With a nod to the recession, NiSource Inc. business segment NiSource Gas Transmission & Storage (NGT&S) said it plans to cut 370-380 positions across its 16-state operating territory during the course of 2009. The operating segment, which houses Columbia Gas Transmission LLC, Columbia Gulf Transmission Co. and Crossroads Pipeline and holds partnership interests in Central Kentucky Transmission Co., Hardy Storage Co. and Millennium Pipeline LLC, said the structural changes are “designed to enhance operational efficiency, support growth initiatives and maintain safe, reliable service to customers.” The changes include: (1) focusing company resources on core business functions, consolidating and improving efficiency; and (2); implementing technology and process improvements across the organization. “Employee teams from across our organization have been evaluating all aspects of our existing business structure and work processes over the past few months,” said NGT&S President Christopher Helms. Of the job cuts, Helms said eligible employees will be offered a severance package and outplacement assistance, while certain employee groups will be eligible for voluntary severance. Combined, the NGT&S companies operate about 15,000 miles of interstate gas pipeline and 37 underground gas storage fields, delivering more than 1 Tcf of gas per year.
Since 1994, when Dow Chemical Co. first reported its energy and conservation performance, the company says it has saved 1,600 trillion Btu. Dow’s program has resulted in energy savings of $8.6 billion and has prevented 86 million metric tons of carbon dioxide from entering the atmosphere, a company official told U.S. lawmakers. Rich Wells, Dow vice president of energy, recently offered expert testimony to the U.S. House of Representatives’ Subcommittee on Energy and Environment regarding policies for climate change legislation. Wells recommended that Congress include greater energy efficiency measures to extend U.S. energy supplies and slash carbon emissions. “We need to be thoughtful when designing a climate policy,” he said. “Too strong a price signal on carbon in the short term could accelerate fuel switching from coal to natural gas in the power generation sector. This action could trigger a steep demand for natural gas and dramatically drive up prices that would harm manufacturing companies such as Dow. Combined with other well designed climate policy elements — such as cost containment — energy efficiency measures can lessen the impact of fuel switching under a cap-and-trade system.”
Calypso LNG LLC has informed the Maritimes Administration (MARAD) and U.S. Coast Guard that it will withdraw its application for a deepwater port license to build a liquefied natural gas (LNG) facility off the southeastern coast of Florida. The announcement came about a week after Florida Gov. Charlie Crist vowed to oppose the Calypso project, which was to include ships, a marine offloading buoy and anchoring system located eight to 10 miles offshore of Broward County northeast of Port Everglades. The explosive growth in gas shale production, which has offset the demand for LNG in the United States, also may have factored into Calypso’s decision to pull the plug on the project (see NGI, Oct. 27, 2008). “The Maritime Administration and Calypso remain committed to the long-term value of liquefied natural gas as a new source of clean, reliable and secure energy, and hold out the hope that the company may resubmit the application at a later date and under more favorable conditions,” MARAD said.
TransCanada Corp. has completed a successful binding open season for firm transportation service to carry 378 MMcf/d of shale natural gas supplies from the Horn River Basin north of Fort Nelson, BC, to its Alberta System (see related story). As proposed, the C$350 million Horn River pipeline project would run 155 kilometers (96 miles) using existing pipelines in the area and new pipes up to 36 inches in diameter. The system would transport sweet natural gas from the Horn River area to a tie-in point on the existing Alberta System. The pipeline could be operational early in 2Q2011, subject to regulatory approval. TransCanada also is encouraged by the “strong commercial support” it received for another pipeline that would transport developing shale gas reserves in the Montney formation of northeast British Columbia. The pipeline company recently concluded a binding open season for transmission service from the Groundbirch area west of Dawson Creek, BC. Shippers committed to firm gas transportation contracts that could reach 1.1 Bcf/d by 2014. The proposed Groundbirch pipeline, projected to cost around C$250 million, would be 78 kilometers (48 miles) long, with service expected in late 2010, subject to regulatory approval.
The energy sector is alive and well, according to Deloitte, which has opened its doors in Houston to the new Deloitte Center for Energy Solutions. The center, designed to house the consultant’s 500-plus energy professionals, will allow Deloitte to participate in hands-on collaboration with oil and natural gas companies, many of which are headquartered in the state’s largest city. In addition to functioning as a “practical hub for innovative solutions,” Deloitte plans to conduct executive and industry programs, which would include dialogues and roundtables. Among other things the facility houses a derivatives pricing center that will provide clients with detailed information about energy derivatives.
GE Energy Financial Services has agreed to invest $150 million in a partnership with ATP Oil & Gas Corp. to expand the producer’s floating natural gas and oil production unit in the deepwater Gulf of Mexico. The GE unit would obtain a 49% limited partnership stake in the existing project, its first investment in a floating production facility. ATP, which operates the unit, would own the majority stake and serve as managing partner. Located 80 miles south of New Orleans, the ATP Innovator has been in operation since March 2006 to produce ATP’s offshore reserves. The Houston-based producer in 2005 purchased and converted the unit from a drilling semisubmersible rig into a floating production facility. The unit processes up to 100 MMcf/d of gas and 20,000 b/d of oil. Under the new partnership agreement, the facility plans to process additional reserves from a third-party producer by 2010. The GE unit also has announced it plans to invest $126 million in a joint venture partnership to help Regency Energy Partners LP move forward the Haynesville Expansion Project (see related story).
The Federal Energy Regulatory Commission approved a joint offer of settlement filed by its enforcement staff and Energy Transfer Partners’ Oasis Pipeline and affiliates, which essentially closes the enforcement case against the companies without levying any financial penalties. “The Commission finds that the stipulation and consent agreement is fair, reasonable and in the public interest and [it] is hereby approved,” the order said [IN06-3]. Commissioner Joseph Kelliher, who led the charge in bringing the enforcement action against Oasis Pipeline and affiliates in July 2007, did not participate in the decision. The joint settlement spells out the conditions under which Oasis will provide transportation services to its customers, upgrade its electronic bulletin board, record telephone conversations of its dispatchers for four years, and enhance and maintain its compliance monitoring program. The approval of the settlement comes three months after presiding Administrative Law Judge Bruce L. Birchman in a partial decision dismissed the meat of the FERC enforcement case against Oasis Pipeline — that it discriminated against nonaffiliated shippers in favor of affiliated shippers (see NGI, Nov. 24, 2008).
The multi-billion-dollar long-term natural gas deals secured in the past four years by major public-sector utilities received credit review by the two major rating agencies following a downgrade of MBIA Insurance Corp. of Illinois (from “AA” to “BBB+”), a major player in backing the municipal revenue bonds that support the gas buys. Several deals continue to carry “negative” outlooks as a result. Standard & Poor’s Ratings Services (S&P) reviewed deals involving the Southern California Public Power Authority (SCPPA), Northern California Gas Authority No. 1, Texas Municipal Gas Acquisition and Supply Corp., Public Authority of Colorado and American Public Energy Agency. Moody’s Investors Service looked at the Municipal Gas Authority of Georgia. S&P affirmed SCPPA’s “A” senior secured debt rating of $504 million of gas project revenue bonds, but kept a “negative” outlook on its prepaid gas purchase financing in the wake of lowering of MBIA’s ratings. The move would have had more of an impact on the SCPPA bonds, but MBIA Illinois has issued a new reinsurance policy that S&P said provides “additional credit support” to the original MBIA policy. A financing arm for a dozen public-sector utilities in Southern California, SCPPA’s bond proceeds paid for the prepayment of about 135 Bcf of natural gas scheduled to be delivered during the next 30 years to five SCPPA member power utilities. S&P gave similar affirmation with a negative outlook to the Northern California authority’s $757 million in gas project revenue bonds — $668.5 million (2007B) and $68.5 million (2007A), following the MBIA downgrade. The gas buying authority originally obtained the supplies for the Sacramento Municipal Utility District and other Northern California public-sector power providers. Ratings for the Texas municipal gas authority, Colorado public authority, and Nebraska-based American Public Energy Agency were all similarly affirmed after Transamerica Life Insurance Co. (TLIC) was placed on a “credit watch negative” outlook. TLIC is provider of guaranteed investments to bondholders for the Texas gas acquisition bonds totaling nearly $2 billion; $653.2 million in Colorado public-sector gas bonds; and $306 million in American Public Energy revenue bonds. Moody’s affirmed the ratings on the Georgia gas authority’s $35.5 million in bonds that were secured by letters of credit from JPMorgan Chase Bank NA and Wachovia Bank NA.
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