Williams said it placed an expansion of its Transco natural gas pipeline system into service, increasing firm capacity into the New York City metropolitan area by 100,000 Dth/d to serve growth on National Grid‘s distribution system. The Leidy to Long Island project required expanding certain existing Transco pipeline facilities in New Jersey, New York and Pennsylvania. This included adding approximately 12 miles of new 42-inch diameter pipeline, replacing approximately 2.5 miles of existing 42-inch diameter pipeline, adding a new compressor facility in Old Bridge, NJ, and minor modifications to several other Transco facilities. The Federal Energy Regulatory Commission approved the project in May 2006 (see NGI, May 29, 2006). The Transco pipeline is a 10,500-mile pipeline system which transports gas to markets throughout the northeastern and southeastern United States. The expansion increases the total system capacity of the Transco pipeline to approximately 8.3 Bcf/d.
Anadarko Petroleum has completed a $2.2 billion transaction that has accelerated the monetization of its midstream assets while retaining its existing ownership, control and management of the assets, the company said. Proceeds will be used to reduce debt associated with the acquisitions of Kerr-McGee and Western Gas Resources, the Houston-based independent producer said (see NGI, June 26, 2006). It noted that the transaction will have no effect on the company’s proposed plan to form a master limited partnership for its midstream assets (see NGI, Dec. 18, 2006). To facilitate the transaction, Anadarko said it formed a subsidiary that owns or has rights to substantially all of the company’s midstream assets. An investment entity raised funds from a group of investors and advanced the funds to the midstream subsidiary on a non-recourse basis to Anadarko. The company said it intends to further monetize the subsidiary’s assets. A portion of the proceeds received from the monetization will be used by the subsidiary to partially redeem the advance, with the balance of the proceeds retained by Anadarko. The producer’s midstream portfolio is expected to generate approximately $350 million of EBITDA (earnings before interest, taxes, depreciation and amortization) for 2007, with additional projects likely to further increase operating performance in 2008, Anadarko said.
Superior Energy Services Inc. subsidiary Wild Well Control Inc. has signed contracts with subsidiaries of BP plc, Chevron Corp. and Apache Corp. to decommission seven downed platforms, associated wellbores and other related well facilities located offshore Louisiana for a fixed sum of $750 million. Work on the project has already begun and will ramp up gradually during the first quarter before “going full bore” during the second quarter. The work, which will take place in water depths of 85-135 feet, is expected to take approximately three years to complete, according to Superior Energy Services. The company did not identify the specific locations of the platforms, which were apparently damaged by hurricanes Katrina and Rita in 2005. Since Hurricane Ivan in 2004, Houston-based Wild Well Control has plugged and abandoned more than 340 wells on 30 downed platforms in water depths of up to 340 feet, requiring the removal of more than 15,000 metric tons of steel structure and more than 400 pressurized and unpressurized entries into wells.
With oil futures prices reaching a record $100/bbl last week, power generators and other traditional natural gas users may soon find themselves competing with everyday drivers for the precious commodity, if NGVAmerica has anything to say about it. After notching the $100/bbl milestone on Wednesday, February crude futures revisited the lofty price level Thursday, recording a high tick of $100.05/bbl before settling the day at $99.18/bbl. In contrast, February natural gas closed Thursday at $7.674. On a rough BTU comparison basis, February crude settled at $16.53/MMBtu, or at a $8.856/MMBtu premium to February natural gas. “In the past, there were substantial societal benefits of using more natural gas as a vehicle fuel — such as reducing dependence on foreign oil, reducing greenhouse gases and reducing urban pollution,” said NGVAmerica President Richard Kolodziej. “Now, as the price gap between petroleum and natural gas widens, we’re seeing a major economic advantage, too. As a result, 2008 will be a milestone year in the growth of natural gas vehicles in the U.S.” There are already six million natural gas vehicles (NGV) in use worldwide, up 20% from 2006, according to Kolodziej. “We expect that growth rate to continue — or even accelerate — as countries try to avoid the economic burden of rising oil prices while also trying to reduce greenhouse gases,” he said. “South America, Asia and Europe will see the most expansion, but we will see much more interest in NGV use in the U.S., too. There is no silver bullet answer to our dependence on foreign oil. We must be shifting to all alternatives in the regions of the country and in the applications where they make the most sense. NGVs are a here-and-now alternative that makes environmental and economic sense.” To encourage the shift to NGVs, the federal government is offering income tax credits that range from $2,500 to $32,000 for the purchase or conversion of NGVs, Kolodziej said.
Chesapeake Utilities’ Eastern Shore Natural Gas pipeline said it plans to withdraw its proposed Energylink Expansion Project (E3) from the FERC prefiling process, citing projected increased capital costs and a lack of customer commitments. The project, which would have increased Eastern Shore’s capacity by approximately 33%, would have been the pipeline’s largest expansion since it was built in 1959. “We have always believed and continue to believe that the E3 Project is the right thing to do. However, the board and management have decided that [Eastern Shore] should withdraw the E3 Project from the prefiling process, given the changed economics of the project,” said Eastern Shore President Stephen C. Thompson. The project, originally priced at $93 million, called for the construction of 63 miles of pipeline from Calvert County, MD, across the Chesapeake Bay into Dorchester and Caroline counties to Eastern Shore’s existing system in Sussex County, DE. It would have brought an additional 60,000 Dth/d of natural gas capacity to the Delmarva Peninsula.
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