Borrowing a page from federal officials, Anadarko Petroleum Corp. has selected the Oil & Gas Asset Clearinghouse to host a lease sale auction later this month to market all of its unleased holdings in the Fayetteville Shale and Smackover play in Arkansas. Lease sales are commonly used by state and federal agencies to market drilling rights. This lease sale will be the first of its kind for a publicly held entity, according to the clearinghouse, which will market and advise Anadarko about the sale. Anadarko will offer the right to lease about 250,000 gross (206,000 net) acres throughout the state. About 170,000 net acres are considered to be in the natural gas-rich Fayetteville Shale fairway; another 5,000 acres lie within the Smackover play in southern Arkansas. The assets will be offered under predetermined lease terms, which will be available prior to the auction through the clearinghouse. Royalties retained by Anadarko will be 12.5-15%, with primary lease terms ranging from five to 10 years. The hybrid auction will be held Nov. 14-15 at the Sheraton North Houston Hotel in Houston and via the Internet. The auction will begin with the sale of Anadarko leases followed by other oil and gas properties owned by various sellers including Chevron Corp., EOG Resources Inc., McClymond Ltd., Reed Partners, Rudman Partnership, Samson Resources and Whiting Petroleum. For more information on the properties to be offered, visit www.ogclearinghouse.com.
Steckman Ridge LP has submitted an application to FERC to construct and operate approximately 12 Bcf of gas storage capacity to serve markets in the Northeast. In an open season held earlier this year, Steckman Ridge received bids for services totaling nearly five times the proposed working capacity of the project (see NGI, July 2), which would be located in Bedford County, PA. The depleted reservoir would be the easternmost gas storage on the Texas Eastern Transmission pipeline and could provide a home for gas supply from the Dominion Cove Point LNG (liquefied natural gas) terminal. Steckman Ridge plans to convert a natural gas field into a storage facility with the addition of storage wells, a compressor station and a storage field pipeline network. The project is expected to be in service by April 2009. The Steckman reservoir can be cycled two to three times and will have withdrawal capability of 300,000 MMDth/d and injection capability of 150,000 MMDth/d. Pipeline interconnects will be Spectra Energy Corp.’s Texas Eastern and the Dominion Gas Transmission system. Both pipes have large facilities at the storage site. Some expansions may take place downstream to complement the storage development. Steckman Ridge is a joint venture, equally owned by subsidiaries of Spectra and New Jersey Resources.
PPL EnergyPlus, a seller of wholesale and retail electricity based in eastern Pennsylvania, has began offering retail natural gas to commercial and industrial customers in Pennsylvania, New Jersey, Maryland and Delaware. PPL Gas Utilities and PPL Electric Utilities, two PPL Corp. regulated affiliates of the unregulated marketing business, deliver gas and power to customers mainly in Pennsylvania. Another affiliate, PPL Generation, produces more than 11,000 MW at power plants in Connecticut, Illinois, Maine, Montana, New York and Pennsylvania. The addition of retail gas supply is part of the effort to grow the value of the PPL EnergyPlus marketing and trading operations. To that end PPL EnergyPlus will be contacting large industrial and commercial customers such as factories, school districts, government operations and hospitals to discuss their natural gas needs.
In a move that was widely expected, Los Angeles Mayor Antonio Villaraigosa Monday nominated strong political ally and local real estate lawyer H. David Nahai to be the next general manager of the city’s $4 billion municipal utility. Nahai early in October resigned his mayoral-appointed position on the oversight board of the Los Angeles Department of Water and Power (LADWP), the nation’s largest city-run utility, so he could be a candidate for its general manager. Nahai is only the third nonengineer to head the venerable municipal utility, which the LA mayor’s announcement charged with following an “ambitious path” to both modernize and reduce its contribution to global warming. Villaraigosa said the city utility is responsible for 98% of the greenhouse gas (GHG) emissions caused by the municipal operations of the nation’s second largest city. The mayor indicated that he was looking for a turnaround specialist to head the LADWP, calling Nahai “uniquely qualified” to turn the utility into “the cleanest and greenest power company in the nation.” If confirmed by the city council, Nahai will permanently replace Ronald Deaton, who resigned last Friday after four months off the job recovering from a severe heart arrhythmia. Nahai can begin immediately serving as head of LADWP, but he will have to get the council’s affirmation before he can settle into the city’s highest-paying job permanently.
While some Republicans last week continued to voice their opposition to the behind-closed-door talks on the U.S. House and Senate energy bills, House leaders said a conference report reconciling the two measures could be completed by as early as mid-November, according to committee aides. Senate and House energy committee staffers have been meeting informally to combine the two bills (HR 3221, HR 6) since mid-September. The meetings are “much more intensive” than they were a few weeks ago, and staffers “are actually drafting recommendations for their bosses,” said Bill Wicker, a spokesman for the Senate Energy and Natural Resources Committee. But he noted that there is a “fair amount of work that still needs to be done” before the two bills, which total 1,500 pages, can be reconciled. The Senate is “hopeful” that a conference report will be issued, but unlike the House, it has not set a deadline, Wicker said. Key Senate Republicans, such as Sens. Kay Bailey Hutchinson and John Cornyn of Texas, who oppose certain provisions in the legislation, have prevented the House and Senate energy bills from going to a formal conference.
Retail charges were reduced for two of Oregon’s private-sector natural gas utilities, while a third gas utility was granted an increase of less than 1% by the Oregon Public Utility Commission (PUC). The PUC said wholesale gas and oil prices have separated somewhat over the past 12 months, allowing for a downturn in wholesale gas prices. The rate changes for all of the utilities took effect Nov. 1. A typical monthly bill for customers of Oregon’s largest natural gas distributor, Northwest Natural Gas Corp., will decrease by $6.50, or 8%, based on the PUC’s approval. Customers of Spokane, WA-based Avista Utilities will see a decrease in monthly bills of about $1.02, or 1.3%. The third utility, Cascade Natural Gas, will increase its rates 0.8%, or less than 60 cents/month for the average bill. Oregon’s regulators and utilities attributed the lower prices to several factors, including a generally mild 2006-07 winter, no major supply interruptions such as the hurricanes of two years ago, and the decoupling of wholesale gas and oil prices.
U.S. Rep. Barney Frank (D-MA) appeared before a House Natural Resources subcommittee last Tuesday to urge adoption of his bill (HR 415) that would designate the Taunton River in Massachusetts as a Wild and Scenic River, putting another crimp in Weaver’s Cove Energy’s plans to build a liquefied natural gas (LNG) terminal in Fall River, MA. The controversial project, which is sponsored by Hess LNG and Poten & Partners, calls for LNG tankers to come up the Taunton River to reach the proposed terminal site. The river feeds into Mount Hope Bay and Narragansett Bay about 50 miles south of Boston. “This Wild and Scenic designation effort began well before the liquefied natural gas facility in Fall River was proposed,” Frank, an opponent of the project, told the House panel. Frank’s measure has been cosponsored by the entire Massachusetts and Rhode Island delegations in the House. A companion bill (S 868) has been introduced in the Senate by Democrats Edward Kennedy and John Kerry of Massachusetts. The legislation is the latest in a string of bad news for Weaver’s Cove. The U.S. Coast Guard last month ruled that the proposed LNG terminal “is unsuitable from a navigation safety perspective for the type, size and frequency of LNG marine traffic” associated with the project. Weaver’s Cove is expected to appeal the decision.(see NGI, Sept. 11, 2006).
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