New York-based Hess Corp. has completed sidetracking its Pony discovery in Green Canyon Block 468, which established a record for the deepest conventional core ever recovered in the deepwater Gulf of Mexico. Results to date in its 100%-owned discovery have been consistent with pre-drill expectations, and total hydrocarbon resource on the Hess acreage is estimated to be in the range of 100-600 MMboe. The sidetrack well, drilled approximately 2,700 feet northeast of the discovery well to a depth of 30,634 feet, encountered 280 feet of oil-saturated sandstone in Miocene age reservoirs after penetrating 60% of its geological objective. Hess said the oil bearing section in the sidetrack well is similar in thickness and quality to the equivalent interval in the discovery well, which was drilled to 32,448 feet and encountered 475 feet of oil saturated sandstone. The company will next drill an appraisal well with the Ocean Baroness rig at the Pony No. 2 location, about 7,400 feet northwest of the discovery well.

Falcon Gas Storage subsidiary NorTex Gas Storage closed on a secured $335 million bank loan for the expansion of its Hill-Lake and Worsham-Steed gas storage facilities and other projects in North Texas. The financing will be used to complete the Phase II and Phase III expansions of the Hill-Lake Gas Storage Facility in Eastland County, as well as the Phase I and Phase II expansions of the Worsham-Steed Gas Storage Facility in Jack County. The latter project includes the construction of a 63-mile, 24-inch diameter 450 MMcfd takeaway pipeline that will traverse the western expansion of the Barnett Shale gas play in North Texas. The loan also will be used to finance two 60 MMcfd cryogenic gas processing plants, the expansion of crude oil production operations at both storage facilities and the recovery of crude oil produced in association with gas storage operations at both locations. “This new bank financing represents the next big step for us in implementing our business strategy, following the equity investment by Arcapita in 2005,” said Falcon CEO John M. Hopper. “We’ve been involved for over six years in gas storage development and operations activity in North Texas. The financing will allow NorTex to complete the full-phase expansions at both Hill-Lake and Worsham-Steed, as well as construction of a new 450 MMcfd take-away pipeline in the Barnett Shale, in order to meet the growing demand for high-deliverability, multi-cycle gas storage services and gas transportation services in the rapidly expanding North Texas energy market.”

Briarcliff Manor, NY-based Optionable Inc., a provider of natural gas and other energy derivatives brokerage services, announced Thursday that December’s number of contracts traded for its clients is an all-time high. For the month of December, Optionable executed the trade of 1,780,659 options and swaps contracts either through voice brokerage, OPEX, or the New York Mercantile Exchange floor. This number excludes the processing of bilateral contracts converted to cleared contracts. The company provides its services to brokerage firms, financial institutions, energy traders and hedge funds nationwide. In addition to the traditional voice brokerage business, Optionable developed OPEX, a real-time electronic trade matching and brokerage system designed to improve liquidity and transparency in the energy derivatives market.

As politicians in the Bahamas continue to mull over the fate of several long-proposed liquefied natural gas (LNG) projects, AES Corp. was forced to ask FERC late last month to push back a deadline for a gas pipeline project from the Bahamas to Florida by four years to January 2011. “An extension of the in-service date is necessary because Ocean Express has been unable to commence construction of the pipeline due to unanticipated delays in securing final approval from the Commonwealth of The Bahamas for the construction of related facilities,” AES told the Federal Energy Regulatory Commission (FERC). “The delay is largely due to the time required for The Bahamas to develop regulations to govern the [LNG] terminal that will be built in the Bahamas and the associated nonjurisdictional pipeline facilities that will interconnect with the Ocean Express pipeline.” AES said it expects the Bahamian government to “soon complete work on these regulations” and to approve the terminal and associated pipeline. AES’ proposed $800 million project would include two 160,000 cubic-meter LNG storage tanks and an 842 MMcf/d regasification facility on a 90-acre man made island, located about 65 miles east of Miami. The project also would include the 76-mile Ocean Express pipeline, which would transport regasified LNG to Ft. Lauderdale in southern Florida, where it would interconnect with Florida Gas Transmission (FGT). Approximately 55 miles of the pipeline would be located in U.S. waters. FERC’s order on the U.S. portion of AES’ proposed pipeline required completion of the facilities by Jan. 29, 2007.

Wisconsin Power and Light Co. (WP&L), a subsidiary of Alliant Energy Corp., will issue the first in a two-part credit to natural gas customers in January or February. The first credit totals $10.2 million. After an audit by the Public Service Commission of Wisconsin (PSC), the total credit amount is expected to be $12.8 million. The credit represents gas purchase savings from November 2005 through October 2006 and is the result of a gas purchase plan WP&L developed to share cost savings with customers. Customers get billed at market prices and to the extent WP&L is able to purchase gas for less than these market prices, the difference is shared between the company and its customers. This credit represents 80% of the customers’ share of those below-market purchases. The natural gas purchase credit is based on customer usage over the individual credit audit period. Customers will see the first of the two-part credit on either their January or February bill. The credit is expected to be about $43.21 for the typical residential customer using 800 therms per year.

Denver-based MarkWest Energy Partners LP has purchased a 100% ownership interest in Santa Fe Gathering LLC and the Grimes Gathering System in Roger Mills and Beckham counties, OK, for an undisclosed amount. Current system throughput on the Grimes system, which was constructed in May 2005, is 16 MMcf/d. As a part of the acquisition, the master limited partnership signed a 10-year gas gathering agreement with the largest producer on the system, Oklahoma City-based JMA Energy Co. LLC, under which undeveloped acreage will be dedicated to the Grimes system. The Grimes system was initially constructed to gather growing Cherokee and Des Moines production in the region. MarkWest also said it is exploring the possibility of integrating the Grimes system with its Foss Lake Gathering System, which it acquired in late 2003 (see NGI, Dec. 1, 2003).

The chairman of the Public Utilities Commission of Ohio (PUCO) is asking the state’s local distribution companies (LDC) to survey some of the customer-owned natural gas service lines to ensure they are safe. A recent report by PUCO staff indicated that some of the state’s gas lines may be susceptible to leaks in certain circumstances. The letter to the LDCs by PUCO Chairman Alan R. Schriber follows a PUCO staff report, which was issued in November, that focused on the results of riser testing conducted by Akron Rubber Development Laboratory Inc. (ARDL). Risers, which are installed by a builder or contractor, connect a building’s natural gas meter to the piping that runs from the building to the gas company’s pipelines. Both the riser and the piping that runs to the gas company pipeline, also called a service line, are owned by the customer. “The staff report outlines the potential circumstances under which an operating natural gas riser may leak,” Schriber stated. “The study conducted by ARDL provides us with a comprehensive picture of the situation and an indication that an immediate response is necessary. Recognizing that identifying the risers on the natural gas distribution systems could take some time, I am requesting that the natural gas companies start this inventory now so that we have the information we need to thoroughly and expeditiously address this issue.” Schriber also requested the LDCs to consider assuming responsibility for the customer-owned service lines. Comments on the report are due to the PUCO by Feb. 5.

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