ExxonMobil Production Co. is soliciting bids to sell its nonoperated interests in properties in several fields located in the Permian Basin of West Texas and southeast New Mexico, as well as the Texas Gulf Coast. The Permian Basin fields included in the sale are the Empire ABO unit, Jo Mill/Spraberry, the Sundown Slaughter unit, various Vacuum leases and several nonoperated interests associated with these fields. Along the Texas Gulf Coast, ExxonMobil wants to sell its nonoperated interest in the Hastings Field in Brazoria and Galveston counties. The ExxonMobil Corp. subsidiary, which is based in Houston, did not disclose operating data on the fields or how much it expects to earn from the sale. However, a compact disk containing ExxonMobil’s sales instructions and sample agreements, accounting, geological, engineering data and land descriptions is available. ExxonMobil also will open a data room in Houston to prospective bidders in December. Bids are due by Jan. 28, and the effective date of the sale is May 1, 2008. For more information, contact Deborah Adams at (713) 656-5840 or at Deborah.L.Adams@exxonmobil.com.
Calgary-based Petrobank Energy and Resources Ltd. agreed to buy cross-town junior explorer Peerless Energy Inc. in a friendly deal valued at about C$334 million. The transaction is expected to strengthen Petrobank’s stake in the emerging Bakken unconventional oil and gas play in southeastern Saskatchewan, the companies said in a joint statement. About 1,900 boe/d of Peerless’ current production is from the Bakken and is located within Petrobank’s core properties in southeast Saskatchewan. Combined, the producers’ Bakken output would be around 7,900 boe/d. Peerless produces about 4,250 boe/d in Canada. Peerless also produces natural gas in Alberta and British Columbia, and it has more than 100,000 net acres of undeveloped land. Following the acquisition, Petrobank would be 64% weighted to light oil and 36% to natural gas.
The Canadian government has taken steps to protect and conserve Canada’s north by announcing the withdrawal of more than 10 million hectares (27 million acres) of land from development in the Northwest Territories (NWT). The conservation initiative, one of the largest in the country’s history, will protect an area that extends from near the East Arm of Great Slave Lake and around the Ramparts River and Wetlands. The protected area would not affect the proposed path for the Mackenzie Gas Project, the long-proposed pipeline that could deliver natural gas from the Northwest Territories into Alberta. An interim land withdrawal also will protect about 62,000 square kilometers with the Akaitcho Dene First Nations, designed to prevent “mineral staking, sale or lease” during the course of negotiations between the aboriginal tribe and the federal government.
Williams has sold its interests in the Wamsutter LLC system to its midstream partnership Williams Partners LP for $750 million. The Wamsutter system includes a 1,700-mile natural gas gathering system in the Washakie Basin in south-central Wyoming and the Echo Springs cryogenic processing plant near Wamsutter, WY. The transaction structure would allow Williams Partners to receive cash flows from the existing Wamsutter business and at least 5% of the increase in cash flows resulting from growth of the existing business with Williams. The acquisition, which is expected to close by the middle of December, would be immediately accretive to distributable cash flow for Williams Partners.
A fire that closed Williams Partners LP‘s Ignacio gas processing plant near Durango, CO, last Wednesday will reduce expected cash flows $10 million-20 million, primarily in 4Q2007, the company said. The range includes the expected mitigating effect of Williams Partners’ property damage and business interruption insurance. Williams Partners said it does not expect the reduction in cash flow to impact its regular quarterly cash distributions. The fire began in a cooling tower, damaging it and a few adjacent buildings before being extinguished. No injuries were reported. The Ignacio plant is part of Williams Four Corners LLC, which is owned by Williams Partners. Approximately 100 MMcfe/d of the plant’s normal 450 MMcfe/d production capacity has been rerouted to other facilities in the San Juan Basin. In addition to the Ignacio plant, the Four Corners gathering system is connected to the Kutz and Lybrook gas processing plants and the Milagro and Esperanza gas treating plants in northwestern New Mexico. The Four Corners system’s normal volumes exceed 1.5 Bcfe/d. The cause of the fire is unknown and is under investigation.
Union Gas Ltd., a Spectra Energy subsidiary, said it has acquired a 1 Bcf natural gas storage pool located near Sarnia, ON, from Midway Petroleum Co. for an undisclosed price. Union Gas said it plans to develop the storage pool, which is expected to be in service in 2009. In October Union Gas also signed an agreement in principle regarding the acquisition of a 75% interest in a 3 Bcf storage pool currently owned by Tribute Resources located in Huron County. Union Gas is an integrated natural gas storage, transmission and distribution company, which serves approximately 1.3 million residential, commercial and industrial customers in 400 communities throughout Ontario. The company’s storage and transportation assets move natural gas from all major North American supply basins to central Canadian and northeastern U.S. markets.
The Nevada Public Utilities Commission (PUC) has approved a natural gas retail rate decrease of 1.2%, or $2.2 million, for Sierra Pacific Power Co. The lower charges reflect a reduction of wholesale natural gas prices for the Sierra Pacific Resources utility. As an adjunct to the natural gas rate change, the PUC also approved changes in the charges for about 410 liquefied petroleum gas (LPG) customers that will result in a 32% decrease in monthly LPG bills. Typical LPG customers using about 48 therms will see their monthly bills drop by about one-third (from $91.89 to $61.27). The utility serves about 145,000 natural gas customers and 410 LPG customers in the Reno-Sparks-northern Nevada area.
Seminole Energy Services LLC has begun talks with producers about whether to develop new gathering, treatment and processing facilities in the Big Sandy region, which contains one of the largest gas fields in the Appalachian Basin. Seminole, which serves more than 350 producers across its service area, said its initial efforts will focus on constrained and shut-in gas supplies as well as areas of new production growth in eastern Kentucky and West Virginia. The Big Sandy gas field covers more than 1.5 million acres. In October Seminole and NGAS Resources Inc. agreed to jointly construct and own a 25,000 MMcf/d gas processing plant near Rogersville, TN, and a separate gas treatment facility in northern Christian County, KY. Seminole has a total customer base of 50,000 and average sales of 600 MMcf/d.
Cobalt International Energy LP claimed another investor for its young exploration company with the announcement that First Reserve Corp. has joined its investor group with a $350 million commitment. First Reserve joins Goldman Sachs, Riverstone Holdings, KERN Partners and Cobalt management in its investment (see NGI, Dec. 5, 2005). Cobalt was founded by former Unocal Corp. and BP plc executives, and it has been focused on oil and gas exploration in the deepwater U.S. Gulf of Mexico (GOM) and West Africa. In October Cobalt captured 53 deepwater leases in the Minerals Management Service’s Central GOM Lease Sale 205, placing it third in the industry’s largest offshore leasehold auction in 24 years (see NGI, Oct. 15).
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