Transcontinental Gas Pipe Line (Transco) has filed an application with the Federal Energy Regulatory Commission to build a $182 million expansion to meet growing natural gas demand in New York City and the Rockaways. The Rockaway Delivery Lateral Project would provide 647,000 Dth/d of gas delivery capacity to National Grid‘s distribution system in Brooklyn and Queens, NY; targeted in service date in late 2014. The project is targeted for service in the second half of 2014. The Transco and National Grid facilities would interconnect with National Grid’s proposed 26-inch diameter lateral. The 3.2-mile, 26-inch diameter Rockaway Delivery Lateral would consist of 2.9 miles of offshore pipeline and 0.3 miles of onshore pipeline. The small pipeline would pass under Jacob Riis Park in the Rockaways portion of Queens and under Jamaica Bay to a new meter and regulator station on the decommissioned airfield Floyd Bennett Field in Brooklyn. Jacob Riis Park and the airfield are part of the Gateway National Recreation Center. President Obama signed a bill allowing for Transco’s expansion (see NGI, Dec. 3, 2012).
The U.S. Geological Survey (USGS) said domestic water wells in two Arkansas counties showed no evidence of contamination from oil and natural gas drilling in the Fayetteville Shale, but cautioned that additional testing would be necessary to provide an adequate comparative analysis. The report indicates that the USGS collected samples from 127 wells in Faulkner and Van Buren counties and tested 51 of the 127 wells for methane. At 32 of those wells, methane occurred above a detection limit of 0.0002 milligram per liter (mg/L). Methane concentrations were up to 28.5 mg/L, and at seven wells were more than or equal to 0.5 mg/L.
Chevron Corp. expects to report “notably higher” results for 4Q2012 than profits in 3Q2012 when the earnings report is issued on Feb. 1. The final three months of 2012 were lifted by bigger gains on asset sales, along with higher oil and natural gas output. Chevron earned $4.25 billion ($2.69/share) in 3Q2012, a number well below earnings in 3Q2011 (see NGI, Nov. 5, 2012). U.S. production rose by 39,000 boe/d in October and November following a recovery in the Gulf of Mexico after Hurricane Issac. Domestic gas output was down year/year in October and November at 1.17 Bcf/d from 1.29 Bcf/d.
The Bureau of Land Management (BLM) office in Rawlins, WY, has extended the public comment period into March on a draft environmental assessment for to expand the natural gas drilling project Continental Divide-Creston. It would be a large addition to existing drilling in the Red Desert region of the state, holding the potential for up to 12.02 Tcf during a projected 30- to 40-year lifespan. The area includes two of Wyoming’s five most active exploration counties — Carbon and Sweetwater. More than 20 operators are part of the proposed additional drilling, led by BP American Production, according to BLM. If approved, the 15-year expansion program could add up to 8,950 new wells on more than 6,100 well pads in a 1.1 million-acre area.
Europe’s EDF Trading, a subsidiary of EDF Group, said it has acquired ConocoPhillips‘ Midwest commercial and industrial (C&I) natural gas portfolio. Financial details of the transaction were not disclosed. The C&I business sells nearly 50 Bcf/year to 200 customers, including industrial, commercial, healthcare, governmental and educational institutions in Indiana, Michigan, Illinois, Wisconsin, Ohio and Kentucky. The acquisition would allow EDF to offer power and natural gas to Midwest customers. EDF currently provides retail electricity supply to large C&I clients in Texas, California, New York and Illinois. Nine employees based in Merrillville, IN, would join EDF Trading’s C&I supply team.
The Senate Commerce Committee plans to hold a field hearing on pipeline safety in Charleston, WV, on Jan. 28 following the natural gas pipeline explosion in December. The hearing is to examine the nation’s pipeline infrastructure in the wake of the rupture near Columbia Gas Pipeline’s Lanham Compressor Station in Sissonville, WV. The 20-inch diameter Columbia Gas line owned by NiSource Inc. ruptured on Dec. 11 (see NGI, Dec. 17, 2012). The Senate panel also will evaluate the Department of Transportation’s implementation of the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, signed into law in January 2012 and based largely on legislation cosponsored by Committee Chairman John D. Rockefeller IV of West Virginia (see NGI, Jan. 9, 2012). In addition, the committee hearing will review the findings of a Government Accountability Office study, expected to be released on Jan. 23, on the ability of transmission pipeline facility operators to respond to a hazardous liquid or gas release. The Office of Pipeline Safety has determined “general wall thinning” to be a major factor in the cause of the rupture.
An interim study committee in the South Dakota legislature is pursuing as many as eight energy-related bills this, including one aimed at hydraulic fracturing (fracking). Separately, the Department of Environment and Natural Resources (DENR) has scheduled a hearing on draft drilling rules for Jan. 17 (Thursday). Department officials have acknowledged that they don’t expect large-scale fracking in their state unless an unconventional reservoir like the Bakken Shale, but one of the drilling rule additions deals with fracking, calling for operators to report fracking details to FracFocus.
The New Mexico Oil Conservation Commission (OCC) resumed hearings on rules for handling oil and natural gas drilling waste, but it alienated environmental groups by refusing to take additional testimony in the year-old case. During the past six months, OCC has reopened the case several times in examining industry-prompted modifications to the state’s “pit rule” for handling natural gas and oil drilling and production waste. Both the New Mexico Oil and Gas Association (NMOGA) and the Independent Petroleum Association of New Mexico have sought amendments to the rule. The New Mexico Environmental Law Center offered expert technical witnesses, but the OCC refused to hear them, prompting law center attorney Eric Jantz to cry foul and accuse the state commission of “affording every leniency” to the oil/gas industry while “pushing the public welfare aside.”Deliberations were scheduled to continue this Thursday, and following that some industry representatives think the OCC will make its final decision on the rule update.
Crestwood Midstream Partners LP, initially financed by First Reserve Corp., has agreed to pay $258 million to purchase the remaining 65% stake in Crestwood Marcellus Midstream LLC (CMM), a joint venture (JV) formed in 2012 with Crestwood Holdings Partners LLC, also controlled by First Reserve (see Shale Daily, Feb. 28, 2012). The JV initially paid $415 million to buy a gathering system in northern West Virginia owned by Antero Resources Appalachian Corp. Once the transaction is completed, First Reserve’s stake in Crestwood Midstream would fall to 47% from 100%.
Hess Corp. plans to spend $6.8 billion on capital expenditures in 2013, with $2.7 billion or 40% devoted to unconventional resources, specifically the Bakken Shale and for drilling appraisal wells in the Utica Shale. Hess holds 800,000 net acres in the Bakken and about 200,000 net acres in the Utica. The company plans to operate 14 rigs in the Bakken this year and spend the remainder of the 2013 budget on conventional resources, with $1.85 billion (28%) allocated to production, $1.6 billion (24%) for development and $550 million (8%) devoted to exploration.
Moviegoers in Pennsylvania are seeing 15-second advertisements sponsored by the Marcellus Shale Coalition (MSC) promoting the “Learn About Shale” website (LearnAboutShale.org) during previews prior to showings of the film Promised Land. MSC also released a video on social media channels detailing the economic benefits of the shale play and asked viewers to submit their questions. Promised Land pits a fictional natural gas company working to purchase land rights for Marcellus drilling around one small town, against a fictional environmental company, which foments in the town the now familiar debate over hydraulic fracturing (fracking). The Focus Features film, which written by and starring Matt Damon and John Krasinski, is based on “Gold Mist,” a short story by Dave Eggers and was filmed in Western Pennsylvania last year. Promised Land, which cost an estimated $15 million to make, didn’t draw many viewers in its first weekend of general release, making a “lackluster” $4.3 million at the box office, according to The Los Angeles Times.
Last year was the warmest year on record for the contiguous United States, with an average temperature of 55.3 degrees, 3.2 degrees above the 20th Century average and 1.0 degree above 1998, the previous warmest year, according to the National Oceanic and Atmospheric Administration (NOAA). Every state in the Lower 48 recorded an above-average annual temperature for 2012, NOAA said. Nineteen states had a record warm year, and an another 26 states had one of their 10 warmest years. Nationally, 2012 began with the fourth warmest winter (December 2011-February 2012) on record, followed by the warmest spring on record, which included the warmest March on record. July was the warmest month ever observed in the contiguous United States, with an average temperature of 76.9 degrees, 3.6 degrees above average. The summer months were the second hottest on record and both Autumn and December temperatures were warmer than average, although not of the same magnitude as the rest of the year, NOAA said.
Maine’s Public Utilities Commission (PUC) approved a Summit Natural Gas of Maine request to provide service to customers in 17 municipalities in the Kennebec Valley region. The PUC decision comes with the implication that the Summit Utilities subsidiary can build necessary pipeline in the area, though permitting will have to be obtained before construction can begin. Summit estimated its project will cost $150 million and create 435 jobs, eventually serving 15,000 residential and industrial customers by its third year of operation. Tim Johnston, executive vice president of Summit Natural Gas of Maine, told the Kennebec Journal the company hopes to begin construction between an existing pipe in Windsor and the state capital, Augusta, this spring. Summit’s pipeline is designed to run north from the capital to Waterville and terminate at Madison, ME.
Summit Investments has agreed to acquire Bear Tracker Energy LLC for $513 million from affiliates of GSO Capital Partners LP and Bear Tracker Investments LLC. Midstream company Bear Tracker is focused on oil and natural gas in North Dakota and Colorado. Privately held Bear Tracker has assets in service and under development in the Williston Basin in North Dakota, including in the Bakken Shale and Three Forks formation, and in the Denver-Julesburg (DJ) Basin in Colorado, which includes the Niobrara formation. The deal is expected to close during the first quarter. “The Bear Tracker acquisition is transformational for Summit and significantly diversifies our business from a customer, geographic and commodity standpoint while maintaining our focus on providing fee-based midstream services under long-term contracts,” said Summit Investments CEO Steve Newby.
ExxonMobil Corp. has sanctioned its massive Hebron oilfield development offshore Newfoundland and Labrador, a $14 billion project that is slated to recover more than 70 million boe. The platform on Canada’s East Coast is being designed for daily production of 150,000 bbl of oil beginning in late 2017. The Hebron field in the Jeanne d’Arc Basin is about 19 miles southeast of ExxonMobil’s Hibernia project. Water depth is around 300 feet. Hebron’s development is expected to employ up to 3,500 during construction; it received regulatory approval in May.
Goldman Sachs‘ recent list of the top 40 undervalued stocks included 16 that were energy-related. The firm’s recently published U.S. Monthly Chartbook included a list of stocks offering the most upside opportunity, 24-44%, relative to analysts’ price targets. Halliburton Co. offers a 44.1% upside, while National Oilwell Varco followed with 39%. Marathon Petroleum Corp., which was spun off from Marathon Oil Corp., offered the third-best upside for energy stocks at 38.1%. Also offering upside were Williams (37.4%), Anadarko Petroleum Corp. (34.6%); Devon Energy Corp. (32.6%), Southwestern Energy Co. 31.7%, Cabot Oil & Gas Corp. (28.7%), Pioneer Natural Resources Corp. (27.2%), Marathon Oil (27.2%), EOG Resources Inc. (25%), Baker Hughes Inc. (24.9%); Noble Energy Inc. (24.8%), Range Resources Corp. (24.1%), and Oneok Inc. (24%). Waste Management, which provides among other things recycling services that produce “green” energy, had a target of 24.5%. Chesapeake Energy Corp. was the only energy stock listed of 25 others “that people expect to fail,” with a 2012 return at minus 24%; it’s being shorted at a rate of 14.04%.
The Delaware River Basin Commission (DRBC), which governs water use for a portion of the Marcellus Shale, has launched an online reporting system for the Water Supply Charges Program (WSCP) to streamline operations. All reports beginning this year must be completed online; reporting and payment deadlines are unchanged. The reporting system, including instructions, may be found at www.drbc.net.
ATP Oil & Gas Corp., which filed for bankruptcy protection last August, has asked the court for permission to auction some of its shallow-water wells. The Houston-based company was required by lenders to begin looking for asset buyers, according to court documents (In re ATP Oil & Gas Corp., Debtor, U.S. Bankruptcy Court, Southern District of Texas, No. 12-36187). The auction was required by lenders following the Chapter 11 filing (see NGI, Aug. 27, 2012). Eighteen leases are for sale, including seven that are producing oil and gas.
QEP Resources Inc. plans to form a master limited partnership (MLP) to support the growth of its midstream business and expects to raise $300-400 million in gross proceeds by selling a minority interest in the MLP, company said. Initial contributions would be gathering assets in Wyoming and North Dakota Proceeds from the offering would be used to fund operations and repay debt.
Minard Run Oil Co. (MROC) bought 56,130 acres of leasehold, almost 195 miles of gathering lines and compression, metering and production station in Cayuga and Seneca counties, NY, from Chesapeake Appalachia LLC, a subsidiary of Chesapeake Energy Corp. The deal includes 413 natural gas wells drilled into the Queenston formation, a shale gas layer below the Marcellus but above the Utica Shale. Financial terms of the agreement were not disclosed. MROC said it plans to drill vertical wells on the acquisition acreage this year.
PetroQuest Energy Inc. has closed on the sale of Fayetteville Shale assets for about $9.2 million as it shifts to producing natural gas liquids (NGL) in the Woodford Shale and the Mississippian Lime formation. The company did not disclose the buyer or the amount of acreage sold but said all of the acreage involved in the transaction was nonoperated and in Arkansas. At the end of 2011 the company held 6,729 net acres of developed leasehold and 2,120 net acres of undeveloped leasehold in Arkansas at the end of 2011. The Fayetteville assets recently generated about $1.3 million in operating cash flow, based on average daily production of 5 MMcf/d. Proved reserves totaled about 11 Bcf on Sept. 30, with an estimated discounted net cash flow of $5.5 million.
Oregon Gov. John Kitzhaber‘s new 10-year energy plan for the state calls for conservation and energy efficiency to take care of all increased energy demand during the period. Fossil fuel use is discouraged, and natural gas is virtually unmentioned in the 49-page document. Kitzhaber said energy is “the issue of our time,” and the plan was “an economic action plan.” The plan involves three core strategies: maximizing efficiency and conservation to absorb all new electricity growth; removing finance and regulatory barriers to building a “clean energy infrastructure;” and accelerating the transition to cleaner transportation fuels.
Endurance Resources Holdings LLC announced that Lime Rock Partners, a global energy-focused private equity firm, had committed $100 million for Endurance to acquire oil-focused assets and additional opportunities in two Southeast New Mexico counties that overlay the Bone Spring formation. Endurance, a newly formed exploration and production company based in Dallas, said Lime Rock’s growth equity commitment will help it acquire producing and development assets currently being operated by Endurance in the Bone Spring and other plays in the Delaware Basin, and will allow it to pursue additional opportunities in Eddy and Lea counties, NM. Endurance’s website says the company and its affiliates hold approximately 16,000 net acres in the Bone Spring formation and the Delaware Basin, all of which are held by production.
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