Based on a preliminary count of votes, El Paso Corp. shareholders have overwhelmingly voted in favor of a merger with Kinder Morgan Inc. About 70% of outstanding El Paso common shares were voted, and of these more than 95% were in favor of the merger. El Paso CEO Doug Foshee said closing is anticipated in the second quarter. The company plans to file a Form 8-K with the Securities and Exchange Commission with the final voting results as soon as they are available. The deal is moving forward with the reluctant blessing of a Delaware business court judge who recently admonished Foshee and Goldman Sachs Group Inc. for “disturbing” behavior that led to the transaction (see NGI, March 5; Oct. 24, 2011).

Private equity giant Kohlberg Kravis Roberts & Co. LP (KKR) and Chesapeake Energy Corp. plan jointly to invest $250 million in key natural gas and oil basins in the United States. The companies plan to invest in minerals interests and overriding royalty interests, with KKR providing 90%, or $225 million, of the initial funding. Chesapeake would provide $25 million, as well as source, manage and acquire the projects. No details were provided on where investments would be made. Tudor, Pickering, Holt & Co. said the transaction wasn’t a “needle mover” for Chesapeake but it would leverage the company’s “expertise in acquiring/managing mineral and overriding royalty interests across North American basins.” It also adds to its “opportunity set within basins by acquiring minerals/royalty interests rather than acquiring acreage outright.”

Linn Energy LLC has agreed to pay $175 million for 19,800 contiguous net acres in East Texas that it said would provide about 24 MMcfe/d of production, weighted 97% to natural gas. The deal is expected to close by May 1. Included in the acquisition are approximately 136 Bcfe of proved reserves and 430 wells, according to Linn, which said the acreage has multiple identified upside recompletion and infill-drilling opportunities. The deal, which will be financed with proceeds from borrowings under Linn’s revolving credit facility, the company said. The deal comes on the heels of Linn’s announcement that it will pay $1.2 billion to acquire BP plc‘s natural gas-rich Hugoton Basin properties in Kansas (see NGI, March 5). Linn, which claims about 4.2 Tcfe of proved reserves, has completed more than $4 billion of acquisitions in a little more than two years.

Price volatility in natural gas and crude oil markets is energy executives’ top concern this year, according to Grant Thornton LLP‘s 2012 survey of upstream U.S. energy companies. The survey compiled responses from more than 100 senior executives of domestic exploration and production, as well as oilfield service companies, between November and January. Survey respondents expect the spot price of Henry Hub natural gas to average $3.91/Mcf in 2012, $4.30 in 2013 and $4.69 in 2014. Only 16% predict the price of gas will be high enough to support more than a 20% increase in drilling activity in 2012, versus from 8% in 2011. Expectations for the spot price of natural gas in 2014 range from $3 to $8/Mcf; oil price forecasts for the same period range from $75 to $150/bbl. Almost two-thirds (63%) of the respondents plan to increase their domestic capital spending this year, down slightly from 71% in 2011.

Two environmental groups are asking the Interior Department‘s Bureau of Land Management (BLM) to reconsider its decision to allow WPX Energy Inc. to drill unconventional natural gas wells into the Mancos Shale play in northwest New Mexico’s San Juan Basin. In a 23-page statement to Interior’s Board of Land Appeals (IBLA), WildEarth Guardians and the San Juan Citizens Alliance assert that the BLM’s district office in Farmington, NM, failed to consider the air quality impacts from — or a “no action” alternative to — WPX’s Middle Mesa project. According to the groups’ statement, WPX — which was spun off from Williams at the end of 2011 as an independent explorer — plans to drill year-round for five years, performing hydraulic fracturing (fracking) at 53 well sites near the Navajo Reservoir on the San Juan River. David Evans, district manager for the BLM’s office in Farmington, told NGI that he signed a finding of no significant impact statement for the Middle Mesa project on Dec. 1, 2011. He added that the decision was in full force and effect. A decision from the IBLA is not expected until the end of the year.

The challenges of developing oil and gas resources in unconventional plays and in the deepwater have raised the bar for geosciences and petroleum engineering professionals and heightened the importance of human resource management at exploration and production (E&P) companies, according to the latest survey from Schlumberger Business Consulting (SBC). “In parallel, the E&P industry is going through the ‘big crew change’ in which the generations of geoscientists and petroleum engineers, or ‘petrotechnical’ professionals (PTP), hired before the sweeping recruitment cuts of the mid-1980s are now approaching retirement,” SBC said in its 2011 Oil & Gas Human Resources Benchmark Survey. According to the survey, an outflow of more than 22,000 senior key PTPs will occur by 2015, equating to a net loss of more than 5,500 experienced PTPs in the same timeframe. The recruitment of new graduates will compensate this loss in total net numbers of PTPs, but it will not fill the experience gap, according to researchers.

MarkWest Utica EMG LLC has an agreed in principle with Gulfport Energy Corp. and some undisclosed producers to develop extensive midstream infrastructure in the liquids-rich portion of eastern Ohio’s Utica Shale. Under the terms of a letter of intent (LOI), MarkWest Utica — a joint venture between MarkWest Energy Partners LP and The Energy & Minerals Group — said it would build an “extensive” gathering system with Gulfport and some producers in Ohio’s Belmont, Guernsey and Harrison counties. The system is expected to come online this year. However, definitive agreements are required before the transaction would take effect. The LOI calls for MarkWest Utica to process the gas and provide fractionation and marketing services for natural gas liquids (NGLs) through new facilities in Harrison County. MarkWest Utica is building a processing plant that would provide 200 MMcf/d of capacity by 2013, as well as a 100,000 b/d fractionation, storage and marketing complex (see NGI, Feb. 6). NGL purity products would be marketed by truck, rail and pipeline from the facility.

Shippers have stepped up for long-term capacity on the proposed Texas Express Pipeline (TEP) and the natural gas liquids (NGL) pipeline project will move forward, a trio of project sponsors said. Future shippers have tendered 15-year ship-or-pay agreements representing volume commitments of 232,000 b/d. Among those contracting are non-affiliates of project backers Enterprise Products Partners LP, Enbridge Energy Partners LP. and Anadarko Petroleum Corp. Originating near Skellytown in Carson County, TX, the 20-inch diameter TEP mainline would run 580 miles to Enterprise’s NGL fractionation and storage complex at Mont Belvieu, TX, and would provide access to other third-party facilities in the area. Production from the Rockies, Permian Basin and Midcontinent would be delivered into TEP through Enterprise’s existing Mid-America Pipeline System, which runs north through Oklahoma into Conway, KS, and south into the Permian Basin.

Noble Energy Inc. and Stone Energy Corp. have agreed to make additional disclosures of how they are managing the risks associated with hydraulic fracturing (fracking), an investment manager organization said. Meanwhile, ExxonMobil Corp. is challenging a resolution filed by shareholders concerned about fracking risks and is asking the Securities and Exchange Commission (SEC) for permission to keep the resolution from appearing on a proxy ballot. Richard Liroff, executive director of the Investor Environmental Health Network (IEHN), which leads a coalition of shareholder advocacy groups on social and environmental issues, told NGI the companies agreed to the disclosures in response to resolutions filed by two of its members, Green Century Capital Management and Miller/Howard Investments. The resolutions have since been withdrawn. IEHN said resolutions filed with EOG Resources Inc. and Penn Virginia Corp. were also withdrawn after the companies had taken steps to respond to shareholder concerns about fracking (see NGI, Feb. 27). Excluding ExxonMobil, five companies — Anadarko Petroleum Corp., Chesapeake Energy Corp., Chevron Corp., Range Resources Corp., and Ultra Petroleum Corp. — have yet to respond to the resolutions, the last of which was submitted in January.

Elected officials in Cecil Township, PA, voted to have the township solicitor look into mounting a legal challenge to Pennsylvania’s new Marcellus Shale law on the grounds that it usurps local zoning authority. After a raucous, hour-long meeting with residents on March 5 to discuss Act 13 of 2012 (formerly HB 1950), the Cecil Township Board of Supervisors held its regularly scheduled monthly meeting and ultimately voted 4-1 to have solicitor John Smith investigate a legal challenge to the state law. Andrew Schrader, the board’s vice chairman, said representatives from Cecil and neighboring Mount Pleasant, Peters and Robinson townships — which are all municipalities in Washington County — met with state legislators in Harrisburg before HB 1950 was passed to voice their concerns about the measure. Act 13 became law after being signed by Gov. Tom Corbett on Feb. 13 (see NGI, Feb. 20). Schrader said Cecil and the other townships were very upset about the setback requirements permitted by the state.

A bill (HB 2526) advancing through the Kansas Legislature would amend existing regulatory law and give the Kansas Corporation Commission (KCC) explicit authority to “promulgate rules and regulations necessary for the supervision and disclosure of any well on which a hydraulic fracturing treatment is performed.” Under current state law, the KCC has the power to regulate the location, design, construction and operation of any oil and gas well in the state. The agency also monitors water quality and handles abandoned wells. HB 2526 passed the House by a 124-0 vote on Feb. 15 and was introduced in the Senate.

Pennsylvania is reportedly planning to resume paying its dues to the Delaware River Basin Commission (DRBC) for the upcoming fiscal year (FY) 2012-2013, but New York wants to continue cutting its contribution to the watershed protection organization. Kevin Sunday, spokesman for the Pennsylvania Department of Environmental Protection (DEP), told NGI that the Keystone State froze $400,000 in dues to the DRBC for FY2011-2012 at the request of Gov. Tom Corbett. But Sunday said Corbett’s proposed budget for FY2012-2013, which starts July 1, allocates $934,000 for the DRBC. Morris Peters, spokesman for New York State Division of the Budget, told NGI that the Empire State plans to allocate $246,000 to the DRBC as part of its FY2012-2013 budget, which begins April 1. That represents a nearly 31% decline from the $355,000 New York gave the DRBC during FY2011-2012. The DRBC’s expense budget for the current fiscal year totals more than $5.66 million.

Colorado School of Mines, Pennsylvania State University and the University of Texas at Austin have launched a shale natural gas and oil training development initiative, which initially would be funded with separate $1 million grants from ExxonMobil Corp. and GE. The training programs created through the initiative would be led by faculty at each academic institution, which, coincidentally, are in states where massive unconventional drilling programs are under way. The series of courses primarily would focus on the development of shale resources.

As Marcellus Shale development has been expanding across Pennsylvania, dairy production has been falling, according to a report from Pennsylvania State University. Between 2007 and 2010, the number of dairy cows in counties with at least 150 Marcellus wells dropped 19% on average, but only dropped 1.2% in counties without Marcellus activity. And dairy production fell around 18.5% on average in counties with at least 150 Marcellus wells, but increases 1% in counties without any Marcellus activity, according to research from professor of agricultural economics Timothy Kelsey. Whether those drops come from farmers using royalty cash to flee a historically difficult industry isn’t conclusive, though, as milk prices also dropped “substantially” during the study period, while demand for corn sent feed costs rising.

With the latest reports from the operators of the 2,300 MW San Onofre Nuclear Generating Station (SONGS) indicating that two units at the plant will remain idle for an indefinite period, officials at the California Independent System Operator (CAISO) said the state grid operator is in “full contingency planning mode.” In February CAISO reported that thermal generation from other sources jumped by more than 1,000 MW as a result of SONGS’ two units being down. Unit 3 was shut down on a precautionary basis when a small leak in one of the unit’s steam generator tubes was discovered at the end of January. Two days later damaged tubing was discovered at Unit 2, which was in the midst of planned maintenance. In its initial assessments CAISO said the shutdown moved gas demand for power up by nearly 250 MMcf/d in the weeks following the outages.There isn’t a revised or summer estimate for the amount of additional gas-fired power generation that may be needed in the event the SONGS outage is prolonged, a spokesperson said. CAISO’s upcoming projections for the summer are expected at the end of March.

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