The Interior Department‘s Bureau of Ocean Energy Management (BOEM) is seeking stakeholder comments on eight planned lease sales scheduled in the Central and Western Gulf of Mexico (GOM) over the next five years, excluding Lease Sale 229 in the Western GOM and Lease Sale 227 in the Central GOM because information for those sales has been completed. In late June Interior Secretary Ken Salazar issued the final version of the Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017, which includes 10 potential lease sales (see NGI, July 2) and BOEM now is asking stakeholders for information about potential leasing and development of these areas, including geological, environmental and biological conditions; archaeological resources, socioeconomic factors and potential concerns about conflicts with other uses. BOEM also is initiating the next stage of environmental and socioeconomic analysis for Western GOM Lease Sale 233 and Central GOM Lease Sale 231, proposed for 2013 and 2014, respectively, by publishing a notice of intent to prepare a supplemental environmental impact statement to build on the final environmental impact statement (FEIS) for the Western and Central GOM lease sales. The FEIS provides baseline analysis in support of 10 lease sales scheduled in the Central and Western GOM, and it evaluates baseline conditions and potential environmental effects of leasing, exploration and development in those two offshore regions.
A well drilled in Mexico’s deepwater Gulf of Mexico Catemaco Fold Belt appears to confirm five natural gas deposits that together total proven, possible and probable reserves of 1.5-2 Tcf, according to state-owned Petroleos Mexicanos (Pemex). The discovery would be the most productive in the deepwater for Pemex to date, officials said. The Kunah-1 well, located about 77 miles northeast of the country’s port city of Veracruz, was drilled to a depth of 2,157 meters, or 7,070 feet. The well tested at 34 MMcf/d of gas and 100 b/d of liquids. The five deposits discovered in the belt were drilled at depths of 9,327-13,450 feet, according to Pemex. Exploratory work at Kunah-1, along with wells drilled at Lakach-1 and Piklis-1, began in 2006, and is resulting “in an increase in the number of productive accumulations in the northern part of the belt,” Pemex said.
Boardwalk Pipeline Partners LP‘s Gulf South Pipeline Co. LP is holding an open season for firm capacity on its proposed Southeast Market Expansion, which is designed to increase the pipeline’s ability to move gas in the East Texas and Perryville, LA areas to serve growing demand in the Southeast. The expansion, projected to be in service by late 2014, would provide delivery capabilities to new markets and increase capacity to existing markets that are east of Gulf South’s Kiln compressor station in Hancock County, MS. The open season concludes July 25. Binding and nonbinding bids will be accepted. Expansion customers would have access to Gulf South’s new Perryville Exchange point, which is expected to become “a key trading hub” supplied with gas from the Haynesville, Barnett, Woodford, Fayetteville and Eagle Ford shales (see NGI, March 26). As part of the expansion, Gulf South will evaluate an interconnection with Florida Gas Transmission Co. in southeast Mississippi, and additional delivery locations will be considered based upon market interest. For information, visit the Gulf South website.
Spectra Energy‘s Texas Eastern Transmission LP is holding a nonbinding open season through July 31 for firm capacity on its Uniontown to Gas City (U2GC) Expansion Project, which offers shippers a firm path from the Marcellus Shale in west Uniontown, PA, to the pipeline’s existing interconnect with Panhandle Eastern Pipeline near Gas City, IN. U2GC would offer new capacity as early as the mid-2013 with a target capacity of 300,000 Dth/d. For information, contact Bob Riga at email@example.com.
Canada’s Peyto Exploration & Development Corp. has agreed to buy fellow explorer Open Range Energy Corp. Based on Peyto’s C$100.2 million ($98.3 million) stock offer, as well as its assumption of close to C$70 million in debt and various transaction costs, the total offer for Open Range is valued at about C$175 million. An agreement by Open Range to sell itself to Canada’s Cequence Energy Ltd. has been terminated. Most of Peyto’s wells, natural gas plants, gathering and sales pipelines are in a corridor about 200 kilometers (124.2 miles) long and 30 kilometers (18.6 miles) wide adjacent to the foothills of the Canadian Rocky Mountains about halfway between the Northwest Territories and the United States. Peyto produced 245 MMcfe/d in 1Q2012 (40,903 boe/d), which was 25% more than in 1Q2011 when it produced 189 MMcfe/d (31,531 boe/d). Open Range assets to be acquired include more than 110 net sections of land, mostly in the Sundance/Ansell area of the Deep Basin, and would add about 31 MMcf/d and 460 b/d of natural gas and liquids output to Peyto’s inventory. At least two-thirds of Open Range’s shareholders have to approve the transaction, and a special shareholder meeting is scheduled for August, when closing is anticipated. Open Range’s board of directors has given its unanimous approval and the company’s directors and officers, who represent about 8.3% of the shares, agreed to vote in favor of the arrangement.
Houston-based Geokinetics Inc. is conducting Marcellus Shale seismic testing in Wyoming County, PA, and has partnered with Geophysical Pursuit Inc., a data acquisition and licensing firm also based in Houston. Both companies’ websites report that they are gathering information on a 187-square mile area — also known as Wyoming Phase I — with plans to incorporate the results to Geokinetics’ ongoing Bradford Complex 3D Merge Project. The area being tested includes portions of 13 townships in Wyoming County (Braintrim, Clinton, Eaton, Forkston, Lemon, Mehoopany, Meshoppen, Nicholson, North Branch, Overfield, Tunkhannock, Washington and Windham), three boroughs in Wyoming County (Factoryville, Meshoppen and Tunkhannock), and two townships in neighboring Susquehanna County (Auburn and Springville). Drilling activity has been light in Wyoming County; according to data from the Pennsylvania Department of Environmental Protection‘s Office of Oil and Gas Management, only nine unconventional wells have been spud in the county this year: five by Chesapeake Appalachia LLC and four by Citrus Energy Corp.
Algonquin Power & Utilities Corp.‘s (APUC) regulated distribution utility, Liberty Utilities, has closed its $285 million acquisition of Granite State Electric Co. and EnergyNorth Natural Gas Inc. Ontario-based APUC announced in December 2010 that it would buy the New Hampshire-based businesses from National Grid (see NGI, Dec. 13, 2010) and the deal received final state regulatory approval in May. The gas utility serves 87,000 customers in five counties and 30 communities across the state. Its load and customer count have shown a consistent 1.6% compounded annual growth over the past 10 years, APUC said. The electric distribution company serves 43,000 customers. Last year Liberty said it would pay about $124 million for Atmos Energy Corp.‘s regulated gas distribution assets in Missouri, Iowa and Illinois (see NGI, May 16, 2011). That deal has received all necessary federal and state regulatory approvals and is expected to close by Aug. 1.
Stamford, CT-based Louis Dreyfus Highbridge Energy (LDHE) unit Louis Dreyfus Energy Services (LDES) has agreed to settle for $4.084 million a commercial dispute with the federal government over natural gas contracts that were in effect between 2004 and 2008. The dispute arose out of LDES’ purchase of gas from the Interior Department’s Minerals Management Service (MMS), which was abolished in 2010 by Interior Secretary Ken Salazar after an investigation uncovered corruption and mismanagement within the agency (see NGI, Sept. 15, 2008). The MMS managed the sale of natural gas and other resources owned by the federal government. The MMS has since been replaced by three agencies: the Bureau of Ocean Energy Management, Bureau of Safety, Bureau of Safety and Environmental Enforcement and the Office of Natural Resources Revenues (see NGI, May 24, 2010). During the 2004-2008 period, LDES purchased gas from MMS and paid the agency a total of about $500 million, according to the company, which markets gas, power and natural gas liquids. MMS claimed that LDES paid less than the agreed amount on certain days, while LDES said it paid the appropriate amounts agreed to in the contracts and that MMS’ interpretation of the agreements was wrong. Because MMS was a government agency, the commercial dispute was referred to the Inspector General for the Department of Interior. The company settled the dispute without admitting to any wrongdoing or liability.
CME Group Inc., which owns the New York Mercantile Exchange (Nymex), has fined Houston-based Whiteside Energy LP $225,000 after one of its traders left an automatic trade execution system (ATES) operating unattended, causing disruption in the natural gas futures market. The ATES was not shut down and continued to operate unattended in the July 2011 natural gas futures contract (NGN1) between 1:30 p.m. CDT on June 8 and 7:30 a.m. CDT on June 9, 2011. “During a period of approximately two minutes of the total time the ATES was running unattended, the ATES entered buy orders at progressively higher prices and sell orders at progressively lower prices,” CME Group said. A panel of the Nymex business conduct committee “found that the unintended trading of the unattended ATES contributed to the disruptive price movements in NGN1,” the exchange said. “In determining the sanction to be assessed against Whiteside, the panel considered that Whiteside lost more than $400,000 as a result of the trading that occurred while the ATES ran unattended…and that it has since adopted additional policies and procedures to ensure that its automatic trade execution systems will not operate without appropriate monitoring.” The trader who allegedly left the ATES unattended, Steven Vu, was fined $25,000. Neither Vu nor Whiteside Energy have admitted nor denied the findings of the Nymex business conduct committee.
A horizontal well targeting the Cotton Valley formation in northern Louisiana recently flowed at an initial production rate of 3,019 boe/d over a 24-hour period, according to privately held producer Indigo Minerals LLC. The Berry 25H No. 1 in Caddo Parish appears to be 65% weighted to natural gas and 35% to natural gas liquids. The well has a horizontal lateral length of 3,700 feet with a total measured depth of 14,175 feet and was fracture stimulated using 12 separate stages along the lateral. Indigo said it has about 60,000 net acres in northern Louisiana and has drilled 24 horizontal Cotton Valley wells to date, several of which “have tested for over 1,500 boe/d including one well that was over 3,300 boe/d.”
DeWitt County, TX, roads are buckling under the weight of trucks and other vehicles in the service of developing the Eagle Ford Shale, a study has found. The study evaluated 394 miles of county roads in the South Texas county and based upon drilling activity expectations, indications are that the cost of providing a road system to serve both the public and oil and gas industry could be as much as $432 million. The study was commissioned by DeWitt County commissioners in January and performed by Naismith Engineering Inc. of Corpus Christi, TX. DeWitt County Judge Daryl Fowler, who serves on the Texas Department of Transportation‘s Energy Solutions Task Force, said the impact of energy development on roads in his county and other Eagle Ford counties is too great of an economic burden. Fowler is recommending voluntary road use agreements with oil and gas companies coupled with fees to help offset the cost of road damage as well as reallocating energy severance taxes collected by the state.
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