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The House has introduced legislation to open federal waters off the coast of Virginia to oil and natural gas development, and the Senate is expected to offer a companion bill in the coming weeks. Virginia lawmakers in Congress and at the state level have pressured the Interior Department to open the coastal waters to offshore development for years (see NGI, July 11, 2011). The Virginia Jobs and Energy Act (HR 1782), introduced by Rep. Scott Rigell (R-VA), mandates that Lease Sale 220 be conducted within one year and that one lease sale be held in subsequent five-year oil and gas leasing programs. Co-sponsors are Virginia Republican Reps. Rob Wittman, Robert Hurt and Morgan Griffith. During the last Congress, Rigell introduced similar legislation (HR 3882) after the Obama administration shut down exploration off of Virginia’s coast. Provisions of the bill passed the House in 2012 as part of a larger energy package, but it failed to make it out of Congress.
The Environmental Protection Agency (EPA) is revising the deadline by which owners or operators of facilities subject to the petroleum and natural gas systems source category of the Greenhouse Gas Reporting Rule must submit requests for use of best available monitoring methods (BAMM) to the agency. Specifically, the agency is moving up the prior deadline of Sept. 30 to June 30, according to a final rule published in the Federal Register on Wednesday. The amendment now reads: “For reporting years after 2012, a new request to use best available monitoring methods must be submitted by June 30 of the year prior to the reporting year for which use of [BAMM] is sought.” The EPA said it is not proposing any other changes related to BAMM for oil and gas. Affected facilities would be natural gas pipelines, local distribution companies, oil and gas drilling facilities and natural gas liquids extraction facilities.
Contango Oil & Gas Co. and Crimson Exploration Inc. have agreed to merge in an all-stock transaction that would create a company with prospects in the Gulf of Mexico (GOM) and onshore North America. Pro forma, production would be natural gas-weighted, 31% to oil and liquids, with output of 101 MMcfe/d net. Total proved reserves would be about 312 Bcfe. Contango, whose founder Kenneth Peak died in April, has operations in the GOM shallow waters, as well as investments in Alta Resources Investments LLC, Exaro Energy III LLC and the Tuscaloosa Marine Shale. Crimson owns about 95,000 net acres total, with interests in the Woodbine, Bossier Sands and James Lime plays in Texas, as well as the Eagle Ford and Haynesville shales, and Denver-Julesburg Basin.
Double Eagle Energy Holdings and private equity firm Apollo Global Management are partnering to invest in properties in Oklahoma, focusing primarily on the Anadarko and Ardmore basins. Double Eagle already has more than 500,000 acres across Texas and the Midcontinent. In 2012 Apollo led a consortium of private equity investors in a $7.15 billion leveraged buyout of El Paso Corp.‘s exploration and production business, which included an array of liquids-rich U.S. unconventional property extending across Texas, Louisiana, the Raton Basin and the Rocky Mountains.
Enbridge Energy Partners LP plans to construct a 150 MMcf/d cryogenic gas processing plant near Beckville in Panola County, TX, that would expand processing capacity to 820 MMcf/d in the Cotton Valley and Haynesville Shale regions. The plant, expected to cost $140 million, would interconnect with existing natural gas liquids infrastructure. Construction is to begin late this year with start-up in early 2015.
Investment in U.S. shale oil and gas drilling during 2011 nearly doubled over 2010 levels, helping to vault the unconventional plays to nearly one-quarter of all domestic wells drilled, according to the American Petroleum Institute (API). In API’s recently released 2011 Joint Association Survey on Drilling Costs, the institute found that an estimated $65.5 billion was invested to drill 10,173 U.S. shale oil and natural gas wells in 2011. The investment represents an 87.6% increase in shale drilling expenditures from 2010 levels and more than half of an estimated $124.8 billion spent on all new wells drilled in 2011. The number of estimated shale wells drilled in 2011 is 43.8% more than in 2010.
The Pennsylvania Department of Environmental Protection (DEP) has concluded following a 16-month investigation that high levels of methane found in three water wells in Franklin Township in Susquehanna County “cannot be attributed to natural gas drilling activity in that geographical area.” DEP evaluated the nearest natural gas wells, isotopic testing and analysis of historical water data to determine the origin of the methane, as well as water samples at nearby Salt Springs State Park, which historically contains naturally occurring methane. DEP’s testing also determined that the gas in the water samples taken from the private water wells was not of the same origin as the natural gas in the nearby gas wells.
The Alaska Department of Natural Resources‘ (DNR) Division of Oil and Gas is soliciting proposals until May 20 for a contractor or contractors to assist in characterizing and developing alternatives to advance a North Slope liquefied natural gas (LNG) project. The study is intended to help the state stay abreast of risks and opportunities of the project and how they are influenced by world events. DNR expects the contractor(s) to assemble a team of experts with various appropriate backgrounds. A pre-proposal conference is scheduled May 17 in Anchorage. Prospective contractors may attend or call via teleconference. Contact Marlys Hagen at (907) 269-8666.
Energy industry efforts to reduce the amount of water used in hydraulic fracturing (fracking) through recycling and other means have to be stepped up if unconventional resources are to grow as projected, according to Ceres, which runs an influential institutional investor coalition. Researchers used data from FracFocus.org on 25,450 wells in operation from January 2011 through September 2012, as water stress indicator maps developed by the World Resources Institute. The data indicated that 47% of the wells developed were in water basins “with high or extremely high water stress,” with the majority in big producing basins of Texas and Colorado.
There is no time frame for a Royal Dutch Shell plc affiliate to decide whether to build a proposed ethane cracker in western Pennsylvania, but officials said Shell was continuing due diligence on the proposal. Steve Kratz, spokesman for the Pennsylvania Department of Community and Economic Development, said the governor’s office has regular contact with Shell Chemical LP, which has an option to purchase a 300-acre site near Monaca from zinc producer Horsehead Holding Corp. The original terms called for the deal to be concluded by the end of 2012, but Shell was granted a six-month extension in December, which expires at the end of June (see NGI, Jan. 7).
Colorado legislators face a Wednesday (May 8) deadline to pass HB 1269, which would restrict energy industry representation on the Colorado Oil and Gas Conservation Commission. The Colorado Oil and Gas Association is “very much opposed” to the bill, said spokesman Doug Flanders. He noted that in 2008 legislation overhauled the commission and created the nine-member body with three industry representatives. Backers of the measure allege that the commission overlooks public health concerns on undue industry influence, and the mission should be narrowed to focus on health and safety only.
The Pennsylvania Department of Environmental Protection fined Pennsylvania General Energy Co. LLC (PGE) $125,000 for separate incidents in Cummings Township in Lycoming County involving two brine spills and a diesel fuel spill in January 2012. An estimated 8,200 gallons of brine and 89 gallons of diesel fuel were spilled. PGE also was fined for failing to meet permit requirements for a temporary limestone cofferdam on Pine Creek in 2011. The company said it performed corrective actions in both cases.
Ohio Department of Natural Resources (ODNR) Director James Zehringer has urged state lawmakers to restore several oil and gas rules that were included in the original version of the biennial budget bill but were stripped out by the House, including a requirement that operators perform radium testing on any technologically enhanced naturally occurring radioactive materials produced from horizontal wells (see NGI, March 4). The House also removed a provision that would have prohibited transferring brine without a permit. Ohio Oil and Gas Association Executive Vice President Tom Stewart said members don’t want the rules restored.
Wisconsin Energy Corp. said a colder-than-normal winter boosted its utility’s retail natural gas sales by 71% in 1Q2013, compared to the same period in 2012. Net earnings were $176.6 million (76 cents/share) in 1Q2013, compared to $172.1 (74 cents) in the same period last year. Sales to the utility’s largest commercial and industrial customers, including a mine in Upper Michigan, were down by 3.9% in the first quarter due to a combination of factors.
American Electric Power (AEP) in 1Q2013 became more dependent on coal and used significantly less natural gas to generate electricity. “In gross terms, AEP generated 34% less electricity from natural gas and 9% more from coal-fired generation,” CFO Brian Tierney said in a quarterly conference call. The Columbus, OH-based company has changed its contracting methods, making it “flexible enough to adjust our generation either way — and it’s worked out positively for us,” said CEO Nicholas Akins. AEP enjoys a lower break point on the price of Central Appalachian coal thanks in part to its ability to avoid rail deliveries, instead bringing in coal via less expensive river barges.
Progress Energy Canada Ltd., Pacific NorthWest LNG Ltd. and Petroliam Nasional Berhad (Petronas) have closed the previously announced transaction that saw Japex Montney Ltd., the Canadian subsidiary of Japan Petroleum Exploration Co. Ltd., acquire a 10% interest in Progress Energy Canada’s natural gas assets in northeast British Columbia (BC), and in the proposed Pacific NorthWest LNG export facility on Canada’s West Coast near Prince Rupert, BC. Japex agreed to buy a 10% share of the liquefied natural gas (LNG) facility’s production for a minimum of 20 years for domestic use in Japan.
Natural gas prices for electric generation in California fell 30% in 2012 from the previous year, but wholesale power prices decreased only 2% because of offsetting lower hydro-electric supplies, increased congestion and the loss of 2,000 MW of nuclear generation, according to an annual market report by the California Independent System Operator. The report noted that 1,300 MW of gas-fired generation was added in 2012 and more than 2,000 MW is expected to be added in 2013. However, combined-cycle gas unit revenues — excluding resource adequacy or bilateral contracts — are falling below the annualized fixed costs of new generation.
A decision to retire the idled San Onofre Nuclear Generating Station (SONGS) in Southern California could come by the end of this year, according to Edison International. As the largest baseload source of electric generation in Southern California with 2,200 MW, the loss of SONGS would require other types of generation, including more natural gas-fired generation in the summer. Edison’s Southern California Edison Co. (SCE), which is the majority owner/operator of SONGS, is seeking approval from federal regulators to restart at 70% capacity Unit 2 this summer.
The Colorado Oil and Gas Conservation Commission has turned over an investigation of a natural gas liquids spill near Parachute Creek to the state Department of Public Health and Environment (DPHE) after trace amounts of benzene were found. The COGCC is responsible for exploration and production (E&P) waste in water spills, but more recently it was concluded that the hydrocarbons released from a Williams NGL line near its processing plant did not constitute “E&P waste.”
Blaze Energy Corp. has settled a dispute with Environmental Energy Services Inc. (EESV), exchanging subsidiary EESV Fayetteville Inc. and associated outstanding notes for a 76% stake in the company, in a stock deal valued at $1.9 million. The Boise, ID-based company is not affiliated with Canada’s Blaze Energy Ltd.
Marathon Petroleum Corp. has completed conceptual engineering for condensate splitters at its refineries in Kentucky and Ohio, part of a $300 million investment to handle increasing volumes from the Utica Shale. The splitters are scheduled to be in-service in late 2015 or in 2016, and would boost processing capacity to about 60,000 b/d.
The California Energy Commission (CEC) has awarded $3.9 million in five research grants, including for two natural gas projects. The University of California, Davis was awarded $900,000 to investigate emissions and leaks within the state’s natural gas infrastructure. Measurements are to be taken for all possible sources, including production, processing, transmission and distribution of gas in buildings, neighborhoods and regional settings to identify areas for mitigating greenhouse gas emission sources. Nearly $400,000 was awarded to Carlsbad, CA-based Anaergia Services to demonstrate a process to convert “green” waste into renewable natural gas by converting “biochar,” a soil supplement that can be used for agriculture.
The California Energy Commission‘s Alternative and Renewable Fuel and Vehicle Technology Program has issued two grants totaling $578,000 to the Los Angeles Unified School District (LAUSD) and Walnut Valley Unified School District (Walnut) for compressed natural gas (CNG) fueling stations. LAUSD will receive $300,000 to install 30 single CNG fueling units to replace older diesel-fired buses with CNG models. Walnut will use a $278,000 grant to update and expand its existing CNG fueling station to fuel 16 buses simultaneously; the district expects to purchase 11 additional CNG buses during the next two years.
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