Privately backed producer Indigo Minerals LLC has returned to the acquisition market after making a $218 million cash deal with Chesapeake Energy Corp. to acquire some producing properties, undeveloped acreage and midstream assets spread across northern Louisiana, East Texas and Arkansas. Under the agreement, Indigo would acquire stakes in 519 of Chesapeake’s producing wells that are located in more than 60 fields. The transaction also includes 40,000 undeveloped acres, bringing the total acreage position to be sold to Indigo to more than 122,000 net acres. Indigo would operate 219 of the newly acquired wells, and it would gain a working interest in another 300 of the Chesapeake-operated wells in the region. Net production following the acquisition “will approach 40 MMcfe/d, and total proved reserves will exceed 220 Bcfe,” said Indigo, which is based in Houston. Chesapeake would retain its deep leasehold rights in the Haynesville Shale properties, Indigo said. The acquisition follows a divestment phase by Indigo that began in 2008, when the company sold 89,000 acres of mineral rights in the Haynesville Shale to EnCana Corp. for $457 million (see NGI, June 30, 2008).
Blue Sky Gas Storage LLC has filed an application at FERC seeking to build a natural gas storage project in Logan County, CO, with proposed interconnects with the Rockies Express, Trailblazer and Kinder Morgan Interstate pipelines and access to Cheyenne Hub by backhaul on Trailblazer. The Blue Sky storage facility, which would be located north of Sterling, CO, would have working gas capacity of 4.4 Bcf, with the potential for further expansion in the future subject to approval by the Federal Energy Regulatory Commission and market demand. Blue Sky said it is conducting a nonbinding open season through June 19. A bid sheet and further information can be found at www.blueskygasstorage.com. Houston-based Blue Sky is an affiliate of Linear Energy Management LP, a privately owned midstream pipeline company.
Perryville Gas Storage LLC has asked FERC for authorization to build a new salt dome natural gas storage facility in Northeast Louisiana. The project would have 15 Bcf of working gas capacity in two caverns to be located in Franklin and Richland parishes, with a maximum injection rate of 226 MMcf/d and a maximum withdrawal rate of 600 MMcf/d. Houston-based Perryville Gas also proposes to construct 14.4 miles of 24- and 36-inch diameter pipeline to deliver natural gas to CenterPoint Energy Gas Transmission and Columbia Gulf Transmission, as well as one 9,500-hp compressor station [CP09-418]. The company asked the Federal Energy Regulatory Commission to issue a final order by Dec. 1 of this year and grant it a construction period of five years. It said it expects to have the facilities in service by June 2012. Perryville Gas is 100% owned by Cardinal Gas Storage Partners LLC, which was formed in 2008 as a joint venture of Martin Resource Management Corp. and Energy Capital Partners for the purpose of developing and owning gas storage facilities.
The Jicarilla Apache Nation, one of the largest natural gas producing nations in the United States, and an affiliate of Enterprise Products Partners LP have signed a 20-year right-of-way agreement allowing the partnership to continue its gas gathering operations on reservation lands in northwest New Mexico. Under the terms of the agreement, Enterprise will continue to own and operate existing infrastructure and related assets located on tribal land, including 545 miles of gathering lines connected to the partnership’s San Juan Gathering system, which has current throughput of more than 30 MMcf/d. Comprised of more than 6,000 miles of gas pipelines in New Mexico and Colorado, the total San Juan system gathers more than 1 Bcf/d. Included in the long-term contract are incentives that may allow future expansion of the gathering system on Jicarilla land, Enterprise said. To protect sensitive religious, cultural and pristine sites, a small portion of the one million acres that comprise the Jicarilla reservation will be off-limits to oil and gas activity.
The Magnum Gas Storage project — the first large-scale, high-deliverability, multi-cycle salt cavern natural gas storage facility proposed for development in the West — is holding a nonbinding open season for storage services through July 31. Magnum Gas Storage LLC, a Salt Lake City, UT, developer, proposes to initially develop two salt caverns in central Utah in Millard County, each with working gas capacity of approximately 5.6 Bcf. The project initially would be capable of accepting natural gas at Opal Hub in Wyoming for injections of up to 0.3 Bcf/d and withdrawing up to 0.5 Bcf/d with a projected six to nine inventory turns annually. Magnum Gas said it eventually plans to expand to eight storage caverns, with a total capacity of 45 Bcf. The proposed storage facility would be directly connected by a new header pipeline to Kern River Gas Transmission and Questar Pipeline at Goshen, UT, and would indirectly service the Opal area market hub pipeline interconnections through backhaul and displacement, Magnum Gas said. The first salt cavern is expected is targeted for in-service in early 2012, according to the company. The project currently is in the pre-filing review stage at the Federal Energy Regulatory Commission [PF09-3]. For more information, contact Rob Webster or Craig Broussard at (801) 990-2970 or go to www.westernenergyhub.com. Magnum Gas Storage is wholly owned by Magnum Development LLC, a Haddington Ventures LLC portfolio company.
Arizona, which currently has no gas storage facilities, took one step closer to the development of such facilities when members of the state’s House approved a bill that would loosen groundwater protections. The bill (HB 2352) would authorize storage in underground salt formations and grant them exemptions from Arizona’s aquifer protection permit requirement. If the bill is approved by the Senate and signed into law, the first company to take advantage of the exemptions would likely be Houston-based Multifuels LP. The developer needs the exemption to proceed with its plans for creating a large underground storage facility near Eloy, AZ, about 50 miles northwest of Tucson. Multifuels has proposed to inject wastewater brine as part of feasibility testing and the eventual preparation of an underground cavern that could store billions of cubic feet of gas. According to the Arizona Department of Environmental Quality, current state law prohibits brine injection because of the possible threat to groundwater supplies. Earlier this year an Arizona legislative committee voted to recommend that Multifuel’s storage project be given an exemption from state requirements protecting groundwater (see NGI, Feb. 23). The bill would also offer the exemptions to other storage projects.
Like its affiliated Sempra Energy utility in California, San Diego Gas & Electric Co. (SDG&E) said it has up to $40 million in rebates and incentives for businesses investing in various energy efficiency projects this year. SDG&E made the announcement at an annual energy meeting drawing about 1,200 business representatives in San Diego. Sempra’s Los Angeles-based Southern California Gas Co. (SoCalGas) in May announced it had more than $20 million earmarked for rebates and incentives to business customers for qualifying energy efficiency projects in 2009, its largest pool of incentive money in the utility’s history. At the energy workshops for businesses, SDG&E featured seminars outlining programs and how businesses can take advantage of them with energy rebates, incentives, free on-site energy efficiency assessments and zero-interest financing programs. The combination utility cited a local construction company that earned almost $230,000 in incentives. The utility helped Hamann Construction design a cold-storage facility in San Diego to run on 60% less electricity than standard facilities of that type. The company’s green building specialist said the facility holds four times more product than the company’s old facility, yet it consumes half as much energy to operate. In another example, SDG&E helped a Radisson Suite Hotel in Rancho Bernardo, CA, to make its physical plant more energy efficient with a no-interest loan.
The cost of being regulated by the Nevada Public Utilities Commission (PUC) went down by a fraction of a penny — 1/200th of a cent, to be exact. The three-member PUC voted unanimously to lower its assessment against all of the private-sector utilities it regulates to 1.90 mills from 1.95 mills. With the mill equaling 1/10-of-a-cent and the amount levied against gross operating revenues from in-state operations, which often run into the hundreds of millions of dollars for the largest utilities, the PUC can count on several millions of dollars from each utility company to help underwrite its regulatory commission budget. The PUC estimates that the NV Energy utilities combined will pay about $6.4 million for fiscal year 2010, which equates to about 22 cents on the typical customer’s monthly utility bill. “Revenues from: the mill tax will fund the annual operations of the PUC,” said a commission spokesperson in Carson City, NV. The new rate assumes “adequate resources are available” to meet legislatively approved budgets and federal utility issues that the state commission must deal with, according to PUC Secretary Crystal Jackson. Under Nevada law, the PUC could levy up to 3.5 mills against the utilities, Jackson said. She cited several factors enabling the lower charge.
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