Chevron Corp. increased its natural gas output in the first two months of 2013 at the same time it was collecting higher gas prices than it did a year ago. In the United States, net gas production in January and February averaged 1.256 Bcf/d, versus 1.170 Bcf/d for the full three-month first quarter of 2012. Global net gas output climbed 5.4% to average 5.291 Bcf/d in January and February, compared to 5.019 Bcf/d in 1Q2012. The producer, which is scheduled to release its 1Q2013 earnings report on April 26, said realized prices for U.S. gas averaged $3.06/Mcf in the first two months of this year, compared with $2.48 in 1Q2012. U.S. net oil-equivalent production increased to 663,000 boe/d in the first two months of 2013 compared with 651,000 boe/d in 1Q2012, but it was down from 4Q2012’s total of 674,000 boe/d because of maintenance activity in the Gulf of Mexico.
General Electric has agreed to pay $3.3 billion to buy Lufkin Industries Inc., a leading provider of artificial lift technologies for the oil and gas industry. The Lufkin, TX-based company sells and services oilfield pumping units, well automation systems, natural gas lift and plunger lift systems, progressing cavity pumps, well completion products, foundry castings and power transmission products. It also has technologies required to design, manufacture and market its products. It’s biggest draw is its advanced artificial lift technology, which is used in nearly all — 94% — of the one million producing wells in the world.
Range Resources Corp. achieved a record high production volume of 876 MMcfe/d during 1Q2013, 33.6% higher than in 1Q2012, driven in large part by the continuing success of its drilling program in the Marcellus Shale. In 1Q2012 Range produced a then-record 655.5 MMcfe/d (see NGI, April 30, 2012). It broke that record in 4Q2012 with production of 844 MMcfe/d(see NGI, Jan. 21). Range said 79% of the output was natural gas; 14% natural gas liquids and 7% crude oil and condensate. Year/year oil and condensate production increased 52%, while natural gas was up 34% and liquids rose 22%.
Calgary-based midstream company Keyera Corp. and Plains All American Pipeline subsidiary Plains Midstream Canada ULC have joined forces to solicit interest in a jointly owned natural gas liquids (NGL) pipeline system in northwest Alberta. The proposed Western Reach Pipeline System would run 570 kilometers (354 miles) from the Gordondale area of northwestern Alberta to the province’s NGL hub in Fort Saskatchewan. Two new pipelines — one dedicated to a mixture of propane, butane and condensate and the other intended for segregated condensate service — would traverse Alberta’s Deep Basin area, which contains some of the most prospective liquids-rich geological horizons being developed in western Canada, including the Montney and Duvernay zones, the companies said. Keyera and Plains would each have a 50% ownership in the pipeline. Plains would be responsible for constructing and operating the system, which is expected to be operational by late 2015. Keyera and Plains have begun a nonbinding open season with a deadline for submitting documents of May 15. Details can be found on the Keyera and Plains websites.
ExxonMobil Corp. is urging shareholders to defeat a proposal that would require the company to report how its natural gas operations in shale formations impact the environment. The proposal and others are detailed in a U.S. Securities and Exchange Commission Schedule 14A, the company’s proxy statement ahead of the annual meeting May 29. Shareholders led by the New York City Pension Funds and the Park Foundation want a report on the results of “procedures and practices, above and beyond regulatory requirements, to minimize any adverse environmental and community impacts” from shale natural gas extraction. Similar proposals, also filed previously at Chevron Corp., failed to pass in 2012 and 2011 (see NGI, June 4, 2012).
Williams concluded that “a failed pressure gauge” on a natural gas liquids (NGL) pipeline operated by Williams Partners was the source of a fluid leak at its Parachute Gas Plant in Colorado. Based on the company’s evaluation of data from two flow meters on the pipeline, the pressure gauge leak started Dec. 20, 2012 and was stopped on Jan. 3. Using U.S. Environmental Protection Agency (EPA) testing standards, Williams estimates that 80% of the NGLs vaporized before entering the soil. The Colorado Oil and Gas Conservation Commission has new information on groundwater samples from three new monitoring wells about 50 feet south of Parachute Creek that showed benzene concentrations between 51 and 450 parts-per-billion. New monitoring wells both to the south and east of the creek are now planned.
Companion bills in the Florida legislature would tax providers of natural gas as a transportation fuel, rather than taxing natural gas vehicle (NGV) operators. The measures would enact a 4-cent tax/motor fuel gallon equivalent of natural gas. HB 579 would replace the system of charging NGV operators for decals required to purchase compressed natural gas (CNG) or liquefied natural gas (LNG). Legislative staff have calculated that after an initial revenue dip for the state, the new tax would net an additional $440,000 in increased annual revenues. HB 579 has passed out of all four necessary committees by unanimous votes. The Senate companion (HB 560) reportedly has one more committee hurdle to clear.
The Pennsylvania House Finance Committee has approved three bills creating natural gas vehicle (NGV) tax breaks. HB 305 would establish a natural gas corridor tax credit and calls for spending up to $5 million to construct NGV fueling stations that would be open to the public. HB 301 would create a six-member Natural Gas Fleet Vehicle Tax Credit Committee and allocate up to $25 million in tax credits for natural gas-powered fleets. HB 309 would set up an NGV tax credit.
The Pennsylvania Department of Environmental Protection (DEP) has given Carrizo Oil & Gas Inc. permission to resume hydraulic fracturing operations at its Yarasavage 1H natural gas well in Wyoming County. DEP spokeswoman Colleen Connolly told NGI that a flange on top of the wellhead malfunctioned on March 13 (see NGI, March 18). The incident caused about 5,400 barrels of flowback to return to the surface, but these were captured in tanks at the well site, which is in Washington Township.
Natural gas, driven by a 100-year supply, will be the dominant fuel in the next 20 years, Calpine Corp. CEO Jack Fusco told an investor conference Wednesday in Houston. Noting the future “is on us today,” Fusco, whose company maintains the nation’s largest fleet of gas-fired combined-cycle power generation facilities, said there is a “transformative, secular shift underway today in the U.S. power sector” — namely, that gas-fired generation is “the preferred solution” for the industry. “Shale gas is here to stay, and we’re blessed in America to have what by all accounts is at least 100 years of gas supply.” Fusco also said the gas pipeline sector is stepping up to build more infrastructure. As a result, Calpine’s analysis calls for U.S. natural gas prices to remain between $3.00-$5.00/Mcf over the longterm. “This is going to make it extremely hard for other forms of power generation to compete, such as nuclear, coal, solar or wind,” Fusco told analysts in the half-day briefing.
Forest Oil Corp. has struck an agreement with Schlumberger Ltd. that would accelerate development in the Eagle Ford Shale. Schlumberger is to pay a $90 million drilling carry in the form of future drilling and completion services and related development capital in order to earn a 50% working interest in Forest’s acreage. The deal supports Forest’s plans to accelerate development by increasing drilling activity to four rigs, from one to two rigs currently, by the end of the third quarter. Forest said the capital carry amount and the accelerated development should bring forward $250 million in PV10 economics. The accelerated program is expected to hold an aggregate of 55,000 gross (27,500 net) acres in Gonzales County, TX, compared to 40,000 gross (40,000 net) acres based on the current program.
The Alaska Oil and Gas Conservation Commission is weighing stricter regulations for hydraulic fracturing (fracking) that, among other things, would require expanded landowner notification before fracking begins and fracking chemical disclosures. At a recent public hearing industry concerns mainly focused on the disclosure/notification and frack fluid proposals. “The proposed new [Alaska] rules differ from other states in requiring pre-approval before conducting hydraulic fracturing, requirements for investigations into other wells in the area and groundwater monitoring before and after fracturing operations, and that copies of the fracture application be provided to landowners within one-quarter mile of the operation,” Alaska Oil and Gas Association Executive Director Kara Moriarty testified.
A bill (HB 1324) recently approved by the Indiana House and Senate, and now being reconciled would provide an income tax credit for large natural gas-fueled trucks and impose a motor carrier fuel tax on natural gas equivalent to rates imposed on gasoline. By making compressed natural gas (CNG) vehicles more appealing to commercial fleet operators, the bill’s author, state Rep. Randy Frye (R-Greensburg) hopes to also prompt the construction of CNG fueling stations. The bill would provide an income tax credit of about $18,000 for vehicles weighing at least 33,000 pounds. It also would increase the maximum weight limitation for natural gas vehicles by 2,000 pounds. The legislation cleared the House in a unanimous 94-0 vote in February and by the Senate in a 47-3 vote April 10. Frye has said that CNG could save Indian residents $1.50 or more per gallon compared to oil-based motor fuels.
The West Virginia House Judiciary Committee approved a bill that would allow companies to classify as trade secrets chemicals and concentrations used in hydraulic fracturing (fracking) fluids. The bill, SB 243, now moves to the House of Delegates for passage. SB 243 would prevent the disclosure of any information deemed a trade secret, unless required under a Department of Environmental Protection investigation or a medical emergency, for which health care professionals would need to sign a confidentiality agreement and written statement of need. The bill is supported by Halliburton Co.
Oneok Partners LP has completed three projects that are part of an ongoing growth program worth roughly $5 billion. The Bakken NGL Pipeline, Stateline II gas processing facility and ethane header pipeline have all entered service, the partnership said. The Bakken NGL Pipeline transports unfractionated natural gas liquids (NGL) from the Bakken and Three Forks formations to the partnership’s 50%-owned Overland Pass Pipeline from southern Wyoming to Conway, KS. Stateline II is in western Williams County, ND, and has capacity of 100 MMcf/d. It is the third gas processing facility that Oneok Partners has completed in the Williston Basin since late 2011, joining the Garden Creek and Stateline I plants.
Researchers at the UK’s Durham University said hydraulic fracturing isn’t a significant sources of earthquakes, but may cause dormant seismic faults to become active. Richard Davies, a petroleum geology and earth sciences professor, said seismic events from fracking were “low compared to other man-made triggers,” including mining, filling reservoirs with water and oil and natural gas production. The Durham-led study, titled “Induced Seismicity and the Hydraulic Fracturing of Low Permeability Sedimentary Rocks,” also said that almost all of the cases where fracking caused seismic events were undetectable by anyone other than geoscientists.
Royale Energy Inc. has struck a $43 million joint venture (JV) agreement with an unnamed company to fund exploration costs on its Alaska North Slope acreage. Royale is to receive $100/acre in cash, stock options and exploration cost-sharing for a total of more than $1,200/acre for up to 50,875 acres of its 96,000-acre North Slope holdings, the San Diego, CA-based company said. “An undisclosed company has agreed in principal to fund all exploration costs for seismic data acquisition and the drilling of two horizontal wells for a total of $38 million,” the company said. “Additionally Royale is to receive $3.37 million for the 33,736 acres on the company’s western block, together with stock options and a right to receive an additional $1.7 million for 17,000 acres in the company’s central block.”
Ridgeline Energy Services Inc. plans to construct a water treatment facility in the Marcellus Shale near Punxsutawney, PA. The Calgary-based company has executed an agreement for an initial single train commercial installation (STCI) that would concentrate on produced water, with an anchor customer providing about 2,500-4,000 b/d of wastewater. Ridgeline said it was looking to build additional permanent installations in the same production area and expand its presence in western Pennsylvania. Installation of the first STCI is to begin in about a month.
High costs prompted Woodside Petroleum Ltd. to scrap plans for the proposed onshore Browse LNG Development at James Price Point (JPP) in Western Australia, but the company is leaving the door open to a floating liquefied natural gas (LNG) development to commercialize Browse Basin gas reserves. CEO Peter Coleman said price pressure was not a factor in the latest Browse decision. “U.S. shale gas was not a relevant consideration in our decision,” he said. Woodside is the operator of the East and West Browse joint ventures. It holds a 34% equity interest in the East Browse joint venture and a 17% equity interest in the West Browse joint venture.
Australia-based and Eagle Ford-focused Aurora Oil & Gas Ltd. said a downspacing pilot on its nonoperated acreage in the Eagle Ford’s Sugarkane Field is yielding strong results and the company is planning 40-acre spacing on its recently acquired operated acreage in the play. “We view the preliminary pilot program results achieved in the Sugarkane Field to be important evidence to further understand the drilling density prior to commencing full field development,” said Aurora CEO Douglas Brooks. “Results to date are very encouraging. Once more data is analyzed and discussed with our partners, Aurora intends to report more definitive results and plans.”
CenterPoint Energy Inc. unit CenterPoint Energy Bakken Crude Services LLC (CEBCS) has struck a long-term agreement with XTO Energy Inc. for a new crude oil gathering and transportation system in the Bakken Shale. CEBCS would service XTO, a subsidiary of ExxonMobil Corp., in exchange for volume commitments on a new gathering system to be built in Dunn and McKenzie counties, ND. The system would have a gathering capacity of up to 19,500 b/d.
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