A Transcontinental Gas Pipe Line Co. LLC (Transco) compressor station in Dallas County, AL, has been given the green light by the Federal Energy Regulatory Commission to begin service, adding 130,000 Dth/d of capacity to the pipeline system [Docket No. CP11-18-000]. The compressor is the second phase of the Mid-South Expansion Project, approved in 2011, to expand Transco services in the Southeast after the first phase went into service in 2012 (see NGI, Sept. 3, 2012). The expansion, originally was designed to service LaGrange, GA, Progress Energy Carolinas and Southern Co., gives Transco an additional total firm capacity of 225,000 Dth/d.
As of May 25, 100 horizontal wells were producing in Ohio’s portion of the Utica Shale, according to the Ohio Department of Natural Resources. Regulators said 686 permits had been issued for drilling horizontals, and of those, 335 wells had been drilled (see related story). There also were 30 drilling rigs deployed in the play. Chesapeake Energy Corp. is the largest operator with 64, followed by Anadarko Petroleum Corp. (seven) and Gulfport Energy Corp. and Hess Corp. (six each).Carroll County is the most active among producing wells with 52, followed by Harrison and Noble counties, which each have nine wells.
New York Gov. Andrew Cuomo said he plans to make a decision on whether to lift a moratorium on high-volume hydraulic fracturing (HVHF) before the next gubernatorial election in 2014. During an editorial board meeting in May with the Post-Standard of Syracuse, NY, Cuomo said he was still waiting for state Department of Health Commissioner Nirav Shah to complete a health impact analysis of HVHF (see NGI, Sept. 24, 2012). The 2014 New York gubernatorial election will take place on Nov. 4, 2014. Cuomo, a Democrat, is eligible to run for re-election, although he has not formally announced his intentions. He was first elected in 2010.
Cone Gathering LLC, a joint venture between Consol Energy Inc. and Noble Energy Inc., is planning to build a 24-inch diameter dry gas pipeline in West Virginia’s portion of the Marcellus Shale. The pipeline, which would run 37 miles, would connect the Audra Field in southern Barbour County to the Century Field in northern Upshur County, both dry gas areas. Cone plans to begin construction of the pipeline in six to nine months, and the time to build and complete the pipeline would take up to nine more months, sponsors said.
NorthWestern Energy Corp. has increased its natural gas holdings by acquiring an estimated 64.6 Bcf net of proven reserves in northern Montana’s Bear Paw Basin from Devon Energy Corp. According to the South Dakota-based utility, production would make up an estimated 28% of current annual gas load in Montana. The purchase is expected to result in a 20-year levelized price for customers of about $4.10/Dth. Included are more than 82 miles of transmission lines, 576 miles of gathering lines and 21 compressors in Blaine, Choteau and Hill counties. The purchase also would include Devon’s 82% stake in the Havre Pipeline Co. LLC, which NorthWestern would need to obtain a regulatory waiver to complete. Once the purchase is completed, expected later this year, NorthWestern’s annual gas supply load in Montana would be comprised of about 37% owned-and-regulated production.
Freeport-McMoRan Copper & Gold Inc. has completed its takeover of Plains Exploration & Production Co., with a total value of $16.2 billion, including $9.7 billion in debt. The transaction, completed Friday, included a payment of about $3.3 billion in cash ($25/Plains share), 91 million shares of Freeport common stock ($2.9 billion) and a special cash dividend of $3.00/share (see NGI, May 27). The acquisition of related affiliate McMoRan Exploration Co. for about $3 billion is expected to close on Monday (June 3), subject to shareholder approval. Former Plains Chairman and CEO Jim Flores was named co-vice chairman and CEO/president of subsidiary Freeport-McMoRan Oil & Gas LLC. Flores also is to be part of newly formed office of the chairman with Chairman Jim Bob Moffett and Vice Chairman Richard C. Adkerson, who also is CEO/president. Flores had served as chairman/CEO of Plains since its inception in 2002; he became president in 2004. Former Plains directors Alan Buckwalter and Thomas A. Fry also have joined the board.
The Illinois Senate approved legislation that supporters say could accelerate rebuilding aging natural gas delivery infrastructure over the next 10 years while maintaining regulatory oversight. The 10-year blueprint for the Natural Gas Modernization, Public Safety & Jobs Act (SB 2266) is designed to reduce nonhazardous leaks and trim maintenance costs while delivering long-term savings for customers. The proposal was put forward earlier this year by Ameren Illinois and a coalition of business and labor organizations (see NGI, April 1). The bill, which was passed by the Illinois House one day prior to the Senate vote, now awaits the signature of Gov. Pat Quinn. Under the legislation, Ameren Illinois would invest $330 million to boost efforts to update its gas transmission, distribution and storage facilities. The blueprint is designed to reduce nonhazardous leaks and trim maintenance costs while delivering long-term savings for customers.
Constitution Pipeline Co. LLC, fully subscribed to carry at least 650,000 Dth/d of natural gas from northern Pennsylvania’s Marcellus Shale to Northeast markets, has gained WGL Holdings Inc. subsidiary Capital Energy Ventures Corp. as a 10% partner after investing $68 million, joining operator Williams Partners LP, which now holds 41%, Cabot Oil & Gas Corp. (25%), and Piedmont Natural Gas (24%). The 30-inch diameter gas line initially would carry up to 650,000 Dth/d from Susquehanna County, PA, interconnecting with the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, NY. Constitution officials expect to file an application in June with the Federal Energy Regulatory Commission to begin construction. With permits and regulatory approvals in hand, the 121-mile project has a start date of March 2015.
CN, Canada’s national railway, plans to accelerate work on a US$33 million project to upgrade a 74-mile section of the Whitehall Subdivision line in Wisconsin. The upgrade between the towns of Wisconsin Rapids and Blair would allow increased car-loading capacity and train velocity for hydraulic fracture (frack) sand suppliers Badger Mining Corp., Preferred Sands of Wisconsin LLC, Atlas Resin Proppants LLC and Taylor Frac LLC. After the upgrade, CN would be able to transport heavier freight cars loaded with frack sand, up to a maximum of 286,000 pounds. CN, which began the work in 2012, plans to complete the project by December 2014, a year ahead of time.
U.S. Court of Appeals Judge Richard Allen Griffin has remanded back to U.S. District Court in Youngstown, OH, class action lawsuit against Chesapeake Energy Corp., which holds leases it assumed from predecessor operators that allegedly underpaid natural gas royalties to Ohio landowners for more than a decade. In a 23-page opinion Griffin said the district court had erred when it dismissed the lawsuit two years ago in part on the grounds that Ohio’s four-year statute of limitations had expired (Lutz et al v. Chesapeake Appalachia LLC et al, Nos. 10-4538 and 11-3034). Because royalty payments continue, the statute of limitations didn’t apply, Griffin wrote. Chesapeake didn’t own the leases in question until 2005, but the underpayments were allegedly begun at least 12 years before then. The leases under scrutiny were signed beginning in 1985 with Columbia Natural Resources Inc. (CNR), a division of Columbia Energy Group (CEG), for properties in Mahoning and Trumbull counties. Plaintiffs allege that CNR began underpaying gas royalties beginning in at least 1993, and then attempted to conceal the underpayments. The plaintiffs also allege that CNR and its successors defrauded them over a six-year period, from 2000 to 2006. NiSource Inc. acquired CEG and CNR in 2000 and later sold CNR to Tirana Energy Holdings LLC in 2003. Chesapeake in turn acquired CNR from Tirana in 2005, and then effectively became the successor lessee.
California’s cap-and-trade program to auction greenhouse gas (GHG) emissions raised nearly $280 million in May, selling out its entire carbon allowance allotments of 14.5 million. It was the third auction conducted in the past three quarters by the California Air Resources Board (CARB), and the event exceeded the first two. The program — the centerpiece of the 2006 climate change law (AB 32) — was set back by a San Francisco Superior Court ruling and other lawsuits have joined the fight but CARB has been undeterred (see NGI, March 28, 2011). The May settlement price was a vintage allowance of $14, compared to the $10.71 auction reserve, or floor price. All of the major gas-fired power plant operators and refineries participated with other industrial operators in the state. There are about 600 facilities that are required to comply with the cap-and-trade regulations for GHG emissions allowances.
Cheap U.S. natural gas contributed to a decision by European steelmaker Voestalpine AG to site a manufacturing plant near Corpus Christi, TX, on the La Quinta Trade Gateway in San Patricio County that would be designed for an annual capacity of around two million tons of hot briquetted iron and direct reduced iron to serve steel production sites in Austria. The plant, which would have access to the Gulf of Mexico and Texas gas supplies, is due to begin operations in early 2016. “We examined a total of 17 sites in eight countries for this project, the largest foreign investment in the group’s history to date. In the end, Texas was the most convincing in terms of all the key criteria, including logistics, energy supply, a well-educated workforce, and the political environment,” said Voestalpine Chairman Wolfgang Eder.
An agreement has been reached by Williams and Boardwalk Pipeline Partners LP to continue developing the Bluegrass Pipeline, which if sanctioned would carry mixed natural gas liquids (NGL) from the Marcellus and Utica shales to Northeast markets and Gulf Coast petrochemical complexes. It faces competition from Enterprise Products Partners LP‘s proposed Appalachia-to-Texas (ATEX) pipe, which is launching an open season June 5 (Wednesday) to carry propane to Mont Belvieu, TX (see related story). Williams and Boardwalk also are exploring a liquefied petroleum gas export terminal to be sited on the Gulf Coast for international market access. Bluegrass is set to be in service in late 2015. Boardwalk planned to file an abandonment application on Friday (May 31) with the Federal Energy Regulatory Commission to convert a portion of the Texas Gas pipeline to NGLs, a process that may take up to a year for approval or denial.
Natural gas generation sets (gensets) for distributed generation (DG) installations could surpass 13 GW of capacity worldwide by 2018, according to the Navigant Research report “Natural Gas Generator Sets.” DG has the advantage of going online more quickly than traditional facilities, so an abundance of DG power sources can help reduce the pressure on electric grids in times of peak demand. DG may be a source of emergency standby, prime or continuous power, and natural gas-fueled gensets “are poised for rapid growth,” particularly in markets like North America, where gas is widely available and inexpensive. Citing emergency and standby markets as particularly robust, Navigant’s principal research analyst Mackinnon Lawrence said both emissions restrictions and relatively low U.S. gas prices allow “natural gas gensets to capture increasing market share as a source of continuous or prime power.” Researchers looked at the global potential for gas gensets ranging from less than 15 kW to 6 MW for residential, commercial and industrial applications.
U.S. District Court Judge Irene Keeley of the Northern District of West Virginia has reconsidered a decision to pass to the Supreme Court of Appeals in West Virginia a key surface rights case. In April, Keeley had asked the high court to certify whether existing state law allows a company to drill on land where it doesn’t own the surface rights, but it owns the underlying mineral rights (see NGI, April 8). Keeley in May filed a summary order indicating the appeal was not necessary. At issue is whether ExxonMobil Corp. subsidiary XTO Energy Co. may drill horizontal wells on 105 surface acres in Marion County owned by Richard Cain, a farmer from Mannington, WV. XTO also plans to build pipelines across Cain’s property. Cain filed a lawsuit against XTO and Waco Oil & Gas Inc. in Marion County Circuit Court in July 2011, arguing that the companies didn’t have the right to use his property to drill wells that would access natural gas from his neighbors’ reserves (see NGI, Aug. 29, 2011).
Texas Gov. Rick Perry is expected to sign SB 1747 to provide $225 million in general revenue funds to help repair and maintain county roads damaged by oil and gas production activity, mainly in the Permian Basin and Eagle Ford Shale regions. The bill creates a transportation infrastructure fund that would allow counties in high-impact producing regions to create reinvestment zones, allowing the counties to use the revenues from property and sales taxes to repair and maintain roads. It is estimated that a county road used for drilling one well will endure the equivalent of eight million passenger vehicles, said the bill’s author state Sen. Carlos Uresti (D-San Antonio. About 5,400 wells have been permitted in the Eagle Ford region, and it’s projected that 24,000 wells will be operating by 2022, he said.
GreenHunter Resources Inc. plans to open a water treatment terminal in Wheeling, WV, to serve the Marcellus and Utica shale region, which may provide drillers with free recycled wastewater. Plans for the facility and a second one in New Matamoras, OH, “include recycling of flowback and produced water, which would include sending clean brine back out to the drill pad and in some cases send it out at no charge (other than transport),” said GreenHunter COO Jonathan Hoopes. Subsidiary GreenHunter Water LLC bought an 11-acre barging terminal facility on the Ohio River in Wheeling, which it is converting and expects to have in operation by later this year.The company changed its name to GreenHunter Resources from GreenHunter Energy effective May 24.
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