An estimated 224,200 people were employed by Texas’ oil and gas industry in June, a nearly 15% increase compared with June 2010, according to the most recent Texas Petro Index (TPI). “Post-recession job growth in Texas has been among the strongest in the nation, and the oil and gas industry in Texas deserves most of the credit for that,” said petroleum economist Karr Ingham, who designed the TPI. June’s employment figure marks the first time more Texans have been working in the industry than in October 2008, the peak of the industry’s last boom, Ingham said. Directly or indirectly, the industry accounted for 66% of total job growth in Texas during the 12-month period, Ingham said. The TPI, which measures a group of upstream economic indicators, rose in June to 243.5 from a low in December 2009 of 186.6. It was the eighteenth straight month to show an increase. The TPI, which peaked at 286 in September and October 2008, was 208 in June 2010 (see NGI, Aug. 2, 2010). According to latest TPI, Texas’ estimated gas output in June was 576.5 Bcf, which was down about 6.1% from a year ago. But the value of Texas-produced gas was $2.46 billion, about 0.2% more than in June 2010.
The Federal Energy Regulatory Commission (FERC) has approved plans by Equitrans LP, a subsidiary of EQT Corp., to expand its natural gas pipeline system in Pennsylvania and West Virginia. The Pittsburgh-based company’s Sunrise Project is estimated to cost $272 million, and when completed will supply the northeastern and Mid-Atlantic states with up to 313,560 Dth/d of Marcellus Shale gas. FERC said Equitrans has already signed commitments for 199,410 Dth/d, about 64% of the project’s total capacity. Construction is scheduled to begin in August or September and the project is expected to go online by May 2012.
The Susquehanna River Basin Commission (SRBC) suspended 41 water withdrawals in Pennsylvania through the end of July because of low-flowing streams in the central part of the state. While the suspensions impact users in various industries — including golf courses — most involve energy companies. That includes Marcellus Shale heavyweights Chesapeake Energy Corp., Talisman Energy Inc., Chief Oil & Gas LLC, Southwestern Energy Production Co., XTO Energy Inc., Ultra Resources Inc. and Tennessee Gas Pipeline, among other smaller companies. The suspensions cover 10 Pennsylvania counties including Bradford, Susquehanna and Tioga, the three most productive in the Marcellus. Chesapeake told NGI that between recycling and storage, it didn’t expect the suspension to have a “significant impact” on operations.
Statoil Marketing and Trading Inc. will supply NOVA Chemicals Corp. with a long-term supply of ethane from the Marcellus Shale play, under the terms of a memorandum of understanding (MOU) between the two companies. The ethane would be transported to NOVA’s ethane cracker at Corunna, ON, which has a processing capacity of 1.8 billion pounds per year. The companies must still finalize the purchase agreement for the ethane and will also conclude a pipeline transportation agreement. The financial terms and the duration of the deal were not disclosed.
Crosstex Energy Inc. unit Crosstex Energy LP is planning to expand Louisiana fractionation facilities and construct a natural gas liquids (NGL) pipeline extension that would would originate from interconnections with major Mont Belvieu supply pipelines, providing connections for NGLs from the Permian Basin, Midcontinent, Barnett Shale, Eagle Ford Shale and Rocky Mountain areas to the partnership’s NGL fractionation facilities in South Louisiana. The project also includes an expansion of the partnership’s Eunice fractionation facilities from 15,000 b/d to 55,000 b/d of NGLs, which would increase the partnership’s interconnected fractionation capacity in Louisiana to 97,000 b/d. The partnership’s investment for the project is estimated at $180-220 million. Construction of the NGL pipeline extension is expected to begin in the second quarter of 2012, and the facilities are expected to be operational in the first quarter of 2013.
Trunkline Gas Co., a subsidiary of Southern Union Co., has completed the first construction phase for isolating its 165-mile South Texas system and provide bidirectional flow for liquids-rich gas. Trunkline will also begin its 15-year agreement with DCP Midstream LLC, which integrates DCP’s six processing facilities and its South and Central Texas gathering systems with Trunkline’s South Texas system. DCP has more than 1 Bcf/d of gas processing and associated natural gas liquids fractionation capacity.
New York-based Highstar Capital IV LP said it will invest up to $270 million in independent midstream energy company Caiman Energy LLC through a preferred equity investment. Caiman, which is privately held by EnCap Flatrock Midstream‘s Energy Infrastructure Fund, operates in the rich gas areas of the Marcellus Shale, providing services including gas and condensate gathering, compression, dehydration, measurement, treating and conditioning, processing, and liquids transportation and fractionation. The investment will provide Caiman with additional growth capital to fuel ongoing expansion of its midstream infrastructure network, the companies said. Caiman now has more than $1 billion available for investment in midstream infrastructure in the Marcellus shale, the company said. In a separate midstream investment deal announced the same day, Tradition Midstream LLC said it has closed a $200 million equity commitment from Denham Capital.
Canada’s National Energy Board (NEB) will hold a public hearing to consider BC LNG Export Co-operative LLC‘s application for a 20-year license to export liquefied natural gas (LNG) to Pacific Rim markets from a facility on British Columbia’s (BC) Pacific coast at Kitimat. BC LNG, a joint venture of the Haisla Nation and LNG Partners LLC of Houston, is seeking authorization to export up to 1.8 million metric tons of LNG annually. NEB said it will consider the export markets and gas supply, transportation arrangements, status of regulatory authorizations, potential environmental effects of the proposed exportation and any social effects directly related to those environmental effects. Members of the public can participate in the hearing by seeking intervenor status, filing a letter of comment or making an oral statement to the board. The deadline to file documents to intervene in the hearing or make an oral statement is Sept. 1; the deadline to file a letter of comment will be announced at a later date. Online forms are available at www.neb-one.gc.ca by clicking on “submit” under “regulatory documents.”
Australia Pacific LNG (APLNG) — a joint venture of ConocoPhillips and Australia’s Origin Energy — has approved the final investment decision for the first of two liquefied natural gas (LNG) trains, part of a $20 billion project to transport 24 Tcf of coal seam gas (CSG) to its LNG facilities on Curtis Island, Queensland. APLNG said the first phase of the project would involve building infrastructure to supply the first LNG train, namely development in the Surat and Bowen basins, construction of a transmission pipeline from the onshore gas fields to Curtis Island and unspecified infrastructure commitments to support the second LNG train. The company said the first train should be online in 2015 and will be used to satisfy a binding sales agreement with China Petroleum & Chemical Corp., also known as Sinopec Corp., for 4.3 million metric tons per year of LNG. The second train should be online in 2016.
Japan’s Sumitomo Corp. is reportedly looking to add more American shale gas investments to its energy portfolio and is shopping for new opportunities in shale oil, but it might wait to make a move on shale gas until natural gas prices are higher. Bob Takai, the company’s energy division manager, told Reuters in an interview that the shale gas market would continue to grow. Sumitomo already has investments in the Barnett and Marcellus shale plays. The company bought a 12.5% stake in 16 of Carrizo Oil & Gas Inc.‘s Barnett Shale drilling units for about $15.7 million in December 2009 (see NGI, Dec. 21, 2009). Then last August a Sumitomo subsidiary, Summit Discovery Resources II LLC, forged a joint venture (JV) agreement with Rex Energy Corp. in the Marcellus (see NGI, Sept. 6, 2010). Under the JV, Rex sold Sumitomo 12,900 net acres, wells and other midstream assets in Butler County, PA, for about $88.4 million in cash and another $52 million in a drilling carry.
Texas Railroad Commissioner David Porter has assembled a 22-member Eagle Ford Task Force charged with establishing best practices for development of the South Texas play based on input from across the industry and affected communities. The body is composed of community leaders, elected officials, water representatives, environmental groups, oil and gas producers, pipeline companies, oil services companies (including a hydraulic fracturing company, a trucking company and a water resources management company), landowners, mineral owners and royalty owners. The task force met last week in San Antonio and set an agenda. Porter plans for the task force to meet monthly, with the second meeting occurring in late August in the Eagle Ford region.
A moratorium on natural gas well permitting in Flower Mound, TX, has ended, but those applying to drill in the affluent Barnett Shale town from now on will face some tough new requirements recently approved by the Flower Mound Town Council. The requirement for setbacks from natural gas wells has been increased from 500 feet to 1,500 feet for residences with mineral interests and from 1,000 feet to 1,500 feet for residences without mineral interests. The setback for schools, religious institutions, public parks, hospitals and water wells increased from 1,000 feet to 1,500 feet, and from 500 feet to 750 feet for property lines, floodplains and public roads or rights-of-way. Monitoring requirements include water well testing, pre- and post-drilling soil sampling, continued air quality monitoring by the town, and the establishment of daytime and nighttime noise levels with mitigation procedures for drilling, hydraulic fracturing and production operations. In addition, emergency plans must now include provisions for residential evacuation and the installation of an audible alarm to signal drops in pressure, the release of gas or a fire.
The city of Wellsburg, WV, has taken its first step toward repealing an ordinance it had enacted less than three months ago calling for a ban on natural gas drilling within the city and an adjacent one-mile buffer zone. A first reading of the proposal to repeal the ban passed the city council by a 5-2 vote on July 19. The council will meet again on Aug. 9 and take a second vote, which if successful will officially repeal the ban. Since Wellsburg enacted its ban on May 10, the City of Morgantown, WV, implemented a similar one in June and was immediately sued in circuit court by Northeast Natural Energy (NNE), which is drilling two Marcellus Shale natural gas wells in an industrial park outside the city limits but within its buffer zone (see NGI, July 4). Gov. Earl Ray Tomblin then issued an executive order on July 12, calling for several new safeguards on drilling and a review of state regulations (see NGI, July 18).
The city council in Fort Worth, TX, is expected to approve a plan to create maps of natural gas pipelines running through the city. The city has received $25,000 in federal grants to make the maps, which could be available to the public in 18 months. The civil engineering firm Pachero Koch will lead the project using global positioning satellite technology. Despite the move, the state’s regulatory agency — the Texas Railroad Commission — is expected to continue making pipeline maps for the entire state.
Chevron Corp. and the National Aeronautics and Space Administration‘s (NASA) Jet Propulsion Laboratory (JPL) plan to work together to develop technologies to improve oil and natural gas production and recovery. Initially the alliance will direct its resources to develop “a wide range of technologies” to use in the deepwater, including power transmission, signal processing and electrical actuation. The technology developed by JPL for interplanetary missions may be useful, the partners noted. “For example, JPL developed technology that enables electronic communication over millions of miles in outer space. That same technology may have application in deepwater energy operations, which extend thousands of feet below the surface of the ocean and encounter extreme pressures and temperatures.”
Noting that traditional natural gas and coal-fired electric generation plants have to work extra and inefficiently, Colorado-based Bentek Energy’s study, “The Wind Power Paradox,” concludes that the integration of wind-generated supplies on a number of major grid systems in the United States has resulted in “little or no emissions reductions” on a systemwide basis. Wind’s intermittency causes too much cycling of other hydrocarbon-based generation units, Bentek stressed in its report. Refiring coal-fired power plants with natural gas can achieve the same level of carbon emission reductions that comes from wind generation currently, the report concluded. As coal’s share of the generation market is replaced by natural gas-fired facilities, the potential savings due to increased wind power will decline, Bentek said.
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