The ConocoPhillips board of directors has given final approval to spin off the downstream businesses as Phillips 66 at close of business on April 30, which would result in ConocoPhillips becoming the largest pure-play, upstream independent in North America (see NGI, July 18, 2011). The companies would be headquartered in Houston. Chairman and CEO Ryan Lance would lead ConocoPhillips. Phillips 66, to be traded on the New York Stock Exchange as “PSX,” would be led by Chairman and CEO Greg Garland and would comprise the refining and marketing; midstream and chemicals businesses.
March 2012 was the warmest March since 1950 based on natural gas-weighted heating degree days (GWHDD), with decades-old temperature records falling in cities across the United States. “With a monthly total of 387.02 [GWHDD], it shattered the previous record of 525.09 from 2007, averaging 38% less than the 30-year normal (625.98) and 37.5% less than the 10-year normal (619.90),” MDA EarthSat said. It was the warmest March ever in cities across the country, according to AccuWeather.com senior meteorologist Kristina Pydynowski. Records for average temperatures were set from Portland, ME (41.2 degrees), to Tampa, FL (74.4 degrees), and from Washington, DC (56.8 degrees), to Burlington, CO (49.5 degrees).
Private equity firms Apollo Global Management and Riverstone Holdings LLC have launched Houston-based Talos Energy LLC, a Gulf Coast-focused exploration and production company with up to $600 million of equity commitments. Talos would operate primarily in shallow water where the management team, led by CEO Tim Duncan, previously has been successful. Duncan, who also would be president of the firm, would be joined by Steve Heitzman, John Parker and John Harrison. The team previously helped build Gryphon Exploration Co. and Phoenix Exploration Co. LP, a Riverstone portfolio company.
Oneok Partners LP plans to invest $140-160 million to build a 270-mile natural gas gathering system and related infrastructure in Divide County, ND, in the heart of the Bakken Shale. The Tulsa-based partnership said the Divide County system, which it expects to complete in the second half of 2013, would deliver natural gas to its 100 MMcf/d Stateline II processing facility in western Williams County, ND, which is scheduled to be in service in the first half of 2013. Oneok Partners has secured long-term supply commitments from producers structured with percent-of-proceeds and fee-based components.
Some of ExxonMobil Corp.‘s investors are attempting once again to force the largest U.S. natural gas producer to issue a report to shareholders about the financial impact from regulatory and community impacts associated with hydraulic fracturing (fracking) within its drilling operations. A similar measure was defeated by ExxonMobil’s shareholders (71% opposed) and those of Chevron Corp. (59% opposed) at their 2011 annual meetings (see NGI, May 30, 2011). ExxonMobil attempted to block the resolution on this year’s proxy statement, which the Securities and Exchange Commission denied in late March. The annual meeting is scheduled May 30. The proposal is part of an investor coalition effort coordinated by Green Century Capital Management and the Investor Environmental Health Network.
Energy Transfer Equity LP‘s Trunkline LNG Co., Trunkline LNG Export and Trunkline Gas Co. units have initiated a prefiling process with the Federal Energy Regulatory Commission to build a natural gas liquefaction project in Lake Charles, LA. Lake Charles Exports LLC has received approval from the U.S. Department of Energy to export LNG to countries with which the United States has a free trade agreement, and the parties expect to file a formal application by March 2013.
Affiliates of Kohlberg Kravis Roberts & Co. LP (KKR) agreed to pay WPX Energy $306 million to acquire two sets of properties; the deal is set to close by the end of June. The Barnett Shale package includes about 27,000 net acres, 320 wells, 91 miles of pipeline and current production of around 67 MMcf/d net. The Arkoma Basin properties include about 66,000 net acres, interests in 525 wells and 115 miles of pipeline. KKR Natural Resources (KNR), KKR’s partnership with Premier Natural Resources, is making the acquisition.
Pacific Gas and Electric Co. (PG&E) informed California regulators that it finished its natural gas transmission pipeline records and has reclassified nearly 10% — 544 miles, or 2,837 segments — after they were found to be mislabeled. However, validating the pipelines’ operating pressures will take more time. PG&E is attempting to digitize its records by the end of 2013 to replace a hodgepodge of paper and computerized files now used. The latest PG&E report summarizes efforts to ensure every pipeline segment within the 6,000-mile system is accurately classified. “PG&E’s entire gas transmission system is now currently operating at an appropriate level of pressure for its class designation, and we are also in the middle of an unprecedented effort to validate the maximum allowable operating pressure of all of our transmission pipelines,” a PG&E utility spokesperson told NGI.
Williams Partners LP is holding a binding open season through April 25 for capacity on an expansion of its interstate Transcontinental Gas Pipe Line (Transco) to provide incremental firm transportation by September 2015 to markets in southern Virginia and northern North Carolina. The Virginia Southside Expansion Project would provide incremental firm service from Transco’s existing Zone 6 Station 210 pooling point in Mercer County, NJ, to delivery points along Transco’s South Virginia Lateral. A precedent agreement is in place to provide Dominion Virginia Power with 250,000 Dth/d of the capacity and it plans to solicit bids in the open season from shippers for additional deliveries along the project path. Dominion Virginia Power would use its capacity for a proposed 1,300 MW combined-cycle, natural gas-fired power station to be built in Brunswick County, VA. For information, contact James Corley at (713) 215-4607.
In an effort to expand its production of olefins, Chevron Phillips Chemical Company LP plans to build a massive 1-hexene plant at its Cedar Bayou Chemical Complex in Baytown, TX, capable of producing up to 250,000 metric tons per year, “the world’s largest on-purpose 1-hexene plant,” according to the Chevron Phillips Chemical Co. LLC subsidiary. Construction is targeted to begin by the end of June, with start up expected in the first quarter of 2014. S&B Engineers and Constructors Ltd. are to engineer and build the plant using a Chevron Phillips Chemical proprietary technology that produces comonomer grade 1-hexene from ethylene with exceptional product purity. The commodity is a critical component used in the manufacture of polyethylene.
A committee appointed by Quebec Environment Minister Pierre Arcand to study hydraulic fracturing (fracking) said the practice requires further study, and it recommended against authorizing any test wells for research purposes. According to reports, committee chairman Robert Joly said Quebec should be able to rely on laboratory experiments and existing data to determine whether fracking is safe. The committee plans to spend C$4-7 million of its budget on about 70 additional studies by 2013 and would incorporate them into a final report. Committee members also plan to visit shale gas wells in Alberta and British Columbia, as well as the United States.
Atlas Resource Partners LP (ARP) paid $18 million for a half-stake to to jointly partner in Equal Energy Ltd.‘s Mississippian Lime play. Under the terms of the joint venture, which is expected to close by the end of April, ARP would participate in Equal’s undeveloped 14,500 net acres in Alfalfa, Garfield and Grant counties in northwestern Oklahoma. The partners plan to launch an 18-month period of continuous exploration and production, with ARP operating the drilling and completion activities while Equal performs production operations, including water disposal. The JV also gives ARP the option of drilling an additional four net wells and adding them to its account within a year of the transaction’s closing.
Even with Marcellus Shale drilling, the Rainforest Alliance for the 14th consecutive year has certified Pennsylvania’s 2.2 million acres of state forests as sustainably managed, the best record of any publicly owned forestland in the United States. New York-based auditor SmartWood monitored five development sites in September 2011, including several road upgrades, a compressor and water storage site, a test well, proposed pipeline corridors and an active drilling pad, and applauded state regulators for addressing drilling-related issues, such as improving potential impacts on species fragmentation, monitoring invasive species at older conventional drilling sites and taking steps toward making the results of monitoring activities more public.
A bill being considered by the Colorado Senate (HB 1160) would make coal mine methane (CMM) gas a renewable source of electricity generation under the state’s renewable energy standard. The legislation is sponsored by state Rep. Randy Baumgardner and state Sen. Gail Schwartz. CMM is distinguished from coalbed methane (CBM) in that it comes from gas vented from working or abandoned mines; CBM is extracted from the seams between unmined coal. HB 1160 would encourage more capture of the greenhouse gas (GHG) emissions from coal mines, and it specifically designates the collection of the mine gas as GHG mitigation. It would limit the renewable credit designation to power plants of 30 MW or less using CMM gas as their principal fuel.
A reworked 20-year liquefied natural gas (LNG) shipment contract between Sempra Energy’s LNG business and a unit of BP plc indicates that more than 90% of the cargoes may be diverted by the Indonesian supplier, according to reports. The transaction reportedly would allow up to 54 of 60 annual shipments to be diverted from the Energia Costa Azul facility in North Baja California, Mexico. Sempra has a confidentiality agreement with Tangguh, and a spokeswoman could not confirm the number of cargoes affected by any contract revisions.
India’s state-owned Oil and Natural Gas Corp. Ltd. has signed a memorandum of understanding with ConocoPhillips to explore and develop shale and deepwater resources in India and North America. The agreement calls for ConocoPhillips to evaluate 19 leasing blocks off the eastern coast of India; the companies would also cooperate in shale gas exploration through joint studies of basins in North America and in India.
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