Williams Partners LP plans to assume the role of operator of the Overland Pass Pipeline after completing a bigger buy-in with joint venture (JV) partner ONEOK Partners LP. ONEOK Partners received about $424 million in the transaction, which was announced in July (see NGI, July 26). The Overland Pass Pipeline JV was established by the partners in May 2006, with Williams Partners then owning 1% interest. As long as Williams Partners owns at least 50% of the natural gas liquids pipe, it has the option to become the operator with 30 days notice.

Methanex Corp. plans to reopen the doors next April at its now shuttered 470,000 ton/year methanol plant in Medicine Hat, AB. In support of the restart, Methanex said it has begun to purchase natural gas on the Alberta gas market. When the plant is operating at capacity, it consumes about 50,000 MMBtu/d of gas. CEO Bruce Aitken said “the current lower natural gas price environment in North America has made this plant a competitive new supply source for our customers.” Methanex, based in Vancouver, BC, is considered the world’s largest supplier of methanol to major international markets and it said recently methanol demand had increased to an all-time high. The Medicine Hat plant was idled in 2001 despite low natural gas prices due to the fact that methanol prices were also in the gutter. In the closing days of August 2001 spot gas prices at the Henry Hub fell below $2.50/MMBtu.

Houston-based LINN Energy LLC said its latest two horizontal wells in the Granite Wash play of the Texas Panhandle tested at double-digit initial production (IP) rates. The wells, in which LINN holds 60% stakes, are in the Greater Stiles Ranch area. The Stein 1-3H well (60% stake) tested at a 24-hour IP rate of 37.2 MMcfe/d, including 19 MMcf/d of natural gas and 1,487 b/d of condensate at 1,510 per square inch (psi) flowing surface pressure. The Thomas 5-8H well tested at a 24-hour production rate of 26.2 MMcfe/d, comprised of 16.3 MMcf/d of gas and 640 b/d of condensate at 1,350 psi flowing surface pressure. In related news the producer signed three definitive purchase agreements to acquire oil and natural gas properties in the Wolfberry trend of the Permian Basin of Texas for a combined price of $352.2 million.

Kansas City, MO-based Inergy LP announced that subsidiary Inergy Midstream has agreed to buy Tres Palacios Gas Storage LLC, owner of the Tres Palacios natural gas storage facility in Matagorda County, TX, from NGS Energy LP for $725 million plus reimbursement of certain capital expenditures and subject to customary net working capital adjustments. Tres Palacios Gas Storage is a high-deliverability salt dome facility with approximately 38.4 Bcf of working capacity, including 27.1 Bcf of working capacity in caverns one and two, and 11.4 of incremental working capacity (third cavern) awaiting the approval of the Federal Energy Regulatory Commission (FERC). Tres Palacios received approval from FERC recently to place the third cavern in service. The facility is expandable by an additional 9.5 Bcf of working capacity, which Inergy said it expects to place in service by 2014 (cavern four). Located approximately 100 miles southwest of Houston, Tres Palacios is interconnected with 10 interstate and intrastate pipelines: Florida Gas Transmission, Transcontinental Gas Pipe Line, Tennessee Gas Pipeline, Natural Gas Pipeline Company of America, Central Texas Gathering System, Houston Pipe Line, Texas Eastern Transmission, Enterprise Texas, Enterprise Texas Intrastate and Kinder Morgan Tejas. The acquisition enlarges Inergy’s existing gas storage platform and creates the largest independent gas storage provider in the United States, the company said. The facility on the Markham salt dome could support more than 150 Bcf of capacity. To fund the acquisition, Inergy has secured a commitment letter for an underwritten $700 million bridge financing from Wells Fargo, Barclays Capital and J.P. Morgan. The transaction is expected to be completed within 60 days, and is subject to approval under the Hart-Scott-Rodino Antitrust Act and other customary closing conditions.

Consumers testifying at recent California Public Utilities Commission (CPUC) meeting urged the state to halt its transformation to total use of advanced metering systems among private-sector utilities, contending that they know of people being made “sick” by the new meters. At the same meeting, an independent consultant offered verification of the accuracy and reliability of the meter devices in the face of growing criticism of the meters by some customers of Pacific Gas and Electric Co. (PG&E). Faced with doubts raised by consumers and some state elected officials, the CPUC in April named Houston-based energy/utility consultant The Structure Group to assess the PG&E advanced metering implementation program (see NGI, April 5).

Intermountain Gas Co. has asked the Idaho Public Utilities Commission (PUC) to authorize further reductions of its retail natural gas utility rates based on lower wholesale gas costs. Intermountain asked to lower its annual revenue requirement by $2.2 million, effective Oct. 1. This is the fourth rate decrease sought by the Boise, ID-based utility in the past five years. The rate change is part of Intermountain’s annual purchased gas adjustment (PGA), which tracks changes in the commodity cost of gas, transportation of the supplies through interstate pipelines and storage costs. Intermountain is reflecting an overall decrease in the commodity, transportation and storage charges in requesting the latest annual PGA decrease, which will be an average savings of 90 cents/month for residential customers and about 18 cents/month for business customers. Larger customers are looking at an increase, mainly because of increased costs for transportation. Noting that the utility has been able to “hold the line” on gas costs in the past year, Intermountain Executive Vice President Frank Morehouse said overall demand for natural gas on the utility’s system remains low while natural gas supplies are plentiful. The imbalance has kept the near-term prices for gas relatively low, he said.

©Copyright 2010Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.