitol Columbus. Under an agreement reached with regulators, the company must also take steps to improve record keeping and enhance safety outreach throughout its service territory. A PUCO investigation revealed that an old natural gas service line leading to the home was replaced, but it was not properly disconnected from Columbia’s main line. A curb valve to the old line was misidentified as a water valve and when it was turned on, gas flowed into the house and ignited. While various parties were involved in causing the accident, PUCO staff concluded that Columbia did not follow its operating procedures to properly abandon an old service line. PUCO said the explosion caused an estimated $9 million in property damage. The company must pay the fine to the state’s general revenue fund and hold an additional $200,000 in abeyance should it fail to fulfill its obligations under the agreement.
The U.S. Department of Energy (DOE) has granted Cheniere Energy unit Sabine Pass Liquefaction LLC authorization to export up to a total of 600 Bcf of liquefied natural gas (LNG) on a spot market basis over a two-year period from the Sabine Pass terminal in Cameron Parish, LA. Previous long-term DOE authorizations allowed export of up to 803 Bcf/year of LNG from the terminal’s Trains 1 through 4 to non-free trade agreement (FTA) countries. Sabine Pass also has long-term authorization to export up to 1,006 Bcf/year to FTA countries. “Sabine Pass asserts that granting the short-term blanket export authorization requested herein would provide Sabine Pass, the first entity authorized to construct and place in service a liquefaction and export facility in the Lower 48 states, with enhanced operational flexibility and the ability to export LNG cargoes that may be rejected by customers under one or more long-term contracts,” DOE said in its order [15-171-LNG]. DOE noted that the 600 Bcf of cumulative export authorization sought is significantly less than the 803 Bcf/year of non-FTA authorization already granted. DOE said no additional public interest review was necessary in the instant proceeding as long as non-FTA exports do not exceed 803 Bcf/year on an annual (consecutive 12-month) basis in total. First exports from the Sabine Pass terminal were expected to begin earlier this month but were delayed by technical issues at the facility (see Daily GPI, Jan. 14).
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