The body of an oil worker, one of 10 workers who were forced to abandon a liftboat in the southern Gulf of Mexico (GOM) during Tropical Storm (TS) Nate, has been recovered. Geokinetics Inc. CEO Richard Miles said that the victim, one of three employees who were aboard the liftboat Trinity II, was recovered Thursday. Miles said the second employee was among the seven men rescued on Sept. 12 but he died shortly afterward. He said the third employee was still recovering in a hospital Friday. The Trinity II was supporting an ocean bottom cable project in the Bay of Campeche for Geokinetics, which performs seismic testing for the oil and gas industry (see NGI, Sept. 12). The company said TS Nate disabled the liftboat and forced the crew to abandon ship and board a life raft.

ConocoPhillips has asked the Department of Energy to renew its authorization to export liquefied natural gas (LNG) from the terminal facilities owned by Freeport LNG Development LP on Quintana Island, TX. The Houston-based producer is seeking permission to export LNG that previously had been imported into the United States from foreign sources in an amount up to the equivalent of 500 Bcf of natural gas over a two-year period beginning on Nov. 30. ConocoPhillips’ existing authority expires on Nov. 29. The producer wants clearance to export to any country with the capacity to import LNG via tanker and with which trade is not prohibited by United States law or policy. “There is no domestic need for the LNG to be exported by ConocoPhillips,” the company said.The Federal Energy Regulatory Commission has vacated the Section 3 authorization and certificate authorization for Port Arthur LNG LP to build a liquefied natural gas (LNG) terminal near Port Arthur, TX, and for Port Arthur Pipeline LP to construct two takeaway natural gas pipelines from the outlet of the proposed terminal. The projects were to be built in two phases. “Neither Port Arthur LNG nor Port Arthur Pipeline has begun Phase I construction of the authorized facilities, nor requested further extension of the [in-service] deadline, which expired two months ago. Therefore, we are vacating their authorizations,” the order said [CP05-83, CP05-84]. Under Phase I, the terminal would have had a send-out capacity of 1.5 Bcf/d and in Phase II would have been doubled (see NGI, Nov. 27, 2006).

QR Energy LP has agreed to pay $577 million to acquire oil and natural gas properties in the Permian Basin, Ark-La-Tex and Midcontinent from its sponsor, Quantum Resources Fund (QRF). The deal, which includes the issuance by QR to QRF of $350 million of convertible preferred units and $227 million in cash, is expected to close by Oct. 1, subject to third party approvals and customary closing conditions. The deal would bring Houston-based QR 109,305 acres with proved reserves of 37.1 million boe, which are 65% proved developed and contain 41% liquids. More than 1,500 producing oil and natural gas wells are included and net production of 8,000 boe/d is expected in 4Q2011, QR said. “A large portion” of the properties QR is buying from QRF were acquired when privately held Quantum Resources Management LLC, which operates QR, agreed to pay Denbury Resources Inc. $900 million to acquire a package of gas-weighted assets in 2010 (see NGI, April 12, 2010), a QR spokesman told NGI. The QRF assets would more than double QR’s production and reserves, according to CEO Alan L. Smith.

Several BP plc subsidiaries have agreed to pay the United States $20.5 million to resolve claims that they violated the False Claims Act by knowingly underpaying royalties for natural gas produced on federal and American Indian leases, the Department of Justice (DOJ) said. The defendants in were BP Amoco Corp. (formerly Amoco Corp.), Amoco Production Co., BP Exploration & Oil Inc., BP America Inc., Atlantic Richfield Co. and Vastar (U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.). The settlement specifically excludes any claims against BP related to the Macondo well blowout in the Gulf of Mexico. The settlement resolves claims that the BP defendants “improperly deducted from the royalty values they reported the cost of boosting gas up to pipeline pressures, improperly reported processed gas as unprocessed gas to reduce royalty payments on federal and Indian leases, and improperly failed to perform ‘dual accounting’ on certain federal leases,” the DOJ stated. The settlement followed a lawsuit filed against several producers more than 10 years ago (see NGI, April 10, 2000). Settlements in the case to date total around $270 million (see NGI, May 16; March 28; April 12, 2010; Jan. 4, 2010).

Southern Star Central Gas Pipeline Inc. is holding a nonbinding open season through Oct. 13 for additional firm transportation capacity from western Oklahoma and the Texas Panhandle to serve natural gas production from the Granite Wash. The company’s Canadian-Blackwell Expansion would involve expanding the capacity of Southern Star’s system beginning in Hemphill County, TX, and Ellis County, OK, along the Canadian Blackwell Line (Line Segment 458) extending east to its Blackwell Compressor Station in Kay County, OK. If the pipeline receives sufficient interest in the proposed expansion, a binding open season will be conducted. If the project moves forward, service could begin as early as during the third quarter of 2013. For project information, call Rullman at (270) 852-4440, Jim Neukam at (270) 852-4665, or Pat Coomes at (270) 852-4552.

High Point Gas Transmission (HPGT) will purchase onshore and offshore natural gas pipeline assets in southeast Louisiana from Southern Natural Gas Co. (SNG). Financial terms of the deal, which is expected to close next year, were not disclosed. Houston-based HPGT, a partnership of an affiliate of ArcLight Capital Partners and High Point Energy (HPE), said it will acquire 621 miles of onshore and offshore pipeline, ranging from four to 26 inches in diameter, in water depths of up to 1,000 feet, including four platforms, about 68 active receipt points and 25 active delivery points, and related pig launching and receiving equipment, machinery, electronic flow measurement and communications equipment, rights of way, easements, permits and line pack. The assets are in SNG’s supply area south of Toca Compressor Station on its east leg, HPGT said. SNG posted a notice requesting proposals for the sale of its offshore pipeline assets south of Toca Compressor Station Oct. 8, 2010.

South Africa-based Sasol has chosen southwestern Louisiana as the site for a gas-to-liquids (GTL) facility, the first plant in the United States to produce GTL transportation fuels and other products. The company said it will evaluate the viability of a GTL venture in Calcasieu Parish, LA, over the next 18 months. The feasibility study will consider two options: a two million ton per year and a four million ton per year facility. A Foster Wheeler AG subsidiary conducting a feasibility study of a GTL project in Western Canada, which is under consideration by Talisman Energy Inc. and Sasol, expects to complete the work in the fourth quarter (see NGI, June 27).

The state of Alaska pushed back the date of its annual Beaufort Sea, North Slope and North Slope Foothills lease sale to possibly expand the sale’s North Slope acreage offering as well as provide prospective bidders additional time to prepare. The sale, which is typically held in October, is now tentatively scheduled for Dec. 7, according to the Division of Oil and Gas of Alaska’s Department of Natural Resources (DNR). The sale is planned to be held at the Dena’ina Civic and Convention Center in Anchorage. The lease offering is expected to be one of the largest in the country this year, DNR said. Combined, the three lease sale areas cover 14.7 million acres, about the size of Massachusetts, Vermont, and Connecticut combined. Sale terms and conditions are being finalized, and notices and related documents are to be published publicly by Oct. 23 at www.dog.dnr.alaska.gov.

Shell Oil Co. and the University of Texas at Austin (UT) are teaming up to work on better ways to extract natural gas and oil from unconventional rock formations. The Shell-UT Program on Unconventional Resources, funded by a $7.5 million grant from Shell, would be managed by the school’s Bureau of Economic Geology with participation from UT researchers. The five-year program’s primary goal is to enhance the understanding of the subsurface characteristics of shales, coalbed methane and other tight, complex formation. The partnership is one of the largest university collaborations ever undertaken by Shell.

Calgary-based NOVA Chemicals Corp. has secured a lease with midstream operator Provident Energy Ltd. for two underground NGL storage caverns and related infrastructure being developed at its Redwater facility in the Fort Saskatchewan, AB, area. The total amount of storage to be leased under the long-term agreements is about 1 million bbl, with staged onstream dates in 3Q2012 and 1Q2013. Both caverns and the associated facilities have been leased to NOVA on a cost-of-service basis.

Hawk Field Services LLC (HFS), a subsidiary of Petrohawk Energy Corp., was fined $350,000, ordered to pay $150,000 in restitution and placed on probation for three years for damaging endangered species habitat in the Fayetteville Shale in Van Buren County, AR. In documents filed in U.S. District Court for the Eastern District of Arkansas Western Division in April, HFS pleaded guilty to three misdemeanor counts of taking an endangered species in the South, Middle and Archey forks of the Little Red River between October 2008 and April 2009. According to the plea agreement, HFS “did not adequately control erosion” after deforesting land during construction of a subsurface natural gas pipeline, which “allowed silt to run downhill to the streams, causing sediment to build up…in waters containing the endangered speckled pocketbook mussel, and caused a take of at least one mussel by harassment” in the streams. Prosecutors argued that the failure to control erosion constituted a violation of the Endangered Species Act (ESA), which defines harassment as “an intentional or negligent act or omission which creates the likelihood of injury to wildlife by annoying it to such an extent as to significantly disrupt normal behavioral patterns,” including breeding, feeding or sheltering.

The California Energy Commission (CEC) has approved $100 million for its third annual alternative transportation investment plan, with nearly half of the budgeted funds going toward natural gas and biofuel transportation programs. Under the latest allocation natural gas and propane-powered vehicle programs were assigned $24.5 million to develop fueling stations while developing and producing biofuels, such as gasoline and diesel substitutes and renewable natural gas was awarded $24 million. Hydrogen fueling station and fuel cell transportation demonstration programs were awarded $8.5 million, programs to expand electric vehicle (EV) charging infrastructure were awarded $8 million, and another $8 million was assigned to programs to improve the efficiency of medium- and heavy-duty EVs. Funds also were divided among incentives to site commercial-scale clean transportation manufacturing facilities ($10 million); workforce training in the alternative transportation sector ($9 million); expanding ethanol fuel (E85) dispensers and retail outlets ($5 million); and to encourage the development of more innovative technologies and advanced fuels ($3 million).

A Pennsylvania township has filed lawsuit against its county board of elections, arguing that a referendum put forth by an environmental group that would ban hydraulic fracturing (fracking) in the township violates several state laws and could expose the municipality to legal action by the industry and others. William Johnson — solicitor for Peters Township, a wealthy Pittsburgh suburb on the northern edge of Washington County — filed a petition in Washington County Court of Common Pleas seeking an injunction over the referendum question being on the Nov. 8 ballot. The environmental group, Peters Township Marcellus Shale Awareness (PTMSA), drafted the proposed referendum and reportedly collected 2,422 signatures to have it appear on the ballot. It asks voters if the township’s home rule charter should be amended to include a “Peters Township Bill of Rights,” which would enact an outright ban on fracking in the township. Judge Paul Pozonsky has scheduled a Sept. 28 hearing for oral arguments on the matter.

A dairy company with an oil and gas lease has filed a lawsuit against the Town of Middlefield, NY, accusing the municipality of overstepping its authority by enacting a ban on oil and gas operations. Scott Kurkoski, an attorney with the Binghamton, NY, firm Levene Gouldin & Thompson LLP, told NGI the lawsuit was filed on behalf of Cooperstown Holstein Corp. (CHC) and its owner, Jennifer Huntington, in the Supreme Court for Otsego County. According to Town of Middlefield documents, the town board repealed the municipality’s zoning ordinance and replaced it with a zoning law on June 14, which outlaws oil and gas drilling operations and many forms of heavy industry. A memo from the law firm Bond, Schoeneck & King PLLC, which is assisting the town, predicted that it was “highly likely [that the town’s] zoning authority is unimpaired. The case law also suggests that localities can exercise some control over land use impacts of gas drilling operations in ways that are more sophisticated than by merely prohibiting or permitting the use. Under properly crafted local laws, municipalities can establish special use permit requirements.”

Williamsville, NY-based National Fuel Gas (NFG) Co. is studying the Upper Devonian/Geneseo and the Utica Shales in Pennsylvania, in addition to ramping up its Marcellus Shale activities. Through its operating arm Seneca Resources, NFG recently drilled two wells into the Geneseo, a shale within the Upper Devonian formation located directly above the Marcellus. In the Utica, directly below the Marcellus, Seneca drilled a vertical well in McKean County in June. While the company didn’t test the well, it said reservoir quality compared favorably to the Marcellus while the mineral make-up differed considerably. The company is currently drilling a vertical Utica well in Venango County and plans to drill another next year. Seneca’s acreage is entirely within the dry gas window.

A nonprofit environmental group recommends British Columbia keep a close eye on the shale gas industry, warning that expanding development in the Montney and Horn River shale plays could hamper the province’s goals of reducing greenhouse gas (GHG) emissions and put stress on water sources. The Pembina Institute — a Canadian conservation group that advocates the use of wind and solar power — issued two reports detailing what it perceived as the risks posed to climate action objectives and water resources by shale gas development. The group warned that even with full implementation of the provincial government’s Climate Action Plan, the natural gas sector’s GHG pollution would increase to 15% above 2007 levels, despite the province’s legislated goal of getting the total 33% below 2007 levels.

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