Units of Kinder Morgan‘s El Paso Pipeline Partners LP said recent open seasons proved successful to provide incremental long-term transportation capacity from the Marcellus Shale region to serve markets in Georgia, South Carolina and northern Florida. Elba Express Co. LLC (EEC) and Southern Natural Gas Co. LLC (SNG) completed open seasons for almost 600 MMcf/d of capacity to support southeastern infrastructure growth, and they attracted interest in 400 MMcf/d of potential additional capacity, which would bring the total expansion to as much as 1 Bcf/d. The north-to-south expansion capacity on the EEC system, including interconnects and delivery points, is expected to become available in phases, with service as early as June 2016 and all phases in service by about April 2019. Total capital invested by SNG and EEC to accommodate the initial phase of 600 MMcf/d is expected to exceed $200 million.

The Department of the Interior‘s Bureau of Safety and Environmental and Enforcement(BSEE) is proposing rules for offshore production facilities to implement industry best practices and to update regulations governing production safety systems and equipment used to collect and treat oil and natural gas. The proposed rule, published in the Aug. 22 Federal Register, would revise 30 CFR 250 subpart H, Oil and Gas Production Safety Systems, to address recent technological advances, BSEE said. This section of the regulations has not had a major revision since it was first published in 1988, according to the agency. Since then, industry’s use of subsea trees (the assembly mounted on a wellhead used to control the flow of oil and gas) and other technologies have evolved or become more prevalent offshore. These devices and materials include foam firefighting systems, electronic-based emergency shutdown systems; subsea pumping, waterflooding and gas lift; and new alloys and equipment for high-temperature and high-pressure wells. BSEE is accepting comments on the proposed rule through Oct. 21.

State regulators in Ohio, Pennsylvania and West Virginia in July collectively issued 411 permits for oil and gas drilling, most for Marcellus and Utica shales. There were 264 permits issued in Pennsylvania, 76 in Ohio and 71 in West Virginia. Gulfport Energy Corp. led among operators in Ohio for the month with 26 permits issued, followed closely by Chesapeake Exploration LLC (25). In Pennsylvania, Cabot Oil & Gas Corp. led the field with 32 permits, followed by Chesapeake Appalachia LLC and EQT Production Co., which each had 26. Antero Resources Corp. led operators in West Virginia, receiving 18 permits.

Colorado’s oil and natural gas industry in 2012 injected $29.6 billion into the state’s economy, supporting 110,000 mostly high-paying jobs, according to the University of Colorado, Boulder’s Leeds Business School. The industry directly contributed $1.6 billion in the form of various tax revenues paid in 2012, according to “Assessment of Oil and Gas Industry 2012: Industry, Economy and Fiscal Contributions in Colorado,” commissioned every two years by the Colorado Oil and Gas Association. Direct employment totaled more than 51,200 jobs with average wages of more than $74,800, or 49% higher than the state average for all industries. From 2010 through 2012, employment increased 17%, adding more than 7,600 jobs. From 2010 through 2012, permits issued dropped an estimated 37%, but over the same period production grew from 32 million bbl to 48 million bbl of oil, and from 1.62 Tcf to 1.65 Tcf of natural gas.

UGI Corp. subsidiary UGI-Penn Natural Gas Inc. (UGI-PNG) agreed to pay a $1 million fine to settle allegations that it failed to adequately maintain and repair in 2012 a 50-year-old high-pressure gas main in Wilkes Barre, PA. The proposed settlement with the Pennsylvania Public Utility Commission‘s enforcement bureau, would be, if approved, the largest fine assessed against a utility since the Pennsylvania legislature in 2012 increased the maximum penalty from $500,000 to $2 million. UGI-PNG agreed to the settlement without admitting any culpability and agreed not to use ratepayer funds to fix the pipeline. According to records, a UGI-PNG whistle blower alerted the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) in May 2012 that the utility had failed to properly repair a 10-inch diameter gas main, which was found to be leaking at “dangerous” levels. The PHMSA notified PUC of allegations that “the gas company may be trying to cover up” the leak.

An eight-month investigation has concluded that a fatal explosion and fire during a construction project last November on a Gulf of Mexico (GOM) oil production platform operated by Black Elk Energy Offshore Operations LLC occurred after contractors failed to follow standard safety practices. ABSG Consulting found that while production was shut in at West Delta 32 Block, 17 miles south east of Grand Isle, LA, workers welded on piping that was connected to a tank containing crude oil and flammable oil vapors without following Black Elk Energy’s safety practices. The piping leading to the tank had not been isolated and made safe for welding activities as required by the safe work practices. Flammable vapors in the piping ignited and within seconds reached the first oil tank and then two connected tanks, killing three people and injuring several others (see NGI, Nov. 19, 2012). In late November top Democrats on the House Energy and Commerce Committee and the House Natural Resources Committee called on Houston-based Black Elk Energy to provide them with answers (see NGI, Dec. 3, 2012). ABSG coordinated its investigation with the U.S. Bureau of Safety and Environmental Enforcement (BSEE). Black Elk had contracted withGrand Isle Shipyard to perform the construction work. Although Grand Isle committed in its contract to not use subcontractors, all of the workers performing the welding involved in the incident were employed by DNR Offshore and Crewing Services, a subcontractor of Grand Isle. Grand Isle Shipyard had no comment on the investigation’s findings when contacted by NGI.

Apache Corp. is selling half a million net acres of leasehold in Western Alberta to a privately held Canadian producer Ember Resources Inc. for $214 million. The sale includes 530,000 net acres in the Nevis, North Grant Lands and South Grant Lands areas, where Apache has more than 2,700 wells. Apache would retain all of the working interest in horizons below the Cretaceous, including potential Duvernay and Nisku targets in Nevis and North Grant Lands. The transaction’s effective date was April 1; the actual hand-off is scheduled by the end of September.

Energy trading house Freepoint Commodities LLC, and equity partners Apollo Global Management LLC and Summit Partners Credit Advisors LP, have agreed to provide $110 million to Whistler Energy II LLC to buy two producing blocks in the deepwater Gulf of Mexico. Freepoint was formed two years ago by former Sempra Energy Trading Corp. (SET) executives. Through Freepoint subsidiary Commerce Oil LLC, Whistler is buying out all of the working interests in Green Canyon (GC) blocks 18 and 60 from ExxonMobil Corp. and W&T Offshore Inc.Whistler also is acquiring the GC Block 18 production platform, which is about 150 miles southwest of Louisiana in 750 feet of water. In addition, committed funding by Freepoint is financing a field redevelopment program to be carried out by Whistler.

Michigan natural gas utility Consumers Energy has agreed to spend $1 million to create a response fund for natural gas disasters and to help train first responders following two deadly incidents in three years, Michigan Attorney General Bill Schuette said. State regulators also fined the utility $430,000 for the Feb. 27 explosion that killed Royal Oak resident Daniel Malczynski and damaged 30 homes in the Detroit suburb, as well as for a 2010 furniture store explosion in Wayne on Dec. 29, 2010 that killed two people. Consumers agreed to spend $900,000 to create the Natural Gas Incident Response Fund, while $100,000 would be set aside for improved safety and training practices for first responders and utility workers in Michigan.

New York Gov. Andrew Cuomo said he believes high-volume hydraulic fracturing (hydrofracking) could mesh with the state’s economic development plans, but he said there was no news regarding a health impact analysis of the practice that was launched by state officials. During an interview, Cuomo said “there’s no reason why hydrofracking…couldn’t be conducted as part of this economic agenda that we have. In the places where hydrofracking could work, great.” Meanwhile, a Siena College Research Institute poll showed respondents were opposed to fracking by a 42-41% margin, but support for the practice was on the rise and the gap between the two positions on the issue had narrowed.

Meritage Midstream Services II LLC has purchased for an undisclosed amount Thunder Creek Gas Services LLC, including more than 500 miles of gathering pipelines in Wyoming’s Powder River Basin, from Devon Energy Corp. and PVR Partners LP. The system includes three natural gas treating facilities, compression and gas processing facilities, and various liquids and condensate handling infrastructure. Meritage is developing the Black Thunder Terminal, a joint venture with Arch Coal, in Campbell County, WY to provide storage, blending and rail loading services for crude oil and condensate produced in the basin. Meritage said it expects to expand the Thunder Creek gathering system to provide pipeline service to the terminal.

Blue Racer Midstream LLC, designed to provide expanded services over the next three years in the Utica and Marcellus shales, has secured an initial five-year, $800 million credit facility that could be expanded to $1 billion. Dominion and Caiman Energy II LLC formed the $1.5 billion joint venture in 2012 (see NGI, Dec. 24, 2012). Caiman’s midstream operations partially are owned byWilliams Partners LP, which had formed Caiman Energy II with investors EnCap Flatrock Midstream and Highstar Capital. Dominion contributed 500 miles of Dominion East Ohio gathering lines crossing the Utica Shale, as well as the Natrium Natural Gas Processing and Fractionation Plant in Marshall County, WV. Williams Partners, 47.5% owner of Caiman Midstream, is contributing $380 million through 2014, almost half of its $800 million commitment. EnCap, with a 35.6% stake, is expected to contribute up to $285 million, while Highstar, which holds a 11.5% stake, is contributing up to $95 million. Caiman Energy, which owns the remaining 4%, would operate the system.

BP plc has sued the U.S. government to overturn a suspension from federal contracts for most of its entities, including the exploration and production (E&P) arm. The lawsuit, filed in U.S. District Court for the Southern District of Texas, seeks to lift the ban imposed by the U.S. Environmental Protection Agency in November 2012 because of “BP’s lack of business integrity as demonstrated by the company’s contact with regard to the Deepwater Horizon blowout, explosion, oil spill and response…” (see NGI, Dec. 3, 2012). EPA disqualified BP’s E&P arm from federal contracts in February “temporarily” preventing BP from securing new federal government contracts, grants or other covered transactions until it could provide evidence that it was meeting federal business standards. The suspension did not impact existing agreements that BP had with the government.

Technip has been contracted to install a subsea natural gas pipeline structure for Shell Offshore Inc.in the Stones deepwater field in Walker Ridge blocks, part of the prospective Lower Tertiary trend. The system would host the deepest floating, production, storage and offloading (FPSO) unit in the world, Shell’s first, and only the second in the Gulf of Mexico. Brazil’s Petrobras started up the first FPSO in 2012, also in Walker Ridge (see Daily GPI, March 5, 2012). Shell sanctioned Stones, 200 miles southwest of New Orleans, in May (see NGI, May 13). The project contains an estimated 2 billion boe-plus. The first phase of development is expected to produce an annual peak of 50,000 boe/d beginning with two subsea production wells tied back to the FPSO vessel, followed later by six additional production wells. Installation of the pipeline system is expected in the second half of 2014.

The state of Alaska has asked U.S. Fish and Wildlife Service (FWS) Director Daniel Ashe to reverse FWS’s denial of the state’s Arctic National Wildlife Refuge (ANWR) Alaska National Interest Lands Conservation Act (ANILCA) Section 1002(e) exploration plan submitted in July. It proposed a state-funded program to conduct low-impact 3-D seismic testing throughout the coastal plain, or 1002 Area, of ANWR (see NGI, July 15). The data to be gathered would “greatly improve understanding of the hydrocarbon resources in the 1002 Area and assist Congress and federal agencies as they make future decisions regarding development in the region,” the state said. FWS Regional Director Geoffrey Haskett rejected the plan, citing a policy memo prepared by former Secretary of the Interior Bruce Babbitt at the end of President Clinton‘s administration, which claimed the opportunity to submit exploration plans under the act had expired (see NGI, Aug. 5).

A pair of short pipeline connections designed to support the highway delivery of liquefied natural gas (LNG) from Prudhoe Bay, AK, have received preliminary approval from the State Pipeline Coordinator’s Office, moving the state one step closer to providing LNG to Fairbanks. In separate proposed decisions, Acting State Pipeline Coordinator Allison Iversen proposed to grant rights of way for North Slope pipelines to Polar LNG and Spectrum Alaska, concluding that both companies are “fit, willing and able to construct and operate a pipeline in a manner required by present and future public interest…” The Polar Natural Gas Pipeline right-of-way lease is 3.5 miles long and Spectrum’s would be only 1,100-feet long — but they could be key to Alaska’s Interior gas project to bring gas to the region’s largest city. Alaska’s Department of Natural Resources is accepting public comments on the Spectrum application through Sept. 3 and on the Polar project through Sept. 16.

BHP Billiton Ltd. said the Eagle Ford Shale has become the largest producing field in its petroleum and potash division for the fiscal year ending June 30. Petroleum production increased 6% in fiscal 2013 to 236 million boe, which included 99 million boe from the U.S. onshore — 33% from the Eagle Ford. On the natural gas front, BHP said realized prices across its portfolio rose 11%, to $3.76/Mcf. BHP spent $7.1 billion on 2013 capital expenditures (capex) for conventional and unconventional development, including $4.8 billion for onshore drilling in the United States, with more than 80% devoted to the Eagle Ford and the Permian Basin. The Australian-based operator plans to trim spending by 18.8% in the U.S. onshore in fiscal 2014. The company said it was continuing to optimize its drilling program, and planned to reduce the rig count to an average of 25 during 2014.

Prometheus Energy Group Inc. has signed a multi-year agreement to supply Antero Resources Corp. with enough liquefied natural gas (LNG) to power “a significant portion” of the producer’s natural gas-fueled drilling rigs in the Marcellus and Utica shales. Houston-based Prometheus said it would supply LNG, handle logistics delivery and provide onsite equipment for storage and regasification at an unspecified number of drilling sites in northern West Virginia and eastern Ohio (see related story). Financial terms were not disclosed.

A Pennsylvania family that had sued Range Resources Corp. and midstream operators for allegedly contaminating property with hydraulic fracturing (fracking) fluids is still receiving monthly royalty payments. According to records ordered unsealed by Washington County Court of Common Pleas President Judge Debbie O’Dell Seneca, Chris and Stephanie Hallowich agreed not to move to a new address within two miles of any existing facilities owned or operated by Range and midstreamers MarkWest Energy Partners LP, MarkWest Energy Group LLC, and Laurel Mountain Midstream, or within 1,000 feet of existing leases held by the companies. The family also agreed not to protest any oil and gas activity within 1,000 feet of any property it owned, used, occupied or rented in the future.

Pennsylvania State Rep. Michele Brooks (R-Greenville) sent a memo to her colleagues saying she plans to introduce legislation to repeal Section 2.1 of SB 259, on the grounds that the law could create forced pooling. Brooks voted against SB 259 on June 28, but the bill passed by a 167-33 vote. The measure was debated before Gov. Tom Corbett signed it into law on July 9, but the discourse intensified after EQT Corp. filed a lawsuit against 69 landowners and a golf course inAllegheny Court of Common Pleas on July 22 (see NGI, Aug. 12; July 15).

A membrane-based filtration system being developed by researchers at the University of Texas at Austin could improve the efficiency of mobile water recycling systems used in conjunction with hydraulic fracturing (fracking) activities. The high-efficiency filters may “significantly reduce” the amount of water and energy that fracking requires, the researchers said. A study recently showed that the filter can produce up to 50% more water for reuse compared with other filtration systems, greatly reducing demand for fresh water. In addition to producing a higher volume of purified water, the new filter system also operates at lower pressure than traditional systems, yielding significant energy savings, the researchers said. The findings were recently published in the Journal of Membrane Science.

The Alaska Department of Natural Resources plans to hold its annual sale of oil and gas lease tracts on the North Slope and in the North Slope Foothills and Beaufort Sea on Nov. 6 in Anchorage. The lease sale area encompasses 14 million acres; 11 tracts are being deferred to test methane hydrate production in cooperation with the U.S. Department of Energy (see Daily GPI,Aug. 2). Details of the lease sale are available on DNR’s website.

A report by the United Kingdom’s University of Nottingham indicates that public opinion in the country is beginning to shift in favor of unconventional natural gas development. According to the poll, 55% surveyed in July characterized shale gas as a “cheap fuel,” up from 40.5% from March 2012. Meanwhile, the positive rating for shale gas, calculated by taking the number of respondents who associated shale gas as a cheap fuel and subtracting those respondents who didn’t make that association, rose steadily from +11.4 in the initial poll to +34.4 in the final poll.