Hurricane Irene turned out the lights on millions of East Coast residents and in doing so cut demand for natural gas by about 2.8 Bcf, according to an analysis by Bentek Energy LLC. The firm on Aug. 29 said the storm dropped gas demand by 1.3 Bcf in the Northeast since the previous Saturday (Aug. 27) and another 0.8 Bcf of demand loss was expected. About 0.7 Bcf of demand had been lost in the Southeast. Analysts at Canaccord Genuity Inc. also noted the storm’s gas demand destruction. “…[G]as-fired generation has declined by 2-plus Bcf/d over the past couple days, with the heaviest declines, not surprisingly, occurring in the Southeast and Mid-Atlantic regions,” the firm said. “At the same time, precautionary refinery shutdowns in conjunction with activity-limiting flooding suggest industrial demand is likely to see some degradation in these regions as well. Putting it all together, Irene was clearly a net bearish event for the gas complex and, depending on the length of outages, will likely lead to a cumulative natural gas demand loss of 30-plus Bcf over the next couple [of] weeks.”

The Federal Energy Regulatory Commisssion has approved Transcontinental Gas Pipe Line‘s (Transco) proposed 225,000 Dth/d expansion of its system to serve growing natural gas markets in the Southeast region, the Williams Partners LP subsidiary said. Transco’s Mid-South Expansion project, which is designed to provide service to the City of LaGrange, GA, Progress Energy Carolinas and Southern Company Services, will consist of about 23 miles of new pipeline, a new compressor facility in Dallas County, AL, and upgrades to existing compressor facilities in Alabama, Georgia, South Carolina and North Carolina. The project will be constructed in two phases: 95,000 Dth/d is scheduled to be placed into service in the fall of 2012 and another 130,000 Dth/d is expected to be placed into service the following summer. Transco has estimated the capital cost of the project at $217 million. Last year Transco said it had entered into binding precedent agreements for 100% of the incremental firm transportation service to be provided by the project (see NGI, May 31, 2010).

A compression expansion for Dominion Transmission Inc. (DTI) in western Pennsylvania has been approved by the Federal Energy Regulatory Commission. DTI was given one year to install an additional 32,440 hp of additional compression at its existing Punxsutawney, Ardell and Finnefrock compressor stations in the western Pennsylvania counties of Jefferson, Indiana, Elk and Clinton to provide 200,000 Dth/d to CONSOL Gas Co., which represents all of the capacity to be created by the project [CP11-39]. DTI said the project will provide additional firm transportation from multiple receipt points along its LN-280 pipelines to an existing interconnection with Transcontinental Gas Pipe Line at Leidy, PA. It will give Pennsylvania producers greater access to major natural gas markets in the Northeast and Mid-Atlantic regions, according to DTI, a subsidiary of Richmond, VA-based Dominion.

Ontario-based Epsilon Energy Ltd. has entered an agreement with its partners Chesapeake Energy Corp. and Statoil USA Onshore Properties Inc. to construct a new gathering system in the Marcellus Shale. Epsilon said the agreement governs both current and future gathering systems for the project, in which Epsilon holds a 35% interest; Chesapeake and Statoil hold the remaining 65% interest. To better align Epsilon’s interest in the overall project area than originally anticipated in the farm-out agreement with Chesapeake and Statoil, the company sold an additional 15% interest in the existing gathering system beyond the 50% interest as contemplated in the farm-out. Epsilon said it will receive proceeds of C$6.5 million from the sale. Currently under construction, the gathering system will have an ultimate capacity of 400 MMcf/d and will service both the three-party farm-out area as well as have additional off-take capacity for off-system gas.

Tennessee Pipeline was issued a certificate by the Federal Energy Regulatory Commission to construct a 2,000 hp compressor expansion within one year along its Northampton Lateral on its 200 Line system in western Massachusetts in order to provide incremental firm transportation service for Bay State Gas Co. and The Berkshire Gas Co. [CP11-36]. Tennessee said it has entered into binding precedent agreements with Bay State and Berkshire for a combined total of 10,400 Dth/d of firm transportation service (6,100 Dth/d for Bay State and 4,300 Dth/d for Berkshire) for a primary term of 20 years. According to Tennessee, it will provide service for Berkshire from an interconnection with Iroquois Gas Transmission System L.P. near Wright, NY, to the Greenfield meter station near Northampton, MA; and will provide firm transportation service for Bay State from an interconnection with Maritimes and Northeast Pipeline LLC located near Dracut, MA, to the Granite Northampton Massachusetts Meter Station near Northampton. The project calls for Tennessee to construct a new 2,000 hp compressor station and associated facilities on its Northampton Lateral Line 260A-100 in Southwick, MA, to provide an additional 8,305 Dth/d of firm service.

Dynamic Offshore Resources LLC is paying ExxonMobil Corp. $182.5 million to acquire some offshore wells and properties that are 60% weighted to natural gas. The 13.5 million boe in new reserves would pump up Dynamic’s reserves base by nearly one-third (31%). The properties to be acquired currently produce 7,000 boe/d. In a filing on Aug. 26 Dynamic stated that it intends to raise up to $400 million in an initial public offering (IPO) of its common stock and would list on the New York Stock Exchange under the symbol “DOR.” Timing of the IPO was not disclosed.

Halliburton has filed a lawsuit against BP plc claiming negligent misrepresentation, business disparagement and defamation related to the April 20, 2010 Macondo well blowout in the Gulf of Mexico. The lawsuit, filed in a Texas court, also moved to amend claims pending against BP in multi-district litigation in U.S. District Court in the Eastern District of Louisiana in New Orleans to include fraud. “These allegations are based upon BP providing Halliburton with inaccurate information prior to performing cementing services on April 19, 2010, and BP’s use of and omission of that information in subsequent public statements, filings and governmental investigations,” Halliburton said. BP provided “inaccurate information about the actual location of hydrocarbon zones in the Macondo well. The actual location of the hydrocarbon zones is critical information required prior to performing cementing services and is necessary to achieve desired cement placement.”

A Sullivan County, NY Civil Supreme Court judge has permanently barred Cabot Oil & Gas Corp. from drilling in a residential subdivision, which is located in the Marcellus Shale. Weiden Lake Property Owners Association Inc. had sought summary judgment to enforce its covenants against homeowner Jeff Klansky, who in 2008 granted Cabot exclusive rights “to explore for, drill for, produce and market oil, gas and other hydrocarbons” from his 66-acre lot in the town of Tusten on the Delaware River. To date Cabot had “taken no action to exercise their rights” under the five-year lease, according to court documents. Justice James P. Gilpatric also refused to rescind the lease between Klansky and Houston-based Cabot, barring the company from recovering a $99,255 signing bonus it paid to Klansky for the rights to explore and drill under his property.

Since Florida Gas Transmission (FGT) placed its Phase VIII expansion into service on April, daily natural gas flows have exceeded pre-expanded levels nearly 50% of the time, according to a report issued by the Energy Information Administration (EIA). Daily scheduled natural gas flows from June 1 through Aug. 29 were more than 5% higher than in the same period in 2010, despite temperatures in Florida that were cooler than last summer, the agency noted. And as a result of the FGT expansion, utilization of the natural gas pipelines coming into Florida has dropped to an average of 86% since June 1, compared to a 97% utilization rate for the same period last year. The Phase VIII Expansion Project, which the Federal Energy Regulatory Commission approved in November 2009, added more than 483 miles of pipeline loops, laterals and mainline and installed 213,600 hp of compression at eight existing stations and one new compressor station (see NGI, Nov. 23, 2009).

A single Marcellus Shale well in southwestern Pennsylvania directly adds $7.6 million to the economy, on average, according to recent study from the Katz Graduate School of Business at the University of Pittsburgh. By breaking down the cost of each step in the supply chain — from leasing to completion — the study aims to get actual spending figures as opposed to the projected impact of development. A group of business students at Pitt visited an EQT Corp. well this past March and subsequently conducted interviews and studied both academic material and company financial data to map the supply chain and figure out the cost for the life of the well.

Sempra Energy‘s Southern California Gas Co. (SoCalGas) unit has joined a Oberon Fuels in a research and development (R&D) effort centered on a potential transportation fuel derived from natural gas called Dimethyl Ether (DME). The joint R&D agreement is aimed at designing and constructing the first DME dispensing facility in the United States. Oberon is a privately funded technology firm focused on developing small-scale, skid-mounted units that produce DME. Research on DME as an alternative to diesel fuel began in the 1990s, and Oberon said worldwide production of DME has increased dramatically during the last decade.

Pacific Gas and Electric Co. (PG&E) has challenged California legislators for diverting $155 million earlier this year in natural gas ratepayer-collected surcharge funds to help cut the state’s gaping budget deficit. PG&E said that in the recently approved state budget lawmakers transferred the gas ratepayer funds to the state’s general fund and away from their intended use in providing energy efficiency programs. PG&E said in a letter to state legislators it is supporting SB 939 “to ensure funds collected from our customers to support various public purpose programs, such as energy efficiency, low-income programs and research, development and demonstration programs, are used for their intended purposes.”

Royal Dutch Shell plc and Ukraine’s state-owned oil company Naftogaz Ukrainy signed an agreement to develop and explore shale gas in the eastern European country, with Shell initially investing about $800 million for exploration and production (E&P). Ukraine, whose economy now is highly dependent on Russian gas imports, has been working to change that scenario. The country’s shale gas reserves have been estimated totaled 30 trillion cubic meters but the number could double once a new resource assessment is completed.

An ExxonMobil Corp. subsidiary has entered a farm-out agreement with a subsidiary of Canada-based Americas Petrogas to explore shale deposits in in Americas Petrogas’s Los Toldos blocks (163,500 gross acres) in Neuquen, Argentina. The deal was inked between the companies’ Argentine subsidiaries, ExxonMobil Exploration Argentina S.R.L. and Americas Petrogas Argentina S.A. Under the agreement, ExxonMobil committed to fund US$53.9 million (including taxes) during the exploration phase with a further US$22.4 million (including taxes) if the parties proceed to the exploitation phase, for a total potential initial investment of US$76.3 million. ExxonMobil said it will earn a 45% interest in the Los Toldos blocks with Americas Petrogas retaining a 45% interest and the government entity, Gas y Petroleo del Neuquen, maintaining a 10% interest. ExxonMobil will also provide technical assistance on the blocks. The companies said the Vaca Muerta characteristics are believed to be similar to shale reservoirs such as the Eagle Ford, Haynesville and Horn River in North America, which have so far resulted in discoveries of both shale gas and shale oil.

Pennsylvania state Republicans Sen. Lisa Baker and Rep. Matthew Baker plan to introduce legislation to add gathering lines to the One Call System to protect them from being damaged during excavation. The system requires property owners to mark the location of various underground utilities, like electric cables and water lines. Gas gathering lines are not currently covered by the law, but are expanding throughout the state because of Marcellus operations. Nearly 35% of all major pipeline accidents come from people digging blindly, the largest single cause, according to the U.S. Pipeline and Hazardous Materials Safety Administration.

Pennsylvanians are increasingly in favor of imposing a severance tax on natural gas production, according to a poll released last Wednesday by the Center for Opinion Research (COR) at Franklin & Marshall College in Lancaster, PA. In a survey of 525 people contacted between Aug. 22 and Aug. 29, 65% favored a tax and 21% opposed it. When COR surveyed 521 people on the topic in March, 62% favored a tax and 30% opposed it (see NGI, March 21). However, while 14% of respondents now say they don’t have an opinion about the tax, only 8% gave that answer in March. The survey also found that 66% of respondents had a favorable opinion of the industry and only 23% had an unfavorable opinion, but that 39% said the potential economics benefits of drilling outweighed the possible environmental damage, while 35% said the opposite and 26% weren’t sure. Asked if drilling improved or reduced the quality of life in nearby communities, 35% saw an improvement, 26% saw a reduction and 40% didn’t know.

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.