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Anadarko Petroleum Corp. has entered into a $860 million carried-interest arrangement with an undisclosed party for a 12.7% stake in the prospective Heidelberg development project in the deepwater Gulf of Mexico. The arrangement represents nearly all its expected capital requirements through the anticipated date of first ramp-up in mid-2016. The agreement is similar in scope to one secured in 2012 with Inpex Corp. for a 7.2% stake in the Lucius deepwater development, which Anadarko is developing jointly with Heidelberg (see NGI, Aug. 27, 2012). Two truss spars each would have capacity of 80,000 b/d; Lucius is on schedule to achieve first production in 2014.
A subsidiary of Russian state-owned OAO Rosneft has acquired a 30% interest in 20 deepwater Gulf of Mexico (GOM) exploration blocks held by ExxonMobil Corp. for an undisclosed amount. The two struck a strategic cooperation agreement in 2011 swapping access in Russia’s Arctic offshore and other areas, while Rosneft gained access to U.S. and Canadian plays in the onshore and GOM (see NGI, April 23, 2012; Sept. 5, 2011). The 20 blocks are the Western GOM’s Alaminos Canyon blocks 569, 612, 613, 655, 656, 657, 698, 699, 700 and 701; East Breaks 429, 471, 472, 473 and 515; and Keathley Canyon 529 and 573. In the Walker Ridge area of the Central GOM, Rosneft opted to buy stakes in blocks 629, 673 and 717. ExxonMobil would retain a 70% interest in the GOM blocks and remain the operator. An analysis of seismic data is ongoing; there is no production now.
Canadian Pan Ocean Ltd., funded by Asian investors, has put together an operating company in southwestern Alberta’s liquids-rich Duvernay Shale, executing a binding term sheet for a farm-out agreement with Canadian producer Mako Hydrocarbons Ltd. for the producer’s 50% working interest in its Alberta Joint Venture (AJV). Pan Ocean will take over operating the venture, investing up to C$220 million over three years, employing most of Mako’s existing executives and staff, and acquiring Mako’s infrastructure and intellectual property. Four wells, two vertical and two horizontal, are to be spudded by the end of 2013, with additional wells possible in the following two years. Mako will retain a 12.5% working interest of farmed-in acreage with an option to increase it by up to 20%. Calgary-based Mako had established a landholding position of 34,200 net acres in the Duvernay. Pan Ocean also has entered into conditional agreements to acquire interests in the AJV from Transerv Energy Ltd. and Tamaska Oil and Gas Ltd. Early results in the play aroused interest because of the high levels of condensate with the gas stream, condensate that can be used as a diluent in nearby oilsands production. An estimate by Alberta’s Energy Resources Conservation Board puts the Duvernay’s resource base at 443 Tcf of natural gas, 11.3 billion bbl of liquids and 61.7 billion bbl of oil.
Natural gas for use in the fleet transportation sector continues to make inroads, as evidenced by the recent news out of Ford Motor Co. that sales of Ford trucks with engines prepped for compressed natural gas (CNG) or liquefied petroleum gas (LPG) catapulted more than 350% from 2009 to 2012. As a result of the increased customer demand for natural gas vehicles, Ford is expanding its portfolio in the growing alternative-fuel market segment. “Since 2009, we’ve seen the number of Built Ford Tough commercial vehicles sold with factory-prepped engines for CNG/LPG upfit increase by more than 350%,” said Jon Coleman, Ford Fleet Sustainability and Technology manager. “To expand power of choice for our commercial customers, we are offering CNG/LPG prepped engines in additional vehicle nameplates — from the Transit Connect compact van up to medium-duty F-650 models.”
A joint venture (JV) of Battelle and Winner Global LLC expects to begin building its first unit in April to respond to a potential water shortage facing oil and natural gas companies engaged in hydraulic fracturing (fracking) activities in the Utica and Marcellus shales in Ohio and Pennsylvania. Sharon, PA-based Winner Water Services Inc. was formed in January and would use a Battelle-invented technology to remove iron and sulfate from water in potentially thousands of abandoned coal mines in Pennsylvania and Ohio. The water then would be cycled back to drilling sites via pipelines or trucks, said Winner Water CEO John Ontiveros. The Battelle process has been licensed to the JV. The first project could be operational this fall with seven units expected over the next three years, each one costing between $750,000 and $1.5 million.
The Federal Energy Regulatory Commission has approved Columbia Gas Transmission LLC‘s request to participate in a pre-filing review of its East Side Expansion Project, which would provide up to 310,000 Dt/d of additional capacity on its system to carry Marcellus Shale gas to the East Coast and Mid-Atlantic region. NiSource Gas Transmission & Storage, parent of Columbia Gas, said the project calls for the installation of new compression to an existing compressor station, and enhancing interconnects with Millennium Pipeline at Columbia’s Wagoner metering station and with Tennessee Gas Pipeline at the Milford compressor station. Construction is expected to begin in early 2015 for in-service late that year.
Ohio House Speaker William Batchelder (R-Media) and Treasurer Josh Mandel said they oppose Gov. John Kasich‘s proposal to levy new severance taxes on hydraulic fracturing and natural gas liquids According to reports, Batchelder said at the Ohio Oil and Gas Association‘s (OOGA) winter meeting in Columbus, OH, that the tax hikes in HB 59 would not receive his support. Mandel also took aim at Kasich’s plan to generate revenue to offset a cut in personal income taxes. The hallmark of the governor’s budget is to cut state income taxes by 7.5% in 2013, followed by additional cuts of 7.5% in FY 2014, and 5% in FY 2015, with severance taxes making up for any shortfall. Kasich has proposed a 1% severance tax on natural gas produced from unconventional wells but has proposed eliminating the severance tax on gas from conventional wells that produce less than 10 Mcf/d; conventional wells that produce more than 10 Mcf/d would be taxed at 1%, up to a cap of 3 cents/Mcf (see NGI, Feb. 11).
Royal Dutch Shell plc is proceeding with two small-scale natural gas liquefaction units in the transport corridors of the Great Lakes and Gulf Coast. In the Gulf Coast corridor, Shell plans to install a 0.25 million metric ton/year facility at its Shell Geismar Chemicals facility in Geismar, LA, to supply LNG along the Mississippi River, the Intra-Coastal Waterway, offshore Gulf of Mexico and the onshore exploration areas of Texas and Louisiana. A similar unit is to be installed at the Shell Sarnia Manufacturing Centre in Sarnia, ON, to supply all five Great Lakes, bordering U.S. states and Canadian provinces, and the St. Lawrence Seaway. The Interlake Steamship Co. is expected to be the first marine customer.
Contact Exploration Inc. and Pieridae Energy Ltd. have created Pieridae Production LP (PPLP) to focus on natural gas exploration and production in support of Pieridae’s proposed Goldboro LNG Terminal in Guysborough, Nova Scotia (see NGI, Oct. 29, 2012). Assets initially acquired by PPLP consist of about 50,000 acres in New Brunswick, initially held by Contact. For the indirect contribution of a 15% working interest in the assets into the partnership, Contact received C$1.3 million from Pieridae and has been issued about 15% of Pieridae stock.
Sabine Pass Liquefaction LLC, a Cheniere Energy Inc. affiliate, and associated companies are seeking Federal Energy Regulatory Commission pre-filing review to expand their liquefied natural gas export terminal and associated pipeline on the Louisiana coast. The companies and Cheniere Creole Trail Pipeline LP filed to initiate pre-filing review to expand the existing Creole Trail pipe and the liquefaction project to add trains 5 and 6, representing additional capacity of about 1.3 Bcf/d. The parties are targeting startup in 2015. They also have applied to the U.S. Department of Energy to export an additional 101 Bcf per year in support of a contract struck last December with Total Gas & Power North America Inc. The term of the 20-year agreement begins upon the first commercial delivery for the project’s fifth train and has an extension option of up to 10 years.
Crosstex Energy Inc. and former management of Enerven Compression Services are forming E2 to serve Utica Shale producers with gas compression and condensate stabilization facilities. Crosstex is putting up $50 million to complement affiliate Crosstex Energy LP’s assets in the Ohio River Valley. E2 would build, own and operate two compressor stations and condensate assets in Noble and Monroe counties in Ohio. The facilities are supported by a long-term, fee-based contract with an active producer, Crosstex said. Commercial operations are expected to start during the third quarter.
Kinder Morgan Texas Pipeline LLC (KMTP) has asked the Federal Energy Regulatory Commission for authorization to increase the design capacity of its U.S.-Mexico border facilities from 425 MMcf/d to 700 MMcf/d. KMTP proposes no construction or modifications to its previously approved border crossing facilities. The current shipper customer of Kinder Morgan Mexico is Mexico’s Pemex-Gas Y Petroquimica Basica (Pemex), which buys gas at the border from affiliate MGI Supply Ltd. to serve customers in the Monterrey area and to support its system throughout northeastern Mexico. In the United States, MGI either purchases gas from KMTP at the border or ships gas to the border on KMTP’s intrastate system.
The Idaho Public Utilities Commission (PUC) is taking public comment through March 18 on an Intermountain Gas Co. proposal to sell surplus liquefied natural gas (LNG) from its Nampa LNG facility to nonutility customers. Excess LNG sales are not expected to increase customer rates and have the potential to decrease rates. The company proposes to share 50% of sales revenue with customers until system growth requires it to use all of its LNG to meet peak-day needs. Intermountain would use all stored LNG to first satisfy utility customer demand, even if some of the stored LNG was initially designated for nonutility sales. The company would provide a 2.5-cent credit for each gallon sold to meet any operations and maintenance costs resulting from nonutility sales and another 2.5 cents/gallon to meet any capital expenditures or increased maintenance costs to the Nampa facility. In January the PUC gave Intermountain emergency authority to sell up to 100,000 gallons of LNG from its Nampa facility to aid residents at nearby West Yellowstone, MT, where LNG shortages were anticipated due to a power outage.
EV Energy Partners LP (EVEP) reported a net loss of $9.9 million for 4Q2012 (minus 23 cents/share) versus $9.7 million (27 cents) a year earlier. For the year it had a net loss of $16.3 million (minus 38 cents/share), compared with profits of $91.8 million ($2.68) in 2011. EnerVest Ltd. CEO John Walker, whose private company also controls publicly traded EVEP, said there been bids for the Utica Shale package of assets for sale but they are all below expectations. The assets were put on the market in September (see NGI, Sept. 24, 2012). EVEP reported 4Q2012 production of 10.8 Bcf of natural gas, 277,000 bbl of crude oil and 476,000 bbl of natural gas liquids, and averaged 15.3 Bcfe in 4Q2012, a 38% increase from 4Q2011 (11.1 Bcfe). Full-year 2012 production was 59.6 Bcfe, a 45% increase over 2011 (41.2 Bcfe).
Maine Natural Gas (MNG) has signed a contract with three companies to begin construction of the 12-inch diameter steel pipeline backbone of its natural gas distribution system in Augusta, ME, the Iberdrola USA subsidiary said. The 10.5-mile backbone pipeline, which will serve residential, commercial and institutional customers in the Augusta area, will tap the Maritimes and Northeast transmission pipeline in Windsor, ME, cross the Kennebec River, and then run on to the MaineGeneral Medical Center (MGMC) in Augusta. MNG signed a 10-year agreement last fall to supply gas to the new regional hospital, a deal MNG said could help it build its pipeline even if the state isn’t a customer (see NGI, Nov. 5, 2012). MNG said it has been laying pipe in the area continuously since that contract was signed.
D&L Energy Inc. has filed an appeal with the Ohio Oil and Gas Commission to overturn a Ohio Department of Natural Resources decision to revoke six permits, deny three permit applications and order a halt to all temporary storage operations near Youngstown, after oilfield waste was illegally dumped into waterways near Youngstown in late January. Court documents show that D&L CEO Ben Lupo pleaded “not guilty” to a charge that he violated the federal Clean Water Act by allegedly ordering an employee of Hardrock Excavating LLC to dump the waste into a storm drain that empties into a tributary of the Mahoning River (see NGI, Feb. 18).
Investors face an array of social and environmental shareholder resolutions in upcoming annual meetings, according to Proxy Review 2013. Climate change, energy and related risks, as well as corporate sustainability and transparency, account for almost 40% of the 365 resolutions filed to date. Resolutions on climate change and environmental issues, including on hydraulic fracturing, have been filed with 92 companies to date. This year SandRidge Energy Inc. and Hess Corp. face proxy fights over how their companies are managed (see related story). “Shareholder resolutions are canaries in the coal mine, highlighting problems companies must face, sooner or later,” said the report’s co-author Michael Passoff, who is CEO of Proxy Impact, a proxy voting service. “Hydraulic fracturing continues to be a hot topic with new resolutions asking for quantitative data on reducing health and environmental impacts and on greenhouse gas intensive methane emissions.”
Enbridge Bakken Pipeline Co. Inc. completed and placed in service its 77-mile Bakken Pipeline Project Canada, which connects to the Enbridge Pipelines Inc. (EPI) Mainline and carries crude oil from the Bakken Shale to North American refinery markets, Enbridge Energy Partners LP (EEP) and Enbridge Income Fund said. The project reversed and expanded an existing pipeline running from Berthold, ND, to Steelman, SK, and constructed a 16-inch pipeline from a new terminal near Steelman to the EPI mainline terminal near Cromer, MB. It provides 145,000 b/d of capacity for growing production from the Bakken and Three Forks formations in Montana, North Dakota, Manitoba and Saskatchewan, of which 25,000 b/d was placed in service during the first quarter of 2012, Enbridge said. The C$180 million project was approved by Canada’s National Energy Board in late 2011.
The West Virginia Department of Environmental Protection (DEP) ordered Noble Energy Inc. to cease operations and regain control of an impoundment pit in Marshall County after thousands of gallons of drilling wastewater spilled into a waterway in February. The DEP said it issued seven violation notices and two orders to Houston-based Noble after more than 2,200 gallons of brine reportedly overflowed from a centralized storage impoundment near Dallas, WV, on Feb. 22 and entered a tributary of Wheeling Creek. Noble was cited for allowing pollutants to flow into state waterways; violating monitoring and emergency action plans; failure to maintain a pit in such a manner as to minimize adverse environmental effects; and failure to maintain a two-foot freeboard. The company was also cited for violating West Virginia’s water quality standards by discharging pollutants into a nearby stream and allowing industrial waste emanating from a point source to flow into waters of the state.
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