After satisfying final technical requirements, San Diego-based Sempra Energy March 1 obtained final Federal Energy Regulatory Commission (FERC) approval to begin re-exporting liquefied natural gas (LNG) supplies from its Cameron import terminal in Hackberry, LA. However, a Sempra LNG spokesperson would not say whether any cargoes were ready to be reshipped. Sempra won the federal approval for re-export Jan. 20, but there were some conditions it still had to meet. “Based on staff’s review of your filing [Feb. 28] Cameron LNG LLC has satisfactorily addressed all of the hazard and operability study recommendations needed to commence service,” said FERC’s Lauren O’Donnell, who is director of gas: environment and engineering.

Canada’s National Energy Board (NEB) has approved revised interim tolls for the Canadian Mainline transmission system of TransCanada Corp. effective March 1. “The interim tolls will allow for collection of revenues that will more closely reflect TransCanada’s costs and forecast throughput in 2011,” said TransCanada CEO Russ Girling. Under the approved interim tolls, long-haul service from Empress, AB, to Dawn, ON, will be $1.89/gigajoule (GJ). Two adjustments will be made to the existing 2007-2011 settlement resulting in a lower revenue requirement and therefore lower interim tolls, TransCanada said. These are deferral of the recovery of about $237 million of undercollected 2010 Mainline revenues, and a $31 million reduction representing shippers’ share of forecast operation and maintenance savings this year. Absent the adjustments, the toll for long-haul service from Empress to Dawn would have been $2.35/GJ under the existing Mainline settlement (see NGI, Feb. 14; Jan. 10).

Oklahoma City-based Chesapeake Operating Inc. and Little Rock, AR-based Clarita Operating LLC have agreed to halt drilling waste injection activities at two disposal wells while a potential link between injection activities and earthquakes in the Fayetteville Shale is examined. The Arkansas Oil and Gas Commission (AOGC) held an emergency meeting to consider a staff request that injections at the two wells be halted. However, the companies volunteered to stop injections until the matter can be discussed at the AOGC’s regular meeting, which is scheduled for March 29. Since last summer the Fayetteville Shale region has experienced numerous small earthquakes. A recent larger quake heightened concerns that the seismic activity could be caused by injection wells.

A single bill that would change West Virginia’s regulation of Marcellus Shale drilling survived crossover day in the West Virginia legislature. The Natural Gas Horizontal Well Control Act (SB 424), which would increase horizontal drilling permit fees to $5,000 from the current $650 that all drillers pay, was sent to the House by a unanimous vote of the Senate. SB 424 would require drillers to give surface owners advance notice of any seismic activity on or near their property, prohibit oil and gas wells from being drilled within 100 feet of water wells, and require drillers to submit detailed water management plans and lists of chemicals to used in hydraulic fracturing operations. A bill (SB 465) which would redirect $2 million of the oil and gas severance tax revenue already collected by the state into a fund to be administered by the Department of Environmental Protection (DEP) was also sent to the House. DEP had sought drilling permit fees of $10,000 to help pay for a larger staff to handle about 750 active wells in the state (see NGI, Feb. 14). The legislature is due to adjourn March 12.

Linn Energy agreed to pay $196 million to Concho Resources to acquire oil properties in the Bakken play in North Dakota. The properties are expected to add current net production of about 1,350 Boe/d (94% of it oil), proved reserves of approximately 8 MMBoe (83% oil) and more than 400 potential oil drilling locations, according to Linn. The sale is expected to close by March 31 subject to customary closing conditions and purchase price adjustments. Linn also signed definitive purchase agreements totaling $238 million for a pair of bolt-on acquisitions to expand its position in the Permian Basin of Texas and New Mexico. The properties are expected to add current net production of approximately 1,650 Boe/d (87% oil and natural gas liquids (NGL)), provide reserves of approximately 14 MMBoe (88% oil and NGL) and approximately 180 potential oil drilling locations. The Permian Basin deals are expected to close in the first week of April.

The Delaware River Basin Commission (DRBC) is giving the public another month to comment on proposed regulations for natural gas development in the four-state watershed. The federal/interstate agency will now take comments through April 15. The extension will give the public more time to provide technical comments on the proposed regulations, according to DRBC Executive Director Carol Collier. The DRBC is already sorting through some 2,500 comments received to date. The DRBC includes the governors of the four basin states — Delaware, New Jersey, New York and Pennsylvania — and the federal government, represented by the commander of the U.S. Army Corps of Engineers‘ North Atlantic division. The decision to extend the comment deadline passed by a four-to-one vote, with only Pennsylvania voting against the extension.

The Quebec government should impose a moratorium on offshore natural gas and oil drilling in the Gulf of St. Lawrence until a risk assessment review is completed and after public consultation, a coalition of environmental groups is urging. The St. Lawrence Coalition, or Coalition Saint Laurant, has challenged Quebec’s government to not establish a Canada-Quebec Offshore Petroleum Board until a full public consultation of offshore drilling risks has been completed. The call for a moratorium comes two weeks after Corridor Resources Inc. said it has begun the approval process to drill an exploration well on the Old Harry prospect in the Laurentian Channel (see NGI, Feb. 28).

The Alaska Oil and Gas Association (AOGA) is suing the Department of Interior and the U.S. Fish and Wildlife Service for designating more than 187,000 square miles of the state as critical habitat for the polar bear under the Endangered Species Act (ESA). The critical habitat designation by the FWS, published last December, ruling restricts activity in large areas of sea ice offshore Alaska, including in the Chukchi and Beaufort seas, where some producers had planned to explore. Designation of critical habitat does not automatically block development, but it requires the FWS to consider whether a proposed action would adversely affect the polar bear’s habitat and interfere with its recovery. The designation covers too much territory and could cost Alaska millions in economic effects, the AOGA stated in its complaint, which was filed in U.S. District Court in Anchorage (Alaska Oil and Gas Association v. Kenneth L. Salazar, Secretary of the Interior; and the U.S. Fish and Wildlife Service, No. 11-cv-00025-RRB). The plaintiffs asked the court to declare the final rule unlawful and to vacate and remand it to the FWS for further consideration.

American Standard Energy Corp. (ASEN) announced that it has acquired more than 10,000 acres in North Dakota’s Bakken Shale play. Andrew Wall, general counsel for the Scottsdale, AZ-based company, told NGI that ASEN purchased 10.147.66 acres from Geronimo Holding Corp. for about $7.42 million in cash and company stock. The deal would value the acreage at between $700 and $750 per acre, an amount below the current market value. Wall confirmed that the purchase from Geronimo represented the company’s largest acquisition in the Bakken Shale play to date, increasing its holdings there by more than 160% to more than 16,000 total acres. Wall said ASEN, a nonoperator oil and gas company involved with exploration and production, also owns holdings in Texas, Arkansas, Oklahoma and New Mexico. According to Wall, the acquired acres are located in Mountrail, Williams, Burke and McKenzie counties, which are all in the northwest part of the state.

SemGas LP signed an agreement with Eagle Energy Co. to gather and process natural gas from Eagle’s dedicated acreage in Region 1 of the Anadarko Basin in northern Oklahoma, the Tulsa-based SemGroup Corp. said. The agreement includes the installation of a 30 MMcf/d cryogenic plant in a Hopeton, OK facility to support Eagle’s drilling activities into the Mississippi and Hunton geological formations. SemGas will continue to support Eagle’s drilling activity from its Nash, OK facility with further expansion capabilities available as needed, the company said. Founded in 2009, Eagle focuses on acquiring and drilling properties in the Midcontinent. Its primary activity focuses on horizontal drilling in the Mississippian formation, where it has a leasehold position exceeding 50,000 acres and production weighted 60% to oil. Eagle also has more than 50,00 net acres (primarily gas) in the Hunton Lime and Woodford Shale resource plays.

An effort to give Pennsylvania regulators more oversight over intrastate pipelines likely won’t extend to gathering lines in remote corners of the state, but would instead create a registry of those rural pipelines. An amended version of Senate Bill 325, introduced by Sen. Lisa Baker, R-Dallas, would require operators of “Class 1” gathering lines to report the location of those lines to the Pennsylvania Public Utility Commission (PUC), but would not have the PUC regulate them. As written, though, SB 325 would expand the size and muscle of the PUC. According to a fiscal note, the bill would require the PUC to hire up to 13 safety inspectors and other personnel at a cost of $1.4 million. If the bill does not get a floor vote this week, it would be held until the General Assembly reconvenes in April.

Apache Canada Ltd. and EOG Resources Canada Inc. have awarded engineering, procurement and construction company KBR the front-end engineering and design contract for Kitimat LNG, the natural gas liquefaction and export facility the partners are planning on British Columbia’s west coast. Financial terms were not disclosed. Kitimat is well under way with engineering and design work, and has the prospect for several Asia-Pacific buyers with whom the project’s backers are now in discussions, according to Apache, which holds a 51% interest in the project (see NGI, Feb. 21). The producers expect to have firm sales commitments in place by the end of this year. Initial LNG shipments are expected to begin in 2015, they said. A hearing on Kitimat LNG’s application to Canada’s National Energy Board for a 20-year export license is set for June 7.

Gastar Exploration Ltd. announced Feb. 28 that it will lease about 3,300 gross acres in West Virginia from PPG Industries Inc. and plans to drill into the Marcellus Shale play as early as July. The acreage is located on the site of PPG’s Natrium chemicals plant on the Ohio River, about five miles north of New Martinsville in Marshall County. Under a joint venture agreement with South Korean investment firm Atinum Marcellus I LLC, Houston-based Gastar will pay 45% of the lease acquisition costs for a 50% interest. Gastar forged ties with Atinum last September, intent on developing acreage in the Marcellus in West Virginia and Pennsylvania (see NGI, Sept. 27, 2010). “We are pleased to add PPG’s acreage to our Marcellus portfolio, and we look forward to getting operations under way later this year,” Gastar CEO J. Russell Porter said. “This lease, when combined with our existing leasehold in Marshall and Wetzel counties, helps Gastar create a large and mostly contiguous block of acreage within an area that is ultra-rich in natural gas liquids and condensate yields.” Gastar plans to start drilling around or after July 2011 and plans to eventually drill more than 30 wells. Pittsburgh-based PPG estimates that the lease will generate about $50 million — in net present value of future before-tax cash flows — over the next 30 years. That figure includes an initial cash payment of about $10 million. “When developed responsibly, Marcellus Shale resources represent a fantastic opportunity in our region to promote jobs and secure an abundant source of U.S.-based energy for our homes and our businesses,” said PPG senior vice president Michael McGarry. PPG’s Natrium plant produces chemicals, including chlorine, caustic soda, muriatic acid and calcium hypochlorite. In December Gastar acquired about 62,000 net acres of leasehold in three West Virginia counties — Preston, Tucker and Pendleton — as well as about 17,000 net acres held by production, a 41-mile gathering system, a salt water disposal well and five conventional wells producing about 500 Mcf/d gross of natural gas (see NGI, Nov. 15, 2010).

Natural gas-fired generation and storage in Wyoming and California could play a key role if Wyoming is to fulfill a long-term strategy of making itself a major exporter of wind-generated electricity, according to a second phase study released by the state Energy Office and Wyoming Infrastructure Authority (WIA). The cost of a 12 GW wind collector system and integration system for wind and natural gas would total tens of billions of dollars, the report said. The study, adding to an initial analysis completed a year earlier, was funded by a stimulus grant from the U.S. Department of Energy and completed for the state by Fairfax, VA-based ICF International. The report outlines several possible next steps, including work to optimize plans for integration of the backup assets for firming of the intermittent wind power. It suggests that scenarios developed for possible gas-fired generation and storage be detailed in various models to “optimize the type and quantity of the backup assets.”

Utilities, gas suppliers and fleet operators talked bullishly about the potential for compressed natural gas (CNG) and liquefied natural gas (LNG) as a transportation fuel at the recent winter meetings of the National Association of Regulatory Utility Commissioners (NARUC) in Washington, DC. However, they acknowledged that more work by the industry and regulators will have to be done to turn the potential into real changes in transportation fueling. Utilities are going to have to do more, according to Hal Snyder, a Southern California Gas Co. (SoCalGas) vice president. While California is leading the charge, Snyder said a more national effort is needed in setting policies and regulations that he said will “level the field” more for natural gas in transportation. SoCalGas plans to file this quarter with California state regulators for a special “compressional tariff service” to offer its customers as a means of widening the natural gas transportation fuel market, Snyder said. It will allow for utility-owned CNG compression units that can help capitalize on the utility’s financial strength, know-how and stability. AT&T‘s Jerome Webber, vice president in charge of the firm’s fleet operations, told NARUC his company will continue its commitment to CNG as evidenced by its 2,472 fleet vehicles now running on natural gas, with 1,662 in California, and plans for spending $565 million to deploy up to 15,000 clean fuel vehicles, most natural gas-powered, but with a mix of electric vehicles and hybrids, too. From the suppliers’ side, Encana Natural Gas Inc.’s David Hill touted the economic, energy security and environmental benefits for putting more natural gas into the transportation sector.

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