BP plc won’t be able to collect from Halliburton Co. any of the cleanup costs and economic losses that resulted from the Macondo well blowout in 2010 in the deepwater Gulf of Mexico (GOM), a district judge in New Orleans has ruled. U.S. District Judge Carl Barbier, who is to oversee a Macondo trial beginning later this month, in January made a similar ruling for Transocean Ltd. BP filed a lawsuit last year to recover from Halliburton, Transocean Ltd. and Cameron International some of the estimated $40 billion in costs and losses that followed the well explosion (see NGI, April 25, 2011) The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179. Halliburton was the well cementing contractor, Transocean owned the Deepwater Horizon drilling rig and Cameron manufactured the blowout preventer for the Macondo well. Cameron and BP settled their lawsuit in December (see NGI, Dec. 19, 2011). On Feb. 27 the litigants are scheduled to meet in New Orleans where Barbier is to preside over the initial BP spill trial.

The Pennsylvania Department of Environmental Protection (DEP) has published a notice requiring all unconventional natural gas operators to provide detailed information about 2011 air emissions by March 1. The DEP is in the process of cataloging air emissions information from all sources — industrial, commercial and natural — as part of a U.S. Environmental Protection Agency inventory compiled every three years. The DEP previously sent requests to 99 companies along the gas supply chain, but the Philadelphia-based Clean Air Council said many major operators weren’t sent the request and therefore aren’t required to provide the information (see NGI, Jan. 9).

Bluewater Gas Storage has asked for authorization from the Federal Energy Regulatory Commission to construct and operate a 300 MMcf/d pipeline to maintain the U.S. portion of a connection between facilities in St. Clair County, MI, and an existing pipeline in St. Clair Township, Ontario. The project would include less than one-third of a mile of 20-inch diameter pipeline from a valve site and vent at the interconnection to its storage facilities to the international border within the St. Clair River. Bluewater is not proposing any increase in its overall certificated daily injection or withdrawal capabilities. Houston-based Bluewater currently uses leased capacity to import and export up to 250 MMcf/d at the border on a pipeline operated by Nova Chemicals, but those leases are to be terminated in early 2013.

The Canadian Association of Petroleum Producers (CAPP) has published hydraulic fracturing (fracking) operating practices for shale and tight natural gas development to improve water management, as well as water and fluids reporting, across the country. CAPP unveiled “Guiding Principles for Hydraulic Fracturing” last fall, which provided information for gas producers on sound wellbore construction, fresh water alternatives, recycling methods, voluntary water reporting, fracking fluid disclosure, and technical advancement and collaboration. The latest operating practices, developed by CAPP gas producers, are to support the guiding principles for fracking and to strengthen the industry’s focus on continuous performance improvement. CAPP expects the fracking practices to “inform and complement regulatory requirements.”

Standard & Poor’s Ratings Services (S&P) has cut corporate credit and senior unsecured debt ratings on Rockies Express Pipeline LLC (REX) to “BB” from “BBB-” with a “stable” outlook based on compressed basis differentials leading to increased recontracting risk in the years ahead. “We base the ratings downgrade on sustained compression in low natural gas basis differentials, which heightens recontracting risk primarily in 2019 and to a lesser extent in 2014, combined with somewhat aggressive financial metrics,” said S&P. “The recontracting risk could result in substantially lower cash flows when the vast majority of existing contracts expire in 2019 (with about 10% of capacity due in late 2014).” Kinder Morgan Energy Partners LP (KMP), 50%; Sempra Energy, 25%; and ConocoPhillips, 25% own the pipeline. KMP gas pipeline chief Tom Martin said REX is fully contracted but its volumes have wavered from 1.8 Bcf/d to as low as about 1 Bcf/d (see NGI, Jan. 30).

The Pennsylvania Department of Environmental Protection (DEP) has launched a website to track oil and gas operations in the state, including those in the Marcellus Shale. The website includes reports on permitting and drilling figures, well inventories organized by county and operator, and violations. The DEP previously listed permitting and drilling information by month and production information twice each year, but the new website allows the public to view individual inspection reports. Additionally, the Pennsylvania Public Utility Commission (PUC) recently created a website to help pipeline operators comply with new oversight requirements. Gov. Tom Corbett signed Act 127 in late December, making the PUC the “state agent” for the U.S. Pipeline and Hazardous Material Safety Administration in Pennsylvania and giving the PUC oversight over most nonutility natural gas pipelines. Among other things, the act requires the PUC to create a registry of all nonutility gas and hazardous liquids pipelines in the state, and the website includes forms to help operators comply. The act takes effect on Feb. 20.

Northwest Pipeline GP has filed a $20 million lawsuit against a division of Chevron Corp. to recover the cost of relocating a section of gas pipeline away from land shifting above a coal mine near Kemmerer, WY. The coal mine has since been sold, but filings with the Securities and Exchange Commission (SEC) indicate that Chevron is still liable for the damage. In a complaint filed Jan. 23 in U.S. District Court for the District of Wyoming, Northwest alleges that Chevron’s activities at the mine caused the earth surrounding two parallel interstate pipelines measuring 26- and 30-inches in diameter to crack and develop deep fissures last summer. Northwest installed land movement detection equipment, followed by temporary and then permanent pipeline bypasses 400 yards away, which were placed in service in September. According to the SEC report, Chevron indemnified Westmoreland for “any losses arising from or in connection with the alleged damage to or business interruption of the [Northwest pipeline]…prior to the closing, including without limitation any losses arising from or in connection with any relocation of such gas transmission pipeline segment.”

SB 1237, a bill to lure an ethane cracker to the state, is advancing in the Pennsylvania General Assembly to add up to 15 Keystone Opportunity Zones and incentives — tax exemptions, deductions, abatements and credits — for 10 years. Companies that invest at least $1 billion and create at least 400 permanent, full-time jobs within seven years would qualify for another five years of the incentives, for a total of 15 years. SB 1237 was resubmitted to the House Appropriations Committee on Jan. 25. The state Senate gave final passage to the measure on Dec. 7, 2011 by a 47-2 vote. The bill was also unanimously passed in two roll call votes in the state House of Representatives on Jan. 25, 188-0.

In his recent State of the State address Illinois Gov. Pat Quinn urged lawmakers to eliminate three taxes, including the natural gas utility tax, which is imposed on gas purchases from outside of the state for their own use but not for resale. Purchasers of natural gas may either pay the tax through their distributor or assess the tax themselves. Entities in state enterprise zones are exempt from the tax, as are utilities that use natural gas to generate electricity. Gas used in petroleum refinery operations, liquefaction and fractionation, the production of anhydrous ammonia and downstream nitrogen fertilizer products also is exempt from the tax. According to the Illinois Department of Revenue, the tax generated $159.4 million of revenue in fiscal 2011, about 5.4% of the $29.4 billion the state collected overall.

A bill to ban hydraulic fracturing (fracking) wastewater imports, storage, treatment, discharge or disposal generated in other states has been introduced in the Maryland General Assembly. HB 296, also known as the Hydraulic Fracturing Wastewater Prohibition Act, was introduced Jan. 27 by Del. Shane Robinson (D-Montgomery Village). The bill has been added to the agenda for the Feb. 15 meeting of the House Environmental Matters Committee. HB 296 doesn’t call for a ban on wastewater generated from wells in Maryland, but there is currently no fracking in the state now under way.

Magnum Hunter Resources Corp. is expanding its operations in the liquids-rich Marcellus Shale. During 4Q2011 the Houston-based company brought four wells online in northern West Virginia and has built 45 miles of pipeline in the region over the past 18 months. Four wells were drilled in Tyler County, WV, to vertical depths of 11,033-12,343 feet, horizontal laterals of 4,350-5,550 feet and 16-18 stages of hydraulic fracturing (fracking) per well. The wells produced at 24-hour initial production rates of 9.4-9.7 MMcfe/d.

Gastar Exploration Ltd. will devote $100.5 million of its $134.2 million 2012 capital budget to drilling and completion costs, with 89% ($88.9 million) to be spent on activities in the liquids-rich window of the Marcellus Shale. In addition to the Marcellus in West Virginia and central and southwestern Pennsylvania, Gastar is active in the Deep Bossier gas play in East Texas and conducts limited coalbed methane development activities within the Powder River Basin of Wyoming and Montana.

Dallas-based J-W Energy Co. is consolidating midstream activities currently conducted by subsidiaries J-W Gathering Co., J-W Pipeline Co. and Q-West Energy Co. into a single subsidiary, J-W Midstream Co. The goal of the new subsidiary is to expand its presence as a full-service provider of midstream services to the upstream natural gas sector. J-W Midstream operates more than 400 miles of natural gas pipeline systems in Louisiana, Texas and Wyoming, and has the capacity to gather and treat more than 600 MMcf/d at 17 facilities, the company said.

Navistar Inc., which manufactures medium- and heavy-duty trucks, is partnering with natural gas transportation fuel and infrastructure leader Clean Energy Fuels Corp. to make it easier for truck fleet operators to switch to vehicles powered by either compressed natural gas (CNG) or liquefied natural gas (LNG). Clean Energy is to provide the fuel and infrastructure while Navistar would offer a range of Class 6-8 CNG/LNG-powered vehicles. The companies plan to build on Navistar’s existing integrated vehicle and powertrain platforms, which were built to run on natural gas. Navistar has a network of dealers with links to major fleet operators, and Clean Energy is one of the leading providers of gas transportation fueling support systems.

In comments to the U.S. Department of Energy’s (DOE) electricity delivery and energy reliability office, American Clean Skies Foundation (ACSF) urged DOE “not to overlook” a “critical electric generating resource” when pursuing a power transmission study. ACSF CEO Gregory Staple wrote that continuing low domestic gas prices have resulted in “dramatic changes” in the U.S. power system. Increased reliance on the nation’s network of gas-fired power plants could save consumers money by eliminating some of the need for “costly and controversial” construction of new long-haul transmission lines, Staple said. ACSF said gas prices are now widely predicted by several energy analysts to remain low and stable in the short- to medium-term.

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