President Obama has proposed a 50% increase in the fiscal year (FY) 2013 budget for the Commodity Futures Trading Commission (CFTC) to fully implement the regulatory reforms under the Dodd-Frank Wall Street Reform Act. The budget calls for $308 million to be allocated to the agency, $103 million more than the $205 million that was approved for the CFTC in the current fiscal year. The number of full-time employees (FTE) would rise to 1,015 from 710 FTE in FY 2012. The budget request would fund the agency from Oct. 1 through the end of September 2013. In a budget letter to the House and Senate Appropriations committees, CFTC Chairman Gary Gensler acknowledged that the president’s funding request for the agency could be scaled back. “In its internal planning, the Commission must anticipate resources below the president’s FY 2013 budget of $308 million and 1,015 FTE while still fulfilling its mandate,” he wrote.

The Commodity Futures Trading Commission plans to consider two major final rules and a proposed rule at its next meeting on Thursday (Feb. 23). One final rule, which is the most contentious of the three up for a vote, seeks to further define swap dealer (SD), security-based swap dealer, major swap participant (MSP), major security-based swap participant and eligible contract participant. The second final rule would outline SD and MSP record-keeping and reporting, duties and conflicts of interest policies and procedures, as well of the conflicts of interest policies involving futures commission merchants and introducing brokers. The proposed rule identifies procedures for establishing appropriate minimum block sizes for large notional off-facility swaps and block trades.

Seven natural gas and electricity trade groups have called on the White House to pressure the Commodity Futures Trading Commission (CFTC) to narrowly define “swap dealer” to prevent end-users and hedge funds from being included, and thus subjected to regulation under the Dodd-Frank Wall Street Reform Act. “We have consistently voiced our support for the overall intent of Dodd-Frank,” but “when it comes to the rulemaking process [at the CFTC], we remain extremely concerned that congressional intent is being ignored, or even circumvented, resulting in end-users being miscast by the CFTC as ‘swap dealers,'” wrote the Independent Petroleum Association of America, American Gas Association, Natural Gas Supply Association, Edison Electric Institute, Electric Power Supply Association, American Public Power Association and the National Rural Electric Cooperative Association. “Currently the CFTC’s proposed swap dealer rule is overly broad and would result in commercial end-users who use swaps to hedge their commercial risk and reduce price volatility for their customers being misclassified as swap dealers,” the groups said.

A pair of Maryland lawmakers have introduced a bill that would implement a 15% severance tax on the wholesale market value of natural gas produced in the state beginning Jan. 1, 2013. The severance tax described in HB 907 would not apply to wells producing less than 5 Mcf/d, wells that produce gas used on the same property for domestic or agricultural purposes, or storage wells. Revenue produced by the severance tax would be deposited in a separate account within the state’s Oil and Gas Fund. The bill, which was introduced by Del. Maggie McIntosh (D-Baltimore) and Del. Sheila Hixson (D-Montgomery), has been assigned to the House Ways and Means Committee. Earlier this month Sen. George Edwards (R-Allegany) introduced a bill (SB 768) that calls for a 2.5% severance tax on natural gas, with the revenue going toward the state’s Natural Gas Impact Fund. Although Maryland does not yet have a state-level severance tax on natural gas, rural Garrett and Allegany counties in the state’s western panhandle that overlie the Marcellus already levy county-level taxes.

The Delaware Riverkeeper Network (DRN) and Damascus Citizens for Sustainability have appealed a permit the Pennsylvania Department of Environmental Protection (DEP) issued to Newfield Appalachia PA LLC for a vertical well in Wayne County. Newfield drilled but did not hydraulically fracture the well in the Upper Delaware River Basin, less than a mile from the river. Through the appeal, the groups determined that DEP officials were not considering the impact of small projects — those disturbing less than five acres of earth — on “special protection watersheds,” or the impact of wells on the river and river basin. Additionally, the groups estimated that DEP officials spent less than 35 minutes on average reviewing permits. Under the terms of the settlement, the DEP will now require applicants looking to permit smaller projects to show how they will comply with existing regulations protecting waterways.

U.S. imports of liquefied natural gas (LNG) last year continued the downward trend that began in 2009, according to data compiled by Pan EurAsian Enterprises Inc. Last year’s imports were well less than half of what they were in 2007, the peak year for imports, and they were slightly less than the level seen in 2008. Gross LNG imports to the United States last year totaled 348.7 Bcf or less than a Bcf/d, down from 431 Bcf in 2010 and 452 Bcf in 2009. Last year’s activity was a long way from the 770.8 Bcf imported during 2007 but not far off the 351.7 Bcf seen in 2008. The figures account for the re-export of previously imported cargoes. According to Pan EurAsian, GDF Suez Gas has the largest share of the U.S. LNG market (38.8% in 2011) ahead of BG Group at 14.4%. LNG has been coming to the United States from Trinidad, Qatar, Egypt, Yemen and Norway.

Triad Hunter LLC, a subsidiary of Magnum Hunter Resources Corp., has closed on a $24.8 million acquisition of approximately 15,558 gross (12,186 net) acres in southeastern Ohio’s Utica Shale from an undisclosed seller. Most of the leasehold acreage is located in Noble County, OH, according to Houston-based Magnum Hunter. The majority of the leasehold acreage is held by shallower production; the purchase includes all depths of 300 feet below the top of the Queenston Formation down to all further depths and there is no associated shallow production included with the acquisition. The acreage is in close proximity to Triad Hunter’s existing acreage position in Washington and Noble counties, and provides Triad Hunter approximately 18,187 gross (14,815 net) acres in the two counties, and a total of 23,214 gross (17,316 net) acres that are prospective for the Utica Shale. A second closing on another block of similar acreage may occur by April 16 if the seller can satisfy certain title deficiency requirements, Magnum Hunter said.

Petsec Energy Ltd. has agreed to pay 35% of the costs to drill at least one well and as many as three others in a shale oil project in Alberta in exchange for a 24.5% working interest in shale oil leases covering 17,280 acres, the Sydney, Australia-based independent said. The seller was not disclosed. The initial commitment well is expected to spud before the end of February. The results of the well are to be extensively evaluated for up to four months, after which Petsec can elect to participate in the drilling of the first optional well, the company said. The venture is Petsec’s first into Canadian shale oil. The company has traditionally focused on natural gas in the shallow waters of the Gulf of Mexico and onshore along the Louisiana Gulf Coast.

BlackRock Inc. has increased its stake in Dominion Resources Inc. to 6.92% (39.4 million shares), according to a recent filing with the Securities and Exchange Commission (SEC). With Dominion’s stock price hovering near $50/share last week, BlackRock’s stake was worth approximately $1.97 billion. The investment management firm had previously reported that it owned 21.1 million Dominion shares. A second investment management firm, Capital Research Global Investors (CRGI), controls another 32.7 million (5.7%) Dominion shares, according a separate SEC filing. CRGI’s stake is worth approximately $1.64 billion. BlackRock has a total of $3.51 trillion in assets under management (AUM); the AUM of CRGI’s parent company, Capital Group Cos., is estimated at approximately $1 trillion.

In the space of six years, shale gas development has turned the U.S. energy world upside down, driving natural gas prices well below the $15/Mcf levels they reached following Gulf of Mexico hurricanes in 2005, former Federal Energy Regulatory Commissioner Marc Spitzer said recently in a webcast on “OnPoint.” Natural gas supply development has moved from traditional exploration/development activities to a manufacturing process that has driven down prices to where some in the industry are talking $1.00/Mcf gas, according to Spitzer. He said that price would have been unthinkable when he became a commissioner in 2006. Now a partner in the Washington, DC, law firm of Steptoe & Johnson LLP, Spitzer said, “dollar natural gas at the Henry Hub would send shivers down the spines of anybody who’s involved in gas production.”

North Dakota ended 2011 on the high side of all-time production totals for oil and natural gas in December, according to a Department of Mineral Resources report. More than 95% of the production was from the Bakken and Three Forks formations. Preliminary year-end statistics placed December gas production at 16.8 Bcf and crude oil at 16.5 million bbl, along with daily all-time high averages for both: 544 MMcf/d of gas and 534,880 b/d of oil. With a current oil-to-gas price ratio of 41-1, gas delivered to Northern Border Pipeline at Watford City was priced down to $2.06/Mcf at the end of last year. Gas is uneconomic at that price, but natural gas liquids are still economic, and the first new gas processing plant in the state opened Jan. 20, which should result in a decline in the percentage of gas being flared.

The Pennsylvania Public Utility Commission (PUC) has started to build its statewide registry for all nonpublic utility and hazardous liquids pipelines. The registration fee is $250, and the deadline for operators to register is March 16. The PUC said it will mail assessments for the 2011-2012 fiscal year (FY) by March 30, with a due date of April 30. FY2012-2013 assessments will be mailed in July and will be due within 30 days. A website has been established to assist operators. The registry was authorized by Act 127, which was signed by Gov. Tom Corbett on Dec. 22.

In his State of the State address, Wyoming Gov. Matt Mead said his state is exporting more Btus than any other state; minerals, including oil and gas, make up 80% of the Wyoming’s revenues. Mead focused much of his annual message on the state’s energy sector and the need to ensure its longevity. Wyoming has been impacted by low gas prices that are “stuck” in the mid-$2 range, he said. The state budget recently was cut by $64 million because of the gas price declines. “The total revenues from minerals in 2010 was $15.5 billion, the second biggest year on record,” said Mead. Among other things, Mead’s budget request asks for $6 million to support enhanced oil recovery and for added support for gas- and coal-to-liquids projects.

A Vectren Corp. official told a panel of Indiana lawmakers that the state’s 30-year contract to purchase coal-to-substitute natural gas (SNG) from Leucadia National Corp. should be modified. Jerrold Ulrey, vice president of regulatory affairs and fuels for Vectren Energy Delivery, told members of the House Ways and Means Committee that the contract with the Indiana Finance Authority (IFA) is uneconomic because of the shale impact and low natural gas prices. Leucadia plans to build a $2.5 billion gasification plant near Rockport, IL and IFA is to purchase 38 million Dth/year of SNG and resell it on the interstate natural gas market. The end customers would share 50% of the profits from the deal but would also be on the hook for any losses.

The Colorado Senate Local Government Committee voted 4-1 to reject a proposal to prevent local governments from regulating oil/gas drilling activity in their jurisdictions. The lawmakers decided SB 88 would have removed the ability of cities and towns to use their land-use and zoning regulations to control energy development in their areas. Recently some Colorado towns passed ordinances banning hydraulic fracturing until local rules for it can be established, prompting SB 88 to be proposed as a way to reiterate that the Colorado Oil and Gas Conservation Commission has jurisdiction to oversee the practice by exploration and production companies. Under SB 88 commissioners would have exclusive powers related to oil/gas development in the state.

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