The Federal Energy Regulatory Commission has issued a favorable environmental assessment of Dominion Transmission Inc.’s Appalachian Gateway Project, which would provide additional capacity to deliver a mix of southwestern Pennsylvania Marcellus Shale gas and West Virginia conventional gas to market [CP10-448]. “Conventional production of natural gas is increasing in the Appalachian region of West Virginia and Pennsylvania. The region is also experiencing a strong emergence of non-conventional production from coalbed methane and Marcellus Shale gas. This production growth and new supplies from other regions, like the Rockies, are competing for gas pipeline capacity within the Appalachian region,” said Dominion Transmission, a subsidiary of Richmond, VA-based Dominion Resources. The project calls for the construction of about 110 miles of 20-, 24- and 30-inch diameter pipeline between West Virginia and Pennsylvania, as well as four compressor stations, adding about 17,000 hp. It would enable Dominion Transmission to transport an additional 484,260 Dth/d of gas to markets in the Mid-Atlantic and northeastern United States. The pipeline would deliver the gas to an interconnect with Texas Eastern Transmission at Oakford in Delmont, PA. Construction is expected to get under way this year, with in-service targeted for September 2012.

When the Pennsylvania General Assembly returns to its regular session Tuesday it will once again face a proposal to institute a severance tax on natural gas drilling. SB 905, sponsored by state Sen. John Yudichak (D-Luzerne), would place a 2% tax on natural gas at the wellhead for three years and 5% thereafter, except wells producing less than 150,000 Mcf/d, which would remain at the 2% rate. The resulting revenue would be deposited into a Natural Gas Severance Tax Fund within the state’s general fund, where it would be spent on environmental and local infrastructure projects necessitated by the impact of gas drilling. Another bill referred to the committee (SB 600), which was authored by Sen. Kim Ward (R-Westmoreland), would institute civil penalties for Department of Environmental Protection (DEP) violations at unconventional wells of $50,000, plus $2,000 for each day the violation continues, and would require DEP to post inspection reports on its website.

A jury in the federal District Court of New Mexico in Albuquerque has awarded nearly $10 million to a group of San Juan Basin royalty owners against Houston-based BP America Production Co. The owners accused the BP unit of failing to pay adequate royalties. A jury returned a verdict that included $9.74 million in compensatory damages. The original lawsuit also sought punitive damages, but U.S. Magistrate Judge Daniel Schneider dismissed that claim. “We are disappointed by the jury’s decision and have to evaluate what our next moves will be,” said a Houston-based BP spokesperson. BP argued that the royalty owners’ filing did not produce sufficient evidence to show why its royalty payments were inconsistent with the market value of the unprocessed gas at the wellhead.

Stronger prices for oil and natural gas liquids (NGL) have prompted Bill Barrett Corp. to increase its 2011 spending with a focus on its liquids-rich Gibson Gulch program, the company said. Production guidance has also been raised. Denver-based Bill Barrett said it expects to produce 106-110 Bcfe this year, representing year/year growth of 10-14%. The company said it plans to continue development drilling at Gibson Gulch in the Piceance Basin, as well as benefit from faster drilling times at West Tavaputs in the Uinta Basin. NGL and oil prices have risen 17% and 19%, respectively, since November 2010 when Bill Barrett put its initial 2011 development program in place. Based on current commodity futures prices, Gibson Gulch oil production and NGL processing revenues are expected to account for more than 50% of the company’s pre-hedge revenue from the area.

Portland, ME-based Unitil Corp. is embarking on a 14-year project to replace more than 100 miles of pipeline throughout Portland and Westbrook, ME. Some of the cast iron pipes to be replaced with plastic pipe are more than 100 years old. “The SURE [system upgrade for reliable energy] project will modernize this area’s gas infrastructure, making it more reliable and better able to meet the growing demand for natural gas in Maine,” said Unitil spokesman Alec O’Meara. Unitil inherited the aging pipelines from predecessor company Northern Utilities in 2008. The upgraded system will operate at a higher pressure, “resulting in more reliable service for commercial and industrial users and large public facilities,” the utility said. Unitil said the project is the largest of its kind in the Northeast. It was approved by the Maine Public Utilities Commission last July. According to the approval, the project must be completed within 17 years.

The West Virginia Department of Environmental Protection’s (DEP) Office of Oil and Gas (OOG) has ordered Antero Resources Appalachian Corp. and Bronco Drilling Corp. to cease operations at an Antero well pad in Harrison County, WV, following an incident in March 21 in which drill cuttings were washed into a nearby stream, OOG said. OOG also issued five notices of violation to Denver-based Antero and one to Edmond, OK-based Bronco, a contracted drilling services company, following the incident at the O. Rice pad, located near Salem, WV. Inspectors found evidence that drilling mud had flowed into Indian Run, according to OOG, which said there was no evidence of a resulting fish kill in the stream. OOG said Bronco could resume operations at other facilities in the state after the company provided OOG a spill prevention plan, made corrections at its active drilling sites and agreed to pay a $15,000 civil administrative penalty.

A Congressional push to further regulate hydraulic fracturing (hydrofracking) would have little impact on Pennsylvania, George Jugovic Jr., director of the Pennsylvania Department of Environmental Protection Southwest Regional Office told an audience in Pittsburgh in March. Jugovic told attendees at the Marcellus Shale Gas Environmental Summit that Pennsylvania already enforces the main principles of the Fracturing Responsibility and Awareness of Chemicals Act, or FRAC Act, re-introduced by U.S. Sen. Bob Casey (D-PA) (see related story).

Pacific Gas and Electric Co. (PG&E) proposed a radio wave-free option for customers who are convinced that radio frequencies produced in the meters cause serious health problems. PG&E proposes to simply turn off the radios in the smart meters for customers requesting it. PG&E has said its new meters use small one-watt radios that allow two-way communication and transmit relatively weak radio signals, resembling those of many other products most people use every day, including cell phones, baby monitors and microwave ovens. Major radio stations, by contrast, usually transmit with 50,000 times as much power, the utility said.

Samson Oil & Gas Limited, an Australian company with development and exploration acreage in the U.S., announced that it will sell its gas assets in the Jonah and Lookout Wash fields in the Wyoming portion of the Green River Formation to a group of private buyers for $6.3 million. The sale will cause Samson to recognize a tax loss that will offset some of the income tax liability it previously incurred by the sale of acreage in Goshen County, WY, which was completed in November. The tax benefit is estimated to be about $8 million. The sale is also consistent with the company’s strategy of focusing on developing the Bakken Formation in North Dakota and the Niobrara Formation in Wyoming.

Mountainview Energy Ltd. — an exploration, production and development company based in Cut Bank, MT, and focused on the Bakken, Three Forks and South Alberta Bakken shale plays — has acquired 506 net acres in Sheridan County, MT, from a private individual for $750/acre, or a total price of $379,500. The acquisition brings the company’s holdings in the Williston Basin to 11,572 acres. Mountainview also said it has acquired a 12.5% working interest in 160 net acres in the Williston Basin for $160,000 and has also acquired a 12.5% working interest in a horizontal well to be drilled in Roosevelt County, MT, in the Bakken Shale play.

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