Connection

Private equity firm Kohlberg Kravis Roberts & Co. (KKR) said it plans to exit its investment in privately held East Resources Inc. in connection with the announcement last week that Royal Dutch Shell plc has agreed to pay $4.7 billion to acquire East Resources’ principal subsidiaries (see Daily GPI, June 1). KKR invested $350 million in Warrendale, PA-based East Resources last year (see Daily GPI, June 10, 2009). That investment “was a catalyst for the growth and development” of East Resources, according to KKR, which said the company succeeded in derisking a substantial part of the Northeastern Marcellus Shale area, developed a critical supply of natural gas to serve the region and saw its annual capital budget grow from $100 million to $350 million over the past year.

Williams’ Northwest Pipeline GP has received authorization from the Federal Energy Regulatory Commission (FERC) to place its 24-inch diameter Colorado Hub Connection into service, it said. The 26.4-mile pipeline and related facilities connect the Meeker/White River Hub, a regional production area hub, with the Northwest Pipeline mainline south of Rangely, CO. The project will provide approximately 360,000 Dth/d of firm service on Northwest’s mainline to delivery points as far south as Ignacio, CO. At Ignacio Northwest interconnects with El Paso Natural Gas and Transwestern Pipeline Co. The cost of the project was approximately $60 million. “Completion of the Colorado Hub makes it possible for us to connect the Piceance Basin supplies with markets in the western U.S. through Northwest’s existing mainline system,” said Phil Wright, president of Williams’ gas pipeline business. In August 2007 Northwest conducted an open season for the project and filed an application for a FERC certificate in September 2008. Williams Pipeline Partners LP owns a 35% interest in Northwest Pipeline GP.

The Virginia Supreme Court has agreed to hear an appeal by Houston-based GeoMet in its ongoing natural gas pipeline dispute with a CNX Gas Corp. affiliate over a 32-acre coalbed methane (CBM) play in Buchanan County, VA.

Pacific Gas & Electric did not extend a systemwide high-inventory OFO beyond Saturday.

With Hurricane Dean following a more westerly path than first expected, natural gas futures traders were ringing the sales register early and often in Sunday’s overnight Globex session and again during Monday’s regular trading session, peeling almost $1 worth of hurricane premium off the prompt-month contract. September futures reached a low of $6.035 on Monday before closing at $6.040, down a whopping 97 cents from Friday’s close.

Northwest notified shippers of a Declared Deficiency Period at the Muddy Creek South Constraint Point that took effect Thursday in connection with an anomaly investigation just south of Muddy Creek Compressor Station (see Daily GPI, Aug. 16). Primary firm nomination requests through the constraint point have exceeded the available capacity of 160,000 Dth/d, Northwest said. Based on a design capacity of 513,000 Dth/d, the Daily Deficiency Volume is 353,000 Dth/d, it added. The Deficiency Period was expected to last for a maximum of 72 hours. The Deficiency Period at the Muddy Creek South Constraint Point allowed the pipeline to end a separate Deficiency Period at Caldwell Compressor Station even though a unit inspection at Caldwell will continue through Thursday.

Williams’ Northwest Pipeline is holding a binding open season for its Colorado Hub Connection (CHC) project. The 34-mile Colorado Hub lateral would allow access from the Greasewood and Meeker hubs to a location near Sand Springs, CO.

Northwest ended on Wednesday morning a Declared Deficiency Period that it had issued late Tuesday afternoon in connection with emergency repairs to the #2 unit at La Plata Compressor Station. Northwest had said it would cut scheduled volumes through the station to 250,000 Dth/d in the Intraday 2 nominations process for Tuesday’s gas day, but would wait until the Intraday 2 process Wednesday before cutting volumes scheduled for that gas day in the hope that repairs could be completed by midday.

Tennessee declared a force majeure event Thursday in connection with a leak on its 527A-100 Line offshore Louisiana. See the bulletin board for a list of 12 meters that were required to shut in until leak repairs are completed.