Anadarko Petroleum Corp., which was a 25% owner of the doomed Macondo well in the deepwater Gulf of Mexico, has agreed to pay BP plc $4 billion to settle claims relating to last year’s well blowout and oil spill and will no longer pursue claims of gross negligence against the oil major. The settlement, which BP said was not an admission of liability, ends a dispute with Anadarko about how to divvy up responsibility to compensate those affected by the tragedy. In May a unit of Mitsui Ltd., which owned a 10% stake in the BP-operated well, agreed to pay nearly $1.07 billion for related damages (see NGI, May 23). Under terms of the settlement, Anadarko agreed to transfer its stake in the Macondo well back to BP, and BP agreed to indemnify Anadarko for some claims, excluding the civil, criminal and administrative fines and potential claims for punitive damages.
Oil well drilling significantly outpaced natural gas activity in 3Q2011, the American Petroleum Institute (API) reported. For every two oil wells that were completed during the period, only one gas well was completed. The producer group estimated that 6,379 oil wells were completed in the quarter, up by 16% from year-ago levels and more than double the number of gas wells that were completed (3,188) during the same period. Oil well completions were down 3% from the 6,595 wells that were completed in 2Q2011, while gas well completions fell 8% from the 3,477 completed wells (see NGI, July 25). The API reported that a total of 10,574 wells — oil, gas and 1,007 dry holes — were completed in the latest period. Estimated drilling footage was 77 million feet, a 6% rise from the year-ago level. API further reported that a total of 31,620 wells have been completed so far this year.
Curtailing hydraulic fracturing (fracking) would be a rush to judgment, according to a report from the National Regulatory Research Institute (NRRI). “Studies measuring reliably the total risk of shale gas production from the combination of horizontal drilling and hydraulic fracturing are lacking. We should expect better information over the next two years,” wrote report author Ken Costello, NRRI principal. “In the meantime…waiting for new evidence does not justify banning fracking or imposing major restrictions on shale gas production — the cost to the country is ostensibly too great relative to the benefits.”
Employment in the six core Marcellus Shale industries in Pennsylvania more than doubled to 20,837 people between 2008 and 2011, while employment in 30 ancillary industries dropped by around 1% to 193,813, according the Center for Workforce Information and Analysis (CWIA) at the Pennsylvania Department of Labor and Industry. Employment in all Marcellus-related industries hit 214,000 in 1Q2011. Among the core industries, “support activities for oil and gas operations” accounted for more than half of the employment growth over the past three years, jumping from 2,177 in early 2008 to 7,196 in early 2011, followed by 2,854 additional drilling jobs and 1,330 additional “crude petroleum and natural gas extraction” jobs. The number of businesses involved in Marcellus development is also growing with 36 industries adding more than 650 “establishments” between 2008 and 2011, including 355 in the core industries and 207 in the oilfield services sector.
AmeriGas Partners LP has agreed to pay $2.9 billion for the propane businesses of Energy Transfer Partners LP (ETP). With 1.3 million customers in all 50 states and 1,200 locations, AmeriGas is the largest retail propane distributor in the United States. ETP has propane operations in 41 states through subsidiaries Heritage Operating LP and Titan Energy Partners LP. Under terms of the agreement, AmeriGas would pay ETP $1.5 billion in cash and $1.3 billion in common units as well as assume $71 million of Heritage debt. Once completed ETP would own more than one-third of AmeriGas common units, which it committed to retain until at least 2013. The tie-up, which is expected to close by early next year, would add more than one million retail propane customers and more than 500 million gallons to AmeriGas’ nationwide propane distribution companies, said CEO Eugene Bissell.
The fifth natural gas liquids (NGL) fractionator at Enterprise Products Partners LP‘s Mont Belvieu, TX, complex has entered operation, producing 75,000 b/d, exceeding its nameplate capacity, the company said. The new unit increases total nameplate capacity at the facility to 380,000 b/d. Supported by long-term contracts, the unit helps accommodate increasing NGL production from shale natural gas plays. Upon completion of the sixth fractionator, nameplate capacity would be more than 450,000 b/d.
Skelly-Belvieu Pipeline Co. LLC is holding a binding open season through Nov. 16 for capacity on a proposed expansion of the 570-mile Skelly-Belvieu natural gas liquids (NGL) pipeline, which originates in Carson County, TX, and transports purity products from the Midcontinent to Mont Belvieu, TX. Skelly-Belvieu is a joint venture partially owned and operated by an affiliate of Enterprise Products Partners LP. The Skelly-Belvieu expansion could be designed to accommodate 17,000 b/d of incremental annual average capacity, 90% of which is being made available in the open season for priority service. The additional capacity could be available as soon as 4Q2012. For information on the Skelly-Belvieu open season contact Buford Barr at (713) 381-8354, or firstname.lastname@example.org; or Bryan McFarland at (713) 381-2468, or email@example.com.
The Bureau of Land Management (BLM) in Colorado has completed the Record of Decision (ROD) for the Little Snake Resource Management Plan (RMP) in northwestern Colorado, which opens 90% of the 2.4 million acres to oil and natural gas drilling. The plan sets limits around breeding areas for sage grouse, the Vermillion Basin canyonlands and a 22-mile stretch of the Yampa River that has been designated “wild and scenic.” The plan is to guide federal decisions for close to 20 years. A total of 242,560 acres now is closed to leasing for drilling in the region; BLM’s previous plan closed about 78,000 acres to drilling. The ROD is the final step of a multi-year effort to develop a RMP for the 1.3 million acres of BLM-administered public lands and an additional 1.1 million acres of subsurface mineral estate administered by the Little Snake Field Office in Moffat, Routt, and Rio Blanco counties.
Weakness in the equity markets has forced Williams to revamp a plan that will create two stand-alone publicly traded companies from its exploration and production (E&P) business and natural gas pipeline unit. Under a revised plan approved by the board of directors, Williams plans to separate its E&P business, to be known as WPX Energy Inc., via a tax-free spinoff to shareholders by the end of the year. The previous plan called for the company to launch an initial public offering of WPX this year, followed by a spinoff of the remaining WPX shares in early 2012 (see NGI, Feb. 21). The WPX senior management team, drawn from Williams’ staff, is led by CEO Ralph A. Hill, CFO Rodney J. Sailor and general counsel James J. Bender. Bryan K. Guderian is to become senior vice president of operations, while Neal A. Buck would be senior vice president of business development and land. Marcia MacLeod takes over as senior vice president of human resources and administration, and Michael R. Fiser will be senior vice president of marketing. Steven G. Natali would serve as senior vice president of exploration while J. Kevin Vann is to become chief accounting officer.
Energy Transfer Partners LP (ETP) agreed to provide natural gas gathering, processing and transportation services in the Woodford and Barnett shales for XTO Energy Inc., a subsidiary of ExxonMobil Corp. Under the terms of the agreement, ETP is to construct the 117-mile Red River Gathering Pipeline (RRG), which would originate in Carter County, OK, and terminate at the Godley processing facility in Johnson County, TX. The partners would also build a new 200 MMcf/d cryogenic processing unit at the Godley plant. RRG would be a 24- and 30-inch diameter pipeline with an initial capacity of 450 MMcf/d and with future expansions could exceed 550 MMcf/d. The pipeline is expected to be in service by 4Q2012. Meanwhile, the new cryogenic unit would increase Godley’s processing capacity from 500 MMcf/d to 700 MMcf/d and is expected to be online by 3Q2013. The total cost for both projects is estimated to be about $360 million.
A coal liquefaction plant in southwestern Ohio that was facing opposition has taken on new life after the developer agreed to use natural gas from the nearby Marcellus and Utica shales instead of coal in the production process. The Ohio River Clean Fuels project in Wellsburg, OH, originally was proposed by Baard Energy LLC as a diesel and naphtha transportation fuels facility fueled using Ohio coal. Under a revamped design by new project operator Planck Trading LLC, the plant could use 500 MMcf/d of gas to produce the same amount of liquid fuels in the original plan. Baard’s design would have used 20,000-25,000 tons of coal daily to produce about 50,000 b/d of fuel. Environmental groups had challenged the coal-to-liquids development in 2008, accusing the Ohio Environmental Protection Agency and the U.S. Army Corps of Engineers of failing to adequately assess the environmental impact of the proposed plant. The opposition had forced Baard to rescind its funding request through the U.S. Department of Energy‘s loan guarantee program.
Less than 14% of Americans believe the United States is headed in the right direction on energy, according a new poll by the University of Texas at Austin. The poll by the McCombs School of Business’ Energy Management and Innovation Center found that more than 84% are worried about U.S. consumption of foreign oil, while 76% are concerned by the lack of progress to develop more efficient energy sources and renewable sources. Sixty-eight percent expressed concerns about the energy efficiency of their homes and more than half (60%) had concerns about global energy issues.The poll reflected the views of 3,406 U.S. consumers collected during Sept. 14-25. Overall those surveyed were less satisfied with how government and big business were addressing energy issues. Most Americans consider energy prices “as high and likely to increase and more people believe that the nation’s energy situation will be worse in 25 years than believe it will be better, “although younger and more Democratic voters are more optimistic about the future.”
A bill introduced in the Pennsylvania General Assembly would require the state’s Environmental Quality Board (EQB) to develop standards to construct oil and gas well pads in the Marcellus and Utica shales, according to GOP State Rep. Fred Keller from central Pennsylvania. The Oil and Gas Well Pad Construction Standards Act (HB 29) would have EQB establish uniform standards governing land clearing, excavation, grading, road construction or well pad construction and stabilization activities for unconventional wells in the state. The EQB would be tasked with annually reviewing and updating the standards “to reflect changes in technology or recognized best management practices,” according to the bill. The 20-member EQB, chaired by the secretary of the Department of Environmental Protection, adopts all of the department’s regulations.
More than 35,000 manufacturing jobs could be created in Louisiana because of shale gas, American Chemistry Council (ACC) CEO Cal Dooley said. “As the second largest chemical-producing state, with 23,000 chemical industry employees, Louisiana is positioned to take advantage of the lower feedstock costs that arise from new supplies of domestic natural gas,” Dooley said. Shale gas supplies could result in $5.4 billion in new investment in Louisiana, including expansion of existing petrochemical plants and restarting idled facilities. In addition to creating jobs, these investments would generate $19.2 billion in chemical industry output, $2.3 billion in Louisiana wages and $399 million in state tax revenues, according to ACC statistics.
Operations at two Northeast Natural Energy (NNE) natural gas wells in the Marcellus Shale near Morgantown, WV, should resume this week after a two-week delay waiting for the arrival of a service rig. Brett Loflin, a spokesman for the Charleston, WV-based company, said one of the two wells has been completed and hydraulic fracturing (fracking) was occurring at the second. Both wells would be cleaned up when the service rig arrives. A judge struck down a city ordinance banning fracking in August. Morgantown enacted its ordinance on June 21 and NNE in turn filed a lawsuit two days later to prevent the city from enforcing the ban (see NGI, July 4; June 27). The city has so far not made any moves to appeal the judge’s ruling (see NGI, Aug. 29).
The Philadelphia City Council unanimously passed a resolution Oct. 13 directing the city to join a lawsuit against the Delaware River Basin Commission (DRBC) over Marcellus Shale natural gas drilling in the Delaware River Basin. The resolution calls on the city to support, as a Friend of the Court, a lawsuit brought against the DRBC by New York State Attorney General Eric Schneiderman for not conducting a full environmental review of proposed regulations for shale development in the basin (see NGI, June 6; Dec. 13, 2010). A coalition of environmental groups have also filed a similar lawsuit (see NGI, Aug. 8). Federal officials wanted the case dismissed, but a district court judge instead awarded them the right to intervene in the lawsuit over constitutional concerns (see NGI, Aug. 15). The judge also gave industry groups the right to file briefs in the case.
After expressing initial reservations, the County Commissioners Association of Pennsylvania (CCAP) is now supporting a county-level impact fee proposed by Gov. Tom Corbett. The CCAP originally worried that making counties responsible for levying and administering the fee could create unhealthy competition, but offered its “full support” after meeting with state officials, reviewing draft legislation of the impact fee and discussing the matter internally, according to CCAP Executive Director Douglas Hill. “In the balance, our members felt that with those changes and clarifications that it can be workable to do the levy and the administration,” Hill told NGI.
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