As of last Friday Enterprise Products Partners was awaiting a permit from the U.S. Army Corps of Engineers to perform a directional drill at a pipeline crossing of the Missouri River at Decatur, NE, to enable inspection and repairs of two natural gas liquids pipelines that were shut in Aug. 13 following damage caused by flooding on the river. The eight-inch diameter pipelines — one carrying propane and one carrying natural gasoline — run from Conway, KS, to Minnesota and are expected to be out for at least two months. The pipelines are on the western leg of the Conway North System, which is part of Enterprise’s Mid-America Pipeline.
Magnum Hunter Resources Corp. and Eagle Operating Inc., which has about 15,500 gross acres in the Williston Basin, have leveled a second round of lawsuits against each other in federal court in North Dakota. Houston’s Magnum Hunter and subsidiary Williston Hunter ND LLC filed a lawsuit against Eagle in U.S. District Court for the District of North Dakota on Aug. 19, accusing the Kenmare, ND-based company of breaching a purchase and sale agreement (PSA). Eagle countersued and accused the duo of breach of contract. The lawsuits stem from a PSA forged on Aug. 4, when Eagle agreed to sell Magnum Hunter the remaining 50% interest in the Williston acreage for $55 million in cash and $2 million in stock.
The Federal Energy Regulatory Commission vacated Creole Trail LNG LP’s Section 3 authorization to build a liquefied natural gas (LNG) terminal in Cameron Parish, LA, citing the company’s failure to meet the agency-ordered deadline for being in service. The terminal project, which FERC approved in June 2006, was to be placed into service by mid-2010. It failed to make the deadline and requested an extension until June 15 of this year, which the Commission granted. However, “since Creole Trail LNG did not construct and place the LNG terminal into service as required by June 15, this authorization has expired,” the order said [CP05-360]. The project, if it had been constructed, would have had the capability of storing 13.5 Bcf and sending out a maximum of 3.3 Bcf/d, according to Creole Trail, a unit of Houston-based Cheniere Energy Inc.
The West Virginia Department of Environmental Protection (DEP) said natural gas production in the state is continuing on an upward swing dating back to 2003, thanks in part to development in the Marcellus Shale. The DEP’s triennial “State of Environment Report” said natural gas production in the state rose from about 180 Bcf in 2003 to more than 250 Bcf in 2009, the last year for which figures were available from the U.S. Department of Energy. The amount of natural gas that was processed also rose during that time frame, from about 120 Bcf in 2003 to about 140 Bcf in 2009. The number of gas producing wells was below 50,000 in 2003 but climbed above that mark by 2009.
The Pennsylvania Public Utility Commission (PUC) denied a request to reconsider its decision to grant public utility status to a Marcellus Shale gathering project currently under construction. By upholding its June decision, the PUC now sends the case of Laser Northeast Gathering Co. LLC to an administrative law judge to determine if the company should get a certificate of public convenience for a pipeline system in northeastern Pennsylvania. Laser could still operate without the certificate but not as a public utility. PUC Commissioner James Cawley issued a dissenting statement saying Laser hasn’t adequately proven it should have public utility status.
DCP Midstream is moving ahead with the Sand Hills Pipeline to carry natural gas liquids from the Permian Basin and Eagle Ford Shale to markets along the Gulf Coast. The DCP Midstream board has approved the project. Planning and field work have been under way for several months, and with board approval construction is to accelerate. An open season for the project was held late last year (see NGI, June 13). Sand Hills is to consist of about 720 miles of 20-inch diameter pipeline with an initial capacity of 200,000 b/d, which could grow to 350,000 b/d with the addition of pumping stations.
The Ohio Environmental Protection Agency (Ohio EPA) is creating a new general permit that will create consistent standards for shale gas sites, allowing most applicants to apply for and receive a permit in as little as two weeks. The draft general permit for shale production includes emission limits, operating restrictions and monitoring, testing and reporting requirements. Ohio EPA said the general permit will cover emissions sources found at most shale gas production sites including internal combustion engines, dehydration systems, truck-loading racks, storage tanks, flares and unpaved roadways. The permit will not cover activities that occur during drilling and fracturing, because the resulting air emissions are considered temporary and exempt from air pollution permit regulations, according to the agency. The general permit is expected to be finalized this fall; a required 30-day public comment period has yet to be scheduled. The draft general permit and qualifying criteria are available at www.epa.state.oh.us.
Calypso U.S. Pipeline LLC has notified the Federal Energy Regulatory Commission that it has abandoned its undersea pipeline project, which was destined to deliver regasified liquefied natural gas (LNG) from a deepwater port offshore Florida to customers in the Sunshine State. When initially approved in 2004 Calypso was expected to deliver regasified LNG to a connection with Florida Gas Transmission in central Broward County, FL, from a proposed Bahamian pipeline at the exclusive economic zone international boundary. The project devolved into one where the Calypso pipeline would deliver regasified gas to Florida from a U.S. LNG facility — one that was affiliated with Calypso (see NGI, May 22, 2006).
The attorney general of New York has issued subpoenas to three companies looking to develop oil and gas resources in the Marcellus Shale, part of an investigation into how the companies calculated production estimates and drilling costs to investors. A source with knowledge of the investigation confirmed to NGI that New York State Attorney General Eric Schneiderman issued subpoenas to Range Resources Corp., Cabot Oil & Gas Corp. and Goodrich Petroleum Corp. on Aug. 8. The source confirmed that a fourth company, Chesapeake Energy Corp., is being asked to provide similar information as part of the investigation. The probe by Schneiderman coincides with another by the Securities and Exchange Commission (SEC), which began serving subpoenas this summer on shale gas producers — including Quicksilver Resources Inc. and EXCO Resources Inc. — for its own investigation of production and reserve estimates (see NGI, Aug. 15; Aug. 8).
Encana Corp.‘s Encana Natural Gas Inc. plans to supply liquefied natural gas (LNG) to fuel fleet vehicles in the Haynesville Shale. It will source the LNG from Pivotal LNG, a unit of AGL Resources, Inc., Pivotal said. Encana plans to serve the fleet trucks of service providers in the North Louisiana gas play by dispensing LNG through mobile and permanent public fueling stations. Pivotal is expected to supply up to 100,000 gal/d of LNG for an initial five-year period. Recently Pivotal said it would buy a 60,000 gal/d natural gas liquefaction facility in Trussville, AL, in support of its plans to market LNG to the wholesale vehicle fuels market as an alternative to diesel (see NGI, Aug. 15).
The Louisiana Mineral and Energy Board collected more than $647,000 in bonuses in its August lease sale, making the total collected for fiscal year 2011-2012 more than $4.8 million. For the calendar year the total is more than $28.9 million. At the latest sale the board awarded 17 leases covering more than 1,680 acres, out of 39 nominated tracts covering more than 44,000 acres. The board sold leases in Avoyelles, Calcasieu, De Soto, Evangeline, Iberville, Natchitoches, Plaquemines, Pointe Coupee, Red River, St. Charles and St. Landry parishes. Of 17 tracts awarded, three were in North Louisiana and 14 were located in the southern parishes.
Private equity firm Quantum Energy Partners has formed Bluestem Energy with industry veteran Jack Hightower as CEO to mainly acquire oil and gas producing properties as well as engage in the exploitation and exploration of reserves in North America. Bluestem expects to have up to $1 billion of available equity from Quantum, co-investors and its management team, Quantum said. Hightower and Quantum partnered to form Celero Energy Partners LP in early 2004, later selling the company to Whiting Petroleum Corp. in July 2005 for more than $800 million. Also, several of Quantum’s founders helped Hightower raise private equity backing in 1995 to found Titan Exploration Inc., a start-up exploration and production company. It later became Pure Resources Inc. and was ultimately acquired by the former Unocal Corp. in 2003 for $1.6 billion (see NGI, Oct. 14, 2002).
The New York Department of Environmental Conservation (DEC) may extend a 60-day comment period on its hydraulic fracturing (fracking) report, which was issued in July (see NGI, July 4). DEC’s recommendations would require operators to disclose frack chemicals used and prohibit drilling in all primary aquifers, watersheds of New York City and Syracuse, and all state-owned land. A 60-day public comment period then was launched at the beginning of July, but some groups, including some lawmakers, have called for an extension to 180 days.
Canada is proposing rules to set a performance standard for coal-fired plants based on emissions levels from high-efficiency natural gas generation. Under the rules the standard for new coal-fired plant emissions would be based on emission levels from high-efficiency gas-fired generation, which are estimated to be up to half the emissions levels of coal. Plants online by 2015 would be allowed to operate without the additional restrictions unless they wanted to extend their operating lives. Draft rules were to be published in the Canada Gazette for a 60-day public comment period. The final rules are expected to be published in 2012, and regulations are scheduled to take effect on July 1, 2015.
Australia’s BHP Billiton Ltd. and Petrohawk Energy Corp. have closed their $12.1 billion merger after clearing the final necessary regulatory hurdle, from the Committee on Foreign Investment in the United States, which concluded that the deal posed no national security issues of concern. BHP Billiton made its $38.75/share offer — giving the deal an enterprise value of $15.1 billion including debt assumption — in July (see NGI, July 18). The merger more than doubled BHP Billiton’s resource base and grew proved reserves by about 30%.
Calpine Corp. confirmed that it made a $673 million bet — $373 million credit facility and $300 million in stock repurchases — on itself and a long-stalled upgrade of a natural gas-fired generation plant in the heart of the Silicon Valley. Underlying a new credit facility is the belief that the recessionary economy — particularly in California — is going to turn around. With its newly acquired $373 million credit facility, Calpine plans to finance construction of a 120 MW upgrade to its Los Esteros 180 MW gas-fired peaking facility in San Jose, CA, and repurchase up to $300 million of its own common shares given the current downturn in the economy and the stock market. Calpine thinks it can have an upgraded plant in place by mid-2013.
The city of Morgantown, WV, made no move to appeal a judge’s ruling that struck down its ban on hydraulic fracturing (fracking). Monongalia County Circuit Court Judge Susan Tucker ruled Aug. 12 that a city ordinance banning fracking within the city and an adjacent one-mile buffer zone was not enforceable because the state Department of Environmental Protection has exclusive jurisdiction over oil and gas regulation. The city council met Aug. 16 to discuss its options and has decided to discuss additional safeguards with Northeast Natural Energy.
The Pennsylvania Department of Environmental Protection (DEP) has sent certification letters to approximately 80 operators in the state, asking them to certify by Monday that they have stopped delivering wastewater from Marcellus Shale gas drilling to 15 municipal treatment facilities. The move follows a request by the DEP in April for operators to stop delivering wastewater to the facilities by May 19, citing newly revised total dissolved solids (TDS) regulations (see NGI, April 25). The DEP said it believes most of the operators met the deadline.
The Pennsylvania Department of Environmental Protection (DEP) and Cabot Oil & Gas Corp. are trying to determine if Marcellus Shale drilling caused a possible methane gas migration that impacted three private drinking water wells in Lenox Township, Susquehanna County. An investigation began Aug. 16 and is ongoing. So far the source of the methane has not been determined. Cabot has ceased drilling at a well pad near the incident site, vented the three impacted wells and installed methane alarms in each of the three homes and is providing drinking water to one home.
Maine regulators conditionally approved plans to build an 80-mile pipeline that would bring natural gas service to a swath of the state for the first time. The eight-inch diameter transmission pipeline would run through more than dozen towns from Richmond to Madison in the Kennebec Valley region. Project sponsor Kennebec Valley Gas Co. (KV Gas) will have to return to the Maine Public Utilities Commission (PUC) for a final approval of its financing and engineering plans for the $70 million transmission pipeline project. With the pipeline, KV Gas bids to become a fully operational natural gas local distribution company. Most of the new transmission pipeline, which would run along the west side of the Kennebec River in the south-central part of the state, would be buried in public right-of-way with distribution pipelines interconnecting at nine points. Gas supplies would come from the existing 685-mile Maritimes and Northeast interstate pipeline.
If the burst of shale gas supplies in British Columbia (BC) turns into a source of liquefied natural gas (LNG) for the Far East, the $300-400 million Kitimat export facility being conceived by engineering consultants is likely to be a moveable feast. The proposed Kitimat export project on the BC coast will not be built at the ice-free port in the Douglas Channel near the village of Kitimat, but instead engineering contractor Black & Veatch (B&V) said it would be constructed in a warm water location — maybe the Gulf of Mexico — on a barge and later moved into place via transport through the Panama Canal. B&V made the disclosure in outlining its work developing front-end engineering design for the Kitimat project backers — Apache Corp., EOG Resources Inc. and Encana Corp. The engineering work is preliminary to several major financial and regulatory steps that still have to be completed for the proposed LNG export venture.
Researchers at the Massachusetts Institute of Technology (MIT) are making headway on a new tool to help detect pipeline problems before they arise. It involves the application of an existing MIT computer model that tests automobile components for crashworthiness. Researchers in MIT’s Impact and Crashworthiness Laboratory are using their computer simulation to predict how pipes may fracture in offshore drilling accidents using a simulation of Deepwater Horizon explosion in the Gulf of Mexico. The researchers found that the model’s reconstruction closely resembled an image of the actual offshore pipeline fracture taken by a remotely operated vehicle shortly after the accident occurred.
If Michigan were to convert some of its coal-fired generating plants to natural gas, it could result in a net increase in long-term jobs and tax revenue, according to an analysis by a Michigan State University (MSU) economist. The initial increase would result from conversion-related construction, said MSU’s Bill Knudson. However, even after the conversions, natural gas generation would lift the state’s struggling economy because of jobs and spending on gas production and distribution. Even a modest level of conversion, defined as about 10 million MW, or 10% of Michigan’s current capacity, would result in $4.1 billion in economic activity and create 19,000 construction-related jobs, the analysis found.
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