The Federal Energy Regulatory Commission approved Golden Triangle Storage Inc.‘s (GTS) plans to construct and operate two high-deliverability salt dome storage caverns in Jefferson County, TX, and granted the AGL Resources subsidiary’s request to charge market-based rates for the new capacity. GTS plans to build Caverns 3 and 4 and associated facilities, including a 14,205 hp compressor station, a header system consisting of two parallel 24-inch diameter pipelines and six bi-directional metering stations, beginning later this year. The proposed expansion would increase the total capacity of the Golden Triangle storage facility to 49.38 Bcf (32.6 Bcf of working gas and 16.78 Bcf of cushion gas).
Range Resources Corp. is reporting record production rates after averaging 625 MMcfe/d across its portfolio in 4Q2011. The Fort Worth, TX-based company averaged 554 MMcfe/d for the year, up 12% from 2010, making 2011 its eighth consecutive year of double-digit production growth. Adjusting for the sale of its Barnett Shale assets in early 2011, the year-over-year increase would have been 36% (see NGI, March 7, 2011).Range is primarily active in the wet gas corridor of southwestern Pennsylvania, where it holds around 550,000 net acres in the Marcellus, Upper Devonian and Utica shales. Range also holds around 240,000 net acres in northeastern Pennsylvania, where it had 15 online as of the third quarter. Range also operates in the Midcontinent, West Texas and the Huron Shale of Kentucky.
An expansion is planned for the Discovery natural gas gathering pipeline system in the Gulf of Mexico to gather more than 400 MMcf/d from the deepwater Keathley Canyon (KC), Walker Ridge and Green Canyon blocks, according to Williams Partners LP and DCP Midstream Partners LP. The proposed 20-inch diameter, 215-mile-long KC Connector would transport natural gas from several emerging gas fields in the central deepwater, originating in the southeast portion of the KC area and terminating into Discovery’s 30-inch diameter mainline near South Timbalier 293. Discovery has signed long-term agreements with the Lucius and Hadrian South leaseholders for production from those fields. Anadarko Petroleum Corp., which operates Lucius, and its partners sanctioned the project in December (see NGI, Dec. 19, 2011). ExxonMobil Corp. operates the Hadrian North and South prospects (see NGI, June 13, 2011).
Sempra Energy‘s Cameron LNG LLC has received authorization to send liquefied natural gas (LNG) to the limited number of countries that are party to a free trade agreement (FTA) with the United States. Cameron LNG’s existing facility, sited along the Calcasieu Channel in Hackberry, LA, now has authorization to export 1.7 Bcf/d of gas to FTA countries for 20 years. Project backers also are seeking an OK from federal officials to export to countries that are not party to an FTA agreement (see related story).
Rapid City, SD-based Black Hills Corp. said it is selling energy marketing unit Enserco Energy Inc. to Houston-based Twin Eagle Resource Management LLC for $160-170 million. The transaction is expected to close by the end of March. Twin Eagle, whose chairman is Chuck Watson, founder of Natural Gas Clearinghouse, later known as Dynegy Inc., would gain Enserco’s North American-based natural gas, power, coal and crude oil marketing operations. Enserco operations include crude gathering and marketing assets averaging 30,000 b/d through 12 owned or leased crude terminals; natural gas marketing with 8 Bcf of leased storage and 250,000 MMBtu/d of firm transportation; power marketing serving municipal and retail load; coal marketing and 35,000 tons/d of physical coal deliveries; as well as rail transportation contracts. The sale would allow Black Hills to fund its strategic growth plans, which are to focus more on utilities, power generation and fuel production businesses, officials said. Twin Eagle’s senior management said Enserco should give the company a strong western U.S. and Canadian footprint. The transaction is subject to regulatory approvals.
McMoRan Exploration Co. surprised analysts after reporting that it swung to a profit in the final three months of 2011, propelled by increased natural gas-weighted output and lower operating expenses. The New Orleans-based producer, which has been spending a lot of money on shallow water Gulf of Mexico prospects, earned $28.4 million (16 cents/share) in 4Q2011, compared with a loss of $84.3 million (minus 83 cents) in the year-ago period. Total revenues were $121.9 million, versus $99 million in 4Q2010. For the year McMoRan posted a net loss of $58.8 million, compared with a net loss of $197.4 million in 2010. Total costs and expenses in the latest quarter fell to $78.7 million from $120.6 million in 4Q2010 in part because of lower exploration costs, as well as lower depreciation and amortization expenses. McMoRan had been expected to report a loss of 13 cents/share in 4Q2011, according to a consensus estimate by Wall Street.
Production has begun from Buccaneer Energy Ltd.‘s Kenai Loop No. 1 well in Southcentral Alaska. The well is expected to produce up to 5 MMcf/d during the next two to three months while performance is monitored. Buccaneer will sell gas into utility Enstar Natural Gas Co.‘s winter daily auction, a system by which producers are advised of the utility’s additional gas requirements during a subsequent 24-hour period and bid price and volume to meet the requirements (see NGI, Aug. 29, 2011). Buccaneer also can sell gas to ConocoPhillips under a sales agreement with the company’s liquefied natural gas export terminal at Kenai.
Renewable Manufacturing Gateway and Aither Chemicals LLC have agreed to collaborate to finance and build a $750 million ethane cracker for Marcellus Shale gas, the two nonprofit organizations said. A specific location within southwestern Pennsylvania, Ohio or West Virginia for the facility has not been identified. The facility, which would use Aither’s ethane catalytic cracker technology, would create 200 permanent direct production jobs in the tri-state region and generate $463 million in annual sales by 2016. Aither said its catalytic cracking technology has lower capital cost, lower operating cost and better scalability than steam cracking. Last August the West Virginia Jobs Investment Trust said it would invest $250,000 in Aither.
Construction approval has been awarded to Vantage Pipeline by the National Energy Board to transport up to 40,000 b/d of ethane from northwestern North Dakota to a link with a products delivery web serving central Alberta petrochemical plants. The project, which would extract ethane from gas production at a Hess Corp. processing plant at Tioga, includes partners Riverstone Holdings LLC and Calgary-based energy infrastructure firm Mistral Energy. For C$240 million, the new conduit is to span 360 miles of Saskatchewan and Alberta. Facilities would be installed with built-in capacity to raise deliveries eventually, as required, to 60,000 b/d by adding pump stations.
Colorado Interstate Gas Co. LLC (CIG) is soliciting customer interest in potential firm south-to-north transportation service on the High Plains Pipeline to carry gas from the Denver-Julesburg (DJ) Basin in northeastern Colorado. High Plains entered service in November 2008 and was originally designed to carry gas from the Cheyenne Hub in Weld County, CO, southward to interconnections with the distribution system of Public Service Co. of Colorado. The pipeline runs through portions of the DJ Basin in Adams, Morgan and Weld counties in Colorado, areas that have recently experienced increased drilling. CIG said south-to-north service on High Plains would not interfere with north-to-south service that is currently being provided. Contact Laine Lobbann at (719) 520-4344, or Mark Iverson at (719) 520-4587.
Tulsa-based midstream company Caballo Energy LLC is targeting the Mississippi Lime of Oklahoma and Kansas, and the Cana Woodford Shale with its acquisition of Eagle Chief Midstream LLC, which owns a gas gathering and processing system in northwestern Oklahoma. Caballo is backed by private equity commitments from EnCap Flatrock Midstream. Eagle Chief is connected to more than 370 wells and serves 25 producers and in 2013 the company plans to install a cryogenic gas processing plant, bringing total processing capacity to about 100 MMcf/d.
Shell Offshore Inc. has agreed to pay $25 million to resolve claims that it underpaid royalties owed on oil and natural gas produced from federal leases, according Interior Department‘s Office of Natural Resources Revenue (ONRR). The settlement agreement covers both royalty-in-value and royalty-in-kind production from Shell deepwater leases in the Gulf of Mexico, according to ONRR. It covers the period from Sept. 1, 2000 to Dec. 31, 2008 for oil and from July 1, 2000 to Dec. 31, 2008 for natural gas. ONRR said its audit and compliance management team discovered the various valuation improprieties while conducting audits of Shell Offshore leases.
Ohio voters believe the benefits of shale gas development outweigh the risks, but they also believe the state should put the breaks on development, according to a Quinnipiac University poll conducted Jan. 9-16. The poll found that 64% of respondents believe the economic boom promised by natural gas development outweighs any environmental concerns. While 85% believed drilling would create jobs in Ohio, 72% said the state should halt hydraulic fracturing (hydrofracking) activities until more is known about the process. Asked if hydrofracking would damage the environment, 43% said “yes” and 40% said they didn’t know. The poll was conducted after state officials ordered Northstar Disposal Services LLC to halt operations at a wastewater disposal well in Youngstown, OH, following concerns that wastewater injections from hydrofracking operations may have triggered seismic activity last year (see NGI, Jan. 9).
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