Oklahoma City-based SandRidge Energy Inc. and Occidental Petroleum Corp. plan to build and operate a West Texas carbon dioxide (CO2) extraction plant and pipeline that is expected to boost Occidental’s Permian Basin oil production by at least 50,000 b/d and Sandridge’s production of high-CO2 natural gas to 350 MMcf/d (260 MMcf/d net). Occidental will put up the $1.1 billion in development costs, own and operate the facilities and claim 100% of the CO2. The Century Plant in Pecos County, TX, combined with existing SandRidge CO2 processing plants, would allow treatment of approximately 1 Bcf/d of high-CO2 gas by year-end 2011. The CO2 takeaway capacity is expected to be at least 450 MMcf/d. SandRidge would drill, produce, and deliver high-CO2 gas to the Century Plant and retain 100% of the methane gas at the tailgate under a 30-year agreement. The Oklahoma company expects the facility also will enable it to develop 1.7 Tcf of additional methane reserves from high-CO2 gas. The company currently has the capability of producing 70 MMcf (50 MMcf net) per day of methane from high-CO2 gas. Occidental also plans to build pipelines from McCamey, TX, to Denver City, TX, to deliver the CO2 to its enhanced oil production facilities.

NorthWestern Energy said the Montana Public Service Commission (MPSC) approved a stipulated agreement with the Montana Consumer Counsel (MCC) to settle the utility’s pending electricity and natural gas rate cases. The agreement resulted in a rate increase of about 2%, which has been in effect on an interim basis since Jan. 1. Last December NorthWestern announced the proposed settlement with the MCC, which included a $10 million annual increase in electric delivery rates, and an increase in natural gas delivery rates of $5 million annually. As part of the agreement, NorthWestern will provide 21 MW of unit-contingent power from Colstrip Unit 4 at $19/MWh below the Mid-C index price for a period of 78 months. NorthWestern will also make capital investments in 2008 and 2009 to improve and upgrade the existing electric transmission and distribution system. The company said it will recover this investment in rates over time but will not earn a rate of return on $38.8 million of the total investment. Under the terms of the agreement, NorthWestern will file another rate case in 2009. NorthWestern provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 650,000 customers in Montana, South Dakota and Nebraska.

NiSource Inc. subsidiary Columbia Gas of Pennsylvania (CPA) has filed a unanimous settlement with an administrative law judge of the Pennsylvania Public Utility Commission (PUC) detailing an agreement reached with regulatory stakeholders on an adjustment to its natural gas distribution rates. The settlement involves a base rate case filed by CPA in January 2008, the company’s first rate case in 12 years. Subject to approval by the PUC, new rates under the settlement are expected to become effective Oct. 28. The settlement is expected to contribute approximately 6 cents of basic earnings per share in 2009, after taking into consideration expected expense levels and interest costs associated with CPA’s infrastructure improvement program.

Monroe Gas Storage Co. LLC (MGS), a joint venture of Foothills Energy Ventures LLC and High Sierra Energy LP, has closed its $130 million debt financing for the Monroe Gas Storage facility, located near Amory, MS. Fortis Capital Corp. was the sole lead arranger; ING Capital LLC acted as syndication agent, and U.S. Bank National Association was the documentation agent on the fully committed financing. Caterpillar Financial Services Corp., COBank ACB, Guaranty Bank and Trust Co. and RZB Finance LLC joined the deal as managing agents. On June 11 MGS also received its Federal Energy Regulatory Commission notice to proceed and began construction on the facility. “We fully anticipate being commercially operational beginning next April,” said Foothills CEO Brian Bierbach. The 3.3 Bcf facility will use a depleted gas reservoir to provide multi-cycle storage with a maximum injection capability of 445 MMcf/d and a maximum withdrawal capability of 465 MMcf/d. It will have interconnections to both Texas Eastern Transmission Co. in the M1 market zone, and Tennessee Gas Pipeline on the 500 Leg in Zone 1.

Avista warned that high natural gas prices will show up in customer rates this fall when annual purchased gas cost adjustments (PGA) are filed with the public utility commissions in Washington, Idaho and Oregon. The company said it uses seasonal arbitrage and storage at its Jackson Prairie facility to hedge physically. Still, Kevin Christie, Avista director of gas supply, said prices have increased significantly over prices seen this past winter and are continuing to climb. In June 2007 gas prices averaged $7.39/Dth compared to June 2008 prices of $12.81/Dth. The lack of lower spring and summer prices means natural gas rates for customers will increase when Avista files its annual PGAs in September. PGAs are typically filed once a year to reflect the average cost of wholesale gas purchased by Avista. The cost of gas is passed through to customers. This spring the American Gas Foundation released a study that cited efficiency and environmental statistics and urged greater residential and direct commercial use of natural gas and less reliance on gas for power generation (see NGI, May 5).

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