Williams is holding an open season through Nov. 16 for firm transportation service on its Transco natural gas pipeline system to serve markets in the southeastern United States. New service from the Mobile Bay South Project is anticipated to be available in the spring of 2010, subject to Federal Energy Regulatory Commission approval. Williams said up to 700,000 Dth/d of firm transportation service will be offered on Transco’s Mobile Bay Lateral from Station 85 in Choctaw County, AL, to an existing interconnection with Gulfstream Natural Gas System in Mobile County, AL. The final project size, scope of facilities and cost will be determined by the results of the open season.
Enterprise Products Partners LP said production through the Independence Hub gas platform in the deepwater Gulf of Mexico has reached approximately 600 MMcf/d from 10 wells. As the initial 15 wells are brought on line, producers expect that production at the Independence Hub will be at or near its capacity of 1 Bcf/d by the end of 2007.
The newly merged Norwegian energy giant StatoilHydro has ramped up the deepwater Q natural gas field in Mississippi Canyon Block 961, which will boost the company’s gas production in the Gulf of Mexico (GOM) by 40%. The field, in which StatoilHydro is a 50% stakeholder, is the company’s first operated deepwater field in the GOM to begin production. Q is the 10th gas field to be developed as a subsea tieback to th Independence Hub. StatoilHydro also has an 18.33% working interest in the Anadarko-operated Spiderman field and 26.67% working interest in the Eni-operated San Jacinto field, which are both tied back to the Independence Hub.
Natural gas producer Range Resources Corp. reported that its 3Q2007 production rose 13% year-over-year to its highest level ever, and it is on target to reach 16% growth this year. The Fort Worth, TX-based independent, whose production is concentrated onshore in the southwestern, Appalachian and Gulf Coast regions of the country, averaged 326 MMcfe/d in the quarter, which is 4% higher sequentially than in 2Q2007. Prices averaged $7.70/Mcfe, which was 19% higher than in 3Q2006.
Tulsa-based RAM Energy Resources Inc. will nearly double its proved reserves with the acquisition of privately held Ascent Energy Inc. in a cash-and-stock deal valued at around $289.5 million ($15.58/boe of proved reserves). RAM, which had estimated net proved reserves of 19.3 million boe at mid-year, said the Ascent deal will give it an additional 18.6 million boe of proved reserves, with 3,162 boe/d and upside potential from 83,000 net acres of undeveloped leasehold, most of which is in active shale plays. In the transaction, RAM will pay Ascent $185 million in cash and give it up to 20.5 million shares of its common stock. Ascent’s audited proved reserves on June 30 included 8.5 million boe of proved developed producing reserves, 1.3 million boe of proved developed nonproducing reserves and 8.8 million boe of proved undeveloped reserves.
Closing appears imminent for Houston-based Marathon Oil Corp.‘s proposed takeover of Calgary-based Western Oil Sands Inc., following approval by Canada’s Minister of Industry and Western’s shareholders. Marathon will pay Western Oil Sands $3.6 billion in cash plus 34.3 million shares or securities exchangeable for shares, and will assume $650 million of debt. In return, Marathon will gain a 60% interest and operatorship in a 26,000-gross-acre project and a 20% working interest in 75,000 gross acres in the Chevron Corp.-operated Ells River project. Collectively, the in-situ leases will add an estimated 600 million boe of net resource. The company also committed to maintain the head office of Western in Calgary, to maintain certain employment levels and to dedicate Marathon’s resources and technology “to optimally develop Western’s assets.” The deal remains subject to the approval of the Court of Queen’s Bench of Alberta.
Oklahoma City, OK-based Quest Resources Corp. and independent producer Pinnacle Gas Resources Inc. have agreed to merge in a stock-for-stock transaction. The combined company will have an equity market capitalization of $450 million and Pinnacle stockholders will receive Quest common stock worth $207 million. Quest stockholders are expected to own about 55% of Quest following the merger and Pinnacle’s current stockholders will own the remaining 45%. Sheridan, WY-based Pinnacle, a developer of coalbed methane, will survive as a wholly owned subsidiary of Quest. The transaction is expected to close either in the first or second quarter of 2008.
Enbridge Energy Partners agreed to sell its interstate natural gas transmission system, commonly known as the Kansas Pipeline System (KPC), to Quest Midstream Partners LP for $133 million in cash. The KPC system extends from three branches, located in northeastern and northwestern Oklahoma and central Kansas, to serve natural gas markets in Wichita and Kansas City, MO. The system includes 1,120 miles of pipeline and three compressor stations. Quest Midstream is a subsidiary of Quest Resources Corp., which agreed to a merger with Pinnacle Gas Resources Inc. (see related story).
Denbury Resources Inc., which has been building its tertiary oil recovery business in the Southeast, agreed to sell its Louisiana natural gas assets for $180 million to an undisclosed private company. The properties accounted for about 4% of Denbury’s total proved reserves at year-end 2006. The properties to be sold produced at a rate of about 28.8 MMcfe/d (85% gas) in 2Q2007, or 11% of Denbury’s total quarterly output. Denbury said it would reduce its debt with the sale proceeds. The producer also swapped 60 MMcf/d of its 2008 natural gas production at a weighted average price of $7.91/MMBtu. Based on preliminary forecasts after the Louisiana sale, these derivative contracts are expected to be 70-80% of Denbury’s gas production.
FERC has approved the merger of affiliates Cheniere Creole Trail Pipeline and Cheniere Sabine Pass Pipeline into a single line that would serve two liquefied natural gas (LNG) terminals in Cameron, LA. Upon completion of the merger, Creole Trail will operate as an integrated 150.9-mile, 42-inch diameter pipeline system with a capacity of 2 Bcf/d, serving the proposed Cheniere Energy Creole Trail LNG terminal in Cameron and the Sabine Pass LNG terminal, which is expected to begin operation in early 2008 [CP07-426, CP05-357]. The Creole Trail terminal project was approved by the Federal Energy Regulatory Commission (FERC) in June 2006, while the Sabine Pass LNG terminal got the green light to proceed in December 2004. In February of this year, FERC approved Cheniere Creole Trail Pipeline’s request to build an 18.1-mile, 42-inch diameter extension that would connect the Sabine Pass pipeline with Creole Trail’s line (see NGI, Feb. 19).
Petrohawk Energy Corp. has entered into a definitive agreement to sell its Gulf Coast division to a privately owned company for $825 million. The sale is expected to close during the fourth quarter. The company said in June it would sell the Gulf Coast division and increase its holdings in the Fayetteville Shale and in North Louisiana, as well as form a master limited partnership to initially hold some of its mature domestic assets (see NGI, July 2). At year-end 2006, the Houston-based independent producer reported proved reserves of 204 Bcfe for its Gulf Coast operations, which extend from South Texas to Mississippi. The properties currently are producing approximately 100 MMcfe/d. .
Iroquois Gas Transmission System LP has filed an application at FERC to build an expansion of its system that would allow for increased natural gas service to customers on Long Island, NY. The pipeline proposes to build three sections of 36-inch diameter pipeline looping and associated above-ground facilities along its existing mainline in New York and Connecticut; a new 10,300 horsepower (hp) compressor station in Milford, CT; and additional 10,300 hp compression and cooling at the Brookfield, CT compressor station. The project, which would be built in three phases, would enable Iroquois to provide an additional 200,000 Dth/d of firm transportation to KeySpan Gas East Corp., which does business as KeySpan Energy Delivery Long Island. The proposed in-service dates of the project are Nov. 1, 2008 (Phase I); Jan. 1, 2009 (Phase II); and Nov. 1, 2009 (Phase III).
Copano Energy LLC closed its previously announced acquisition of Denver-based Cantera Natural Gas LLC for $612.6 million in cash (including $50.1 million of estimated net working capital and other adjustments) and 3,245,817 Copano Class D units issued to the seller in a private placement. The deal was announced in September. Cantera’s assets consist primarily of a 51% managing member interest in Bighorn Gas Gathering LLC and a 37.04% managing member interest in Fort Union Gas Gathering LLC, which operate natural gas pipeline systems in Wyoming’s Powder River Basin. The Bighorn system includes approximately 238 miles of gathering pipelines, which deliver gas into the Fort Union system. The Fort Union system consists of an approximately 105-mile, 24-inch diameter pipeline with a 62-mile loop.
The Federal Trade Commission (FTC) has given the green light to BreitBurn Energy Partners LP‘s plan to buy all of Quicksilver Resources Inc.‘s natural gas properties in Michigan, Indiana and Kentucky for $750 million in cash and 21.35 million of BreitBurn’s common units. The transaction, which is targeted for closure on Nov. 1, is 94% weighted to gas, with a total value of about $1.45 billion. Los Angeles, CA-based BreitBurn’s proposed purchase of producer Quicksilver Resources cleared the Hard-Scott-Rodino waiting period on Oct. 12, with the FTC imposing no restrictions on the deal. The agreement between the two companies was first announced in mid-September (see NGI, Sept. 17).
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