EnCap Flatrock Midstream LLC has closed its second private equity fund, EnCap Flatrock Midstream Fund II LP (EFM II), with commitments of $1.75 billion. The fund exceeded its $1.25 billion target and was significantly oversubscribed, EnCap Flatrock Midstream said. It received strong support from existing and new investors, it said. EnCap Flatrock Midstream now has nearly $3 billion in investment commitments from institutional investors and has made commitments to 10 portfolio companies across Funds I and II. Fund II recently announced a commitment to Caiman Energy II LLC as part of a $285 million total commitment from the firm. Caiman II will develop midstream infrastructure in the rich gas region of Ohio’s Utica Shale, including gathering pipelines and natural gas treating, processing and fractionation facilities. EFM II will be announcing a second commitment soon, EnCap Flatrock Midstream said.
The Federal Energy Regulatory Commission gave Northwest Pipeline GP the go-ahead to place into service two new pipelines that were relocated away from the Chevron Mining operations in Wyoming, which the pipeline company claims were responsible for causing cracks in its existing system.In a lawsuit filed Jan. 23 in U.S. District Court for the District of Wyoming, Northwest alleged 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 during the summer of 2011. Northwest argued that Chevron should pay at least $20 million to cover the cost of of rerouting pipelines threatened by the mining operations (see NGI, Feb. 6). The lawsuit is still pending, with both sides in discovery, said a Northwest spokeswoman. The letter order cleared the path for Northwest, a subsidiary of Oklahoma-based Williams, to start up service on its Kemmerer Mine Relocation Project — approximately 2.4 miles of 26-inch diameter and 30-inch diameter pipelines located west of Kemmerer, WY. The mining operations at the center of the dispute are no longer owned by Chevron. In late January, Westmoreland Coal Co. completed its acquisition of the Kemmerer mine from Chevron for $194.5 million. However, Chevron appears to still be liable for the damage to the Northwest pipeline.
Compressed basis differentials could squeeze cash flows at Midcontinent Express Pipeline LLC (MEP), which is facing recontracting risk in 2019, according to Standard & Poor’s Ratings Services (S&P), which lowered its outlook on MEP to “negative” from “stable.” S&P also affirmed its “BBB-” corporate credit rating on the company and “BBB-” issue-level rating on its senior unsecured notes. As of March 31, MEP had about $829 million of total reported debt. S&P credit analyst William Ferara said the pipeline also faces increased counterparty risk. Ferara said the ratio of debt to earnings before interest, taxes, depreciation and amortization should remain at about 4.5-times in the near term, which is adequate for the rating. “However, recontracting risk could result in substantially lower cash flows when the vast majority of existing contracts expire in 2019. In addition, the credit quality of key counterparty Chesapeake Energy Corp. (Chesapeake, “BB-” negative outlook), which is the anchor shipper on MEP and contracts for nearly 40% of capacity, has deteriorated,” Ferara said. MEP is a 505-mile interstate gas pipeline that runs from Bennington, OK, to the Transco Station 85 pipeline expansion near Butler, AL.
The Federal Energy Regulatory Commission gave the go-ahead for UGI LNG Inc., a subsidiary of Pennsylvania midstream operator UGI Energy Services Inc., to place into service the expansion of its Temple liquefied natural gas (LNG) storage facility in Berks County, PA. The expansion increases the storage capacity of the Temple facility to 1.25 Bcf from the existing 250 MMcf, with maximum liquefaction and delivery rate estimated at 205,200 Dth/d. The storage facility receives gas for liquefaction and storage at Texas Eastern Transmission’s (Tetco) Temple delivery meter and delivers all of its vaporized LNG into the distribution system of UGI Utilities, an affiliate of UGI LNG [CP08-458]. UGI Energy Services recently said it will provide LNG to fuel drilling rigs active in the Marcellus Shale region. The LNG would displace diesel now being used to fuel power generation equipment at rig sites. UGI said it has partnered with Pittsburgh-based EQT Corp., which has launched a pilot program to begin converting drilling rigs from diesel to LNG, which is lower in cost and emits less pollution than diesel. In addition, UGI Energy Services said it plans to provide LNG to truck fleets and industrial facilities in the Mid-Atlantic as an alternative to diesel and other petroleum products.
Williams Partners LP said shipper interest supports a portion of Transcontinental Gas Pipeline‘s (Transco) Atlantic Access project: expansion of the Leidy Line in northern Pennsylvania by up to 800,000 Dth/d by late 2015. However, the remainder of the previously announced Atlantic Access project will have to wait. While Atlantic Access had offered firm transportation options from various Marcellus Shale supply regions in Pennsylvania and West Virginia, a nonbinding open season for the project resulted in “strong interest” in expanding the Leidy Line. “…[O]ther portions of the project continue to be discussed with potential shippers for a later in-service date,” Williams Partners said. The Leidy Southeast expansion project is designed to serve the growing needs of local gas distribution companies and electric power generators along the Atlantic Seaboard and throughout the southeastern United States. The company is finalizing shipper agreements and expects to initiate pre-filing with the Federal Energy Regulatory Commission in early 2013. The scope and cost of the project will be determined by shipper negotiations. In February Williams Partners launched an open season for the remaining capacity on the 260-mile Atlantic Access Project, a pipeline that would carry more than 1 Bcf/d of Appalachian gas supply to eastern markets along the Atlantic Seaboard by late 2014. The partnership said it already had a binding precedent agreement from a shipper for half of the project’s anticipated initial capacity of 1.8 million Dth/d. The pipeline would connect Marcellus and Utica shale supply in western West Virginia and Pennsylvania to markets via Transco (see NGI, Feb. 13).
MarkWest Energy Partners LP has agreed to extend its natural gas liquids (NGL) gathering pipeline in northwest Pennsylvania to accommodate the start-up later this year of XTO Energy Inc.’s midstream processing plant in Butler County, PA. No financial details were disclosed, but the agreement with the ExxonMobil Corp. subsidiary is long-term and fee-based, said MarkWest. MarkWest planned to extend the pipeline north from its Houston, PA, complex to the newly acquired Bluestone facility in Butler County (see NGI, May 14). With the XTO agreement, MarkWest would expand the NGL pipeline from Bluestone to the producer’s new facility.
Canada should act now to become a global “energy powerhouse,” according to the non-profit Energy Policy Institute of Canada (EPIC). In a 151-page report EPIC made 39 recommendations, including calling on federal and provincial governments to “cooperate in evaluating whether the processes in place can be modified to remove key barriers to investment in Canadian resource development without relaxing the protections in place for other government policy objectives, including environmental protection.” Canada, which historically has overwhelmingly relied on the United States to be its principal energy export market, needs to explore new markets, according to the report. It also included recommendations to encourage innovation in Canada’s energy sector, improve energy literacy and conservation and develop a framework for a broad carbon management regime. EPIC’s members include the major natural resource companies operating in Canada, along with power companies, railroads, pipelines, manufacturing and chemical companies.
Houston-based Chimera Energy Corp. has licensed a shale oil extraction technology that is designed to replace hydraulic fracturing (fracking) with a process that was originally developed for use in areas that were too cold for the use of water. Chimera is keeping details of the process under wraps “until the company has their patent in hand, some details about exothermic extraction of shale oil will be closely held,” according to Chimera’s website. The company only said that it does not use “acids or explosives.” Non-hydraulic extraction is “a cheaper and more effective extraction method that does not affect groundwater at all,” according to Chimera, which said it has put in place a procedure for engineering its new method for mass production, patenting, licensing and sales. Testing and third-party certification of the process has begun, Chimera said.
The Federal Energy Regulatory Commission (FERC) has issued a favorable environment assessment (EA) of Transcontinental Gas Pipe Line‘s Northeast Supply Link Project, an expansion to transport Marcellus Shale gas from Pennsylvania to New York and New Jersey markets. “Approval of the proposed project, with appropriate mitigating measures, would not constitute a major federal action significantly affecting the quality of the human environment,” FERC staff said in the EA [CP12-30]. The project calls for the construction of about 13 miles of 42-inch diameter pipeline loop in three separate segments in Hunterdone County, NJ, and Lycoming and Monroe counties in Pennsylvania to accommodate new supplies to meet growing demand. It would add 250,000 Dth/d of capacity to Transco’s system. Transco has targeted the project’s in service for November 2013.
Gas Transmission Northwest LLC (GTN) has filed an application at the Federal Energy Regulatory Commission to build a 24-mile lateral to provide natural gas to a proposed power generating facility in northern Oregon. The pipeline, which is operated by Calgary-based TransCanada Corp., proposes to build a 20-inch diameter line that would extend from GTN’s Ione Compressor Station to Portland General Electric Co.’s (PGE) proposed Carty generating station in Morrow County, OR. The station would provide electric service to 800,000-plus customers. The lateral would have a design capacity of 175,000 Dth/d, according to GTN. GTN has asked the Commission to issue an order by April 1, 2013 so that the lateral can be completed and in service by the start of the heating season on Nov. 1, 2014. According to GTN, PGE has agreed to contract for the entire capacity of the lateral for a term of 30 years beginning on the in-service date. GTN is 75% owned by an indirect subsidiary of TransCanada. The balance is owned by TC PipeLines, LP, a master limited partnership that is partly owned by TransCanada.
The Wyoming Oil and Gas Conservation Commission made available on its website previously confidential information about more than 900 Applications for Permits to Drill (APD), most of which apply to horizontal wells in eastern Wyoming, an area dominated by the Niobrara Shale. In addition, APDs will no longer be approved as “confidential” without “adequate technical and other justification,” the commission said. The requests for confidentiality will themselves not be confidential. The commission has the authority to authorize confidential status for wells determined to be located “outside known fields or new wells which are determined by the commission to have discovered oil or gas in a pool not previously proven productive,” according to the commission’s announcement. Many wells now being permitted “are in or near areas and formations already proven to be productive,” the commission said.
In New York State, the Owego Village Board voted 5-1, with one abstention, to enact a one-year moratorium on natural gas drilling that uses fracking, and other ancillary and support activities. “The process needs a lot of looking at,” Owego Mayor Kevin Millar told NGI. “We need to be very careful to protect the health, safety and financial structure of the village. Fracking has a lot of downside risks for the village with not too many upsides.” Owego is located in Tioga County, one of five in a rumored plan by Gov. Andrew Cuomo‘s administration that would be allowed to have fracking, assuming regulators with the state Department of Environmental Protection allow the practice to move forward (see NGI, June 18).
Two separate polls conducted in New York State have found that public opinion of hydraulic fracturing (fracking) hasn’t changed much over the past year. According to a Quinnipiac University poll, 44% of respondents oppose fracking in New York, compared to 43% in favor, a statistical tie because both figures lie within the margin of error. Another 13% were undecided. That’s a small slip from last year, when similar Quinnipiac polls in August and September found New Yorkers supported fracking by 47-42% and 45-41% margins, respectively (see NGI, Sept. 26, 2011; Aug. 15, 2011). The Quinnipiac poll also found most New Yorkers believe fracking will cause environmental damage, 53-12%, although 34% said they weren’t sure. Those numbers are similar to the results of the August 2011 poll, which found that 52% of respondents believed fracking would damage the environment, compared to 15% who said no, and 33% unsure. Despite those numbers, 75% of New Yorkers believe shale gas development will create jobs in the state, a figure unchanged from August 2011.
A crowd of about 5,000 showed up for the third annual community picnic hosted by Cabot Oil & Gas Corp. at the Harford Fair Grounds in Susquehanna County, PA. Attendees included residents in the Marcellus Shale area, oil and gas industry representatives and their suppliers and a healthy contingent of Cabot employees manning displays from shale rock samples to compressed gas equipment. The community outreach event, including free food and beverages, was just down the road a piece from the infamous Dimock Township, where the company, the state and the U.S. Environmental Protection Agency (EPA) spent years skirmishing over hydraulic fracturing (fracking) and its potential effects on drinking water (see Shale Daily, July 26), and from the size of the crowd it appeared Cabot’s campaign outside of the courts and regulatory arena was also successful. Cabot got help for the event from suppliers such as Baker-Hughes and GasSearch Drilling Services, as well as local organizations, Big Brothers/Big Sisters, and a branch of the Lion’s Club. Representatives from industry groups, including America’s Natural Gas Alliance, American Petroleum Association and the Marcellus Shale Coalition also attended.
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