SemGroup Corp. has rejected a $1.24 billion takeover bid by Plains All American Pipeline LP, but Plains said it intends to continue to pursue the midstream operator. SemGroup, which emerged from bankruptcy in late 2009, purchases, sells, processes, transports and stores crude oil, natural gas, natural gas liquids, asphalt and refined products. It recently had announced plans to increase the capacity of its gas processing facilities in northern Oklahoma, and the board said the increased processing capacity and other long-term strategies offered a compelling future for its shareholders.
Plains Exploration & Production Co. (PXP) is selling a 20% stake in Plains Offshore Operations Inc. to EIG Global Energy Partners for $450 million in cash. PXP plans to use the proceeds to fund its share of capital investments in its deepwater portfolio, which include the Lucius development and prospect exploratory drilling in the Phobos field, which is planned in 2012. Plains Offshore’s Gulf of Mexico portfolio includes 100 blocks covering close to 570,000 gross acres. PXP began to market its entire GOM deepwater portfolio in 2010 (see NGI, Sept. 27, 2010).
Hess Corp. (40%) and partners BP plc (30%) and Chevron Corp. (30%) will proceed with the development of Tubular Bells, a deepwater oil and gas project it operates in the Gulf of Mexico (GOM). Drilling is scheduled to begin in 2012, and initial production is expected in 2014, subject to permitting. Discovered in 2003, Tubular Bells is about 135 miles southeast of New Orleans in the Mississippi Canyon area of the GOM. The development plan initially calls for three subsea production wells and two water injection wells from two subsea drill centers tied back to a third party-owned spar production facility, the first of its kind to be constructed entirely in the United States, Hess said. Williams Partners LP is to design, construct and install the system. Annual gross production is expected to peak in the range of 40,000-45,000 boe/d. Total recoverable resources for Tubular Bells are estimated at more than 120 million boe.
Louisiana has joined other states in requiring the contents of fluids used for hydraulic fracturing (fracking) to be disclosed. Under the rule operators are required to disclose the composition of the fluids and volumes used after completing a well to the Louisiana Office of Conservation or to a public registry, such as FracFocus (www.fracfocus.org). Louisiana oil and gas regulations are found in Title 43 of the Louisiana Revised Statutes, under Subpart 1, Statewide Order No. 29-B. The fracking rule can be found in the Louisiana Register (page 3064). The rule applies to all new wells that are permitted after the effective date.
National Oilwell Varco Inc.‘s (NOV) backlog for capital equipment orders jumped by one-third from the end of March to the end of June, the oilfield services operator reported. The Houston-based operator said its rig technology segment booked a record $3.94 billion in new orders during 3Q2011. The backlog for capital equipment orders reached $10.27 billion, which was 33% more than in 2Q2011. According to NGI’s Shale Daily, NOV’s 3Q2011 book-to-bill ratio was 2.79, its sixth consecutive quarterly increase and approaching the 3.0 level last seen in 3Q2006. Net income in 3Q2011 jumped to $532 million ($1.25/share) from $481 million ($1.13) in the year-ago period.
Cabot Oil & Gas Corp. continues to find drilling success in the Marcellus, Eagle Ford and Marmaton shale plays, and has doubled liquids production and increased natural gas production 37% since 3Q2010, the company said. The Houston-based producer has begun moving gas on Millennium and the new Laser pipeline and expects to begin moving gas to Transcontinental Gas Pipe Line (Transco) via the new Springville pipeline in mid-December. The company recently secured 100% of the remaining capacity of the Springville Pipeline, which will allow it to move up to 625 MMcf/d (an incremental 325 MMcf/d) to Transco by the middle of 2012. Cabot reported 3Q2011 net income of $28.5 million (27 cents/share) compared with $3.9 million (4 cents/share) in 3Q2010. Increased production drove the quarter’s overall improvement, though it was partially offset by lower commodity prices. Natural gas realized prices fell 17% compared with 3Q2010 and oil prices fell almost 12%.
A new study of private water wells in rural Pennsylvania found 20% to be contaminated with methane before Marcellus operations began nearby, but also found increased bromide levels that could be the result of natural gas drilling. Pennsylvania State University researchers sampled 233 water wells in Marcellus country, testing wells before and after hydraulic fracturing (hydrofracking) and drilling occurred nearby in addition to control wells not near drilling sites. “In this study, statistical analyses of post-drilling versus pre-drilling water chemistry did not suggest major influences from gas well drilling or hydrofracking on nearby water wells, when considering changes in potential pollutants that are most prominent in drilling waste fluids,” the study found. The researchers said more work needs to be done to identify the sources of methane and long term impact of drilling. The bipartisan Center for Rural Pennsylvania, an agency of the Pennsylvania General Assembly, funded the study.
Mayor Michael Nutter has declined to have the City of Philadelphia join a lawsuit against the Delaware River Basin Commission (DRBC) over Marcellus Shale development, despite a resolution from the City Council supporting such a move. Mark McDonald, the mayor’s press secretary, told NGI that although the city is concerned about the potential impact that hydraulic fracturing (fracking) could have on municipal water supplies, it was not necessary for the city to intervene in the legal battle. On Oct. 13 the city council unanimously passed a resolution calling for the city and the council 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, Oct. 24; June 6).
A new system for treating shale well flowback water at or near the source was introduced recently by Fountain Quail Water Management, a unit of Calgary-based Aqua-Pure Ventures Inc. The Rover mobile clarifier system is self-contained and can treat up to 10,000 bbl of flowback and produced water per day, according to Fountain Quail. Tested in conjunction with a producer in the Barnett Shale, the system removes suspended solids and soluble organics from shale gas wastewater and returns clean brine that can be blended for reuse as hydraulic fracturing fluid. Fountain Quail is currently providing water handling services in the Marcellus, Barnett and Eagle Ford shales.
Lightfoot Capital Partners plans to make an undisclosed direct investment and own a 48% interest in Arc LNG Holdings LLC, which will own a 20% interest in Gulf LNG Energy‘s new liquefied natural gas (LNG) terminal in Pascagoula, MS. The $1.1 billion facility is expected to be completed in November and will have a capacity of 1.3 Bcf/d, which is all contracted for the next 20 years under firm service agreements. Lightfoot’s investment comes as Atlas Energy LP (ATLS) announced that GE Energy Financial Services, a GE subsidiary, will invest in Lightfoot to own a general partner interest and a 58% limited partner interest. As a result, ATLS will own about a 16% general partner/12% limited partner interest in Lightfoot, which is the general partner and majority owner of Arc Terminals LP.
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