The Pacific Northwest hydrolectric season has stretched into an eight-month-long period, producing a similarly long period in which natural gas-fired generation plants remain mostly idle, according to the U.S. Energy Information Administration (EIA). For gas-fired plant operators the short-term summer prospects look bleak, according to EIA. While it is not unusual to see gas generation drop dramatically in the spring, EIA’s data reported a dramatic gas drop in the region since mid-January, with little change envisioned before September. “Natural gas use at [the region’s] plants dropped almost to zero during the third week of May,” EIA said. “This coincides with the curtailment of wind generators discussed in previous [EIA reports]. Gas use for power generation in 2011 is down 68%, or about 300 MMcf/d, compared to the first five months of 2010 [Jan. 1-May 25].”

The Environmental Protection Agency (EPA), Department of Interior and Department of Agriculture have reached a memorandum of understanding (MOU) that establishes a common process for the agencies to follow in analyzing potential air quality impacts of oil and gas activities on federal management public lands. Prior to the agreement, the federal agencies responsible for land management and air quality reviews associated with oil and gas made their decisions unilaterally. Agencies used different approaches when determining the adequacy of air quality analyses and mitigation; the stage in oil and gas activities — planning, leasing or permitting — when air quality analyses should occur; and the appropriate thresholds and resource conditions to use as the starting point for analyzing impacts to visibility and other air quality-related values. The EPA, Agriculture’s Forest Service and several Interior agencies — Bureau of Land Management, U.S. Fish and Wildlife Service and National Park Service — worked to establish mutually acceptable procedures for conducting air quality analyses as part of the environmental review required by the National Environmental Policy Act (NEPA), according to EPA. The agreement provides for early interagency consultation throughout the NEPA process.

Former Amaranth natural gas trader Brian Hunter has asked a federal appeals court in Washington, DC, to reconsider the Federal Energy Regualtory Commission‘s decision to levy a $30 million fine on him for allegedly manipulating the gas futures market. FERC has not yet said whether it will review its April penalty order (see NGI, April 25), but Hunter contends that the case is ripe for appeal by the U.S. Court of Appeals for the District of Columbia Circuit. In the event the court declines to review the controversial jurisdictional dispute at this time based on the pending FERC rehearing request challenging the $30 million penalty, Hunter asked the court to clarify that his jurisdictional objections may be “properly raised and considered on appeal as part of [his] review of any subsequent Commission order denying his rehearing application.” In his petition for review, Hunter challenges the FERC order as involving an unauthorized exercise of FERC’s jurisdiction over transactions in the futures market, over which the Commodity Futures Trading Commission has exclusive jurisdiction. FERC contends that Hunter’s manipulation of the gas futures market between February and April 2006 subsequently took a toll on physical gas contracts over which the FERC has sole jurisdiction.

Alliance Pipeline LP said Hess Corp. has contracted for capacity on a North Dakota pipeline lateral and planned associated facilities to carry gas from the Williston Basin. Hess entered into a precedent agreement with Alliance for service on the proposed 80-mile lateral, which would connect production from Hess’ gas processing facility in Tioga, ND, to the Alliance mainline near Sherwood, ND, for shipment to the Chicago market hub. The pipeline’s initial design capacity is 120 MMcf/day, which could be expanded based on shipper demand. An open season is planned this summer. The Tioga Lateral Project has a planned in-service date of July 2013, subject to approvals.

Texas Gov. Rick Perry signed into law legislation (HB 3328) requiring public disclosure of chemicals in hydraulic fracturing (fracking) fluids. The legislation requires full public disclosure of the chemical composition of fracking fluids on a well-by-well basis and seeks to establish a model for other states to follow (see NGI, June 6). The regulations are to be implemented by the Railroad Commission of Texas. Operators will have the ability to challenge disclosure if they feel that certain contents of the fluids used constitute a trade secret. Public disclosure would be made on the Frac Focus Chemical Disclosure Registry website.

AltaGas Ltd. has received final regulatory approval for a C$235 million natural gas processing facility and gathering system in the Alberta portion of the Montney Shale. The Calgary-based company said the facility would have a processing capacity of 120 MMcf/d and be built near Gordondale, which is about 100 kilometers (62 miles) northwest of Grande Prairie, AB. The plant is expected to be online in late 2012. AltaGas said natural gas liquid (NGL) extraction facilities at the plant would give local producers the option of having NGLs extracted from the gas they bring for processing. The company also plans to sell NGLs to customers.

The technical portion of a feasibility study of a gas-to-liquids (GTL) project in Western Canada, which is under consideration by Talisman Energy Inc. and Sasol Ltd., is expected to be completed during the fourth quarter, according to the Foster Wheeler AG subsidiary that will perform the study. In addition to the technical work on the feasibility study, Foster Wheeler said it will develop a cost estimate to allow Talisman and Sasol to assess the economic viability of the proposed facility. As part of a C$1.05 billion deal last year in which Calgary-based Talisman sold a 50% working interest in its Farrell Creek assets in the Montney Shale to South Africa-based Sasol, the partners said they would weigh the market viability of converting gas to liquid fuels using Sasol’s GTL technology (see NGI, Jan. 3). Sasol is leading the GTL study with a front-end engineering design decision likely in the second half of 2012. The partnership has yet to announce a specific site for the proposed facility, but has said it is considering locations in Alberta. The facility would convert shale gas to GTL naphtha, diesel and liquefied petroleum gas.

A Wyoming state legislative committee is pursuing legislation to provide matching funds for part of the estimated $5 million cost of a study on the potential for turning natural gas and coal resources into gasoline. Casper, WY-based Nerd Gas Co. hopes to build the complex on land it owns south of Sheridan, WY. Plans call for first developing a natural gas-to-gasoline facility, and later developing the coal-to-gasoline part of the envisioned facilities, according to Nerd representatives, who said they intend to pursue partnerships with several producers. Nerd representatives said it would cost about $1.7 billion for a natural gas-to-gasoline plant that could convert 288 MMcf/d to 34,000 b/d of gasoline.

Continued growth in North America’s unconventional businesses should offset disappointing performances in 2Q2011 from the pressure pumping, U.S. offshore and international units, said Nabors Industries Ltd. CEO Gene Isenberg. Nabors is forecasting operating income of $165-170 million in 2Q2011, which is well below Wall Street’s consensus forecast of $188.1 million. The Superior Well Services business was affected more than expected by late equipment deliveries and adverse weather in the Marcellus and Bakken shales. Permitting delays also “continue to plague our U.S. Offshore operations, leading to the expectation of a modest loss in the second quarter. This situation is gradually improving, and we anticipate moderate profitability over the balance of the year and a return to more normal circumstances as we enter 2012.”

Pennsylvania should create a registry to monitor the health of state residents and search for potential health impacts of Marcellus Shale drilling, Pennsylvania Department of Health Secretary Eli Avila told members of the Marcellus Shale Advisory Commission. Avila testified that his department “must be empowered to provide for a timely and thorough investigation of and response to concerns or complaints raised by citizens, health care providers or public officials.” Over the past year the department has been contacted by dozens of Pennsylvanians who believe that their health problems are related to natural gas drilling in the state, but no link between drilling and the illnesses has been established, Avila said.

Houston-based JGC Energy Development (USA) Inc. (JEDI), a unit of Yokohama, Japan-based engineering firm JGC Corp. (JGC), is acquiring some interests in Eagle Ford Shale assets from TriTech LLC for about $65 million. The area being acquired consists of about 63,000 acres on which operator Chesapeake Energy Corp. holds a 50% interest and other U.S. companies hold 40%, while the 10% held by TriTech will be transferred to JGC. The deal is expected to be completed by the end of July. JEDI President Masato Kato told NGI the deal marks the company’s entry into U.S. shales.

Pennsylvania State Rep. Phyllis Mundy said she plans to introduce a bill to prohibit gas gathering companies from becoming public utilities. The Pennsylvania Public Utility Commission (PUC) is currently reviewing separate requests from gathering line companies seeking to gain public utility status — Laser Northeast Gathering Company LLC, Peregrine Keystone Gas Pipeline LLC and Pentex Pipeline Co. Mundy said she chose to pursue legislation after the PUC voted to make Laser Northeast a public utility (see NGI, May 23).

The couple at the center of state and federal investigations of alleged water well contamination by gas drilling activities in North Texas has filed suit against Range Resources Corp. and others, seeking damages of $4.5 million plus $2 million for mental anguish, attorney fees, as well as trebling of damages under the Texas Business and Commercial Code. In March the Railroad Commission of Texas cleared Range of fouling water wells in the area of its Barnett Shale drilling (see NGI, March 28). The company is still fighting an order by the Environmental Protection Agency. Steven and Shyla Lipsky are suing Range and Range Production Co. as well as parties associated with the Silverado on the Brazos development in Weatherford, TX, which is where their home is located.

Colorado Gov. John Hickenlooper strongly endorsed the need to develop natural gas resources in remarks to the U.S. Chamber of Commerce‘s Bipartisan Governors Summit in Washington, DC. The broader theme for the summit centered on how states can become more competitive, and Hickenlooper emphasized the role that developing domestic gas supplies can play. Hickenlooper also emphasized the need to develop “the vast natural gas reserves” while adhering to the highest environmental standards.

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