Liquids

Liquids-rich gas and high initial production rates from oil wells are driving red hot interest in the Eagle Ford Shale, and this is only bolstered by the region’s established midstream infrastructure and proximity to energy markets, Fitch Ratings said in a new report. More isolated shale basins need costly “mega pipelines,” which are tougher on credit ratings, Fitch said.

Warren Resources Inc. Monday said it closed on its previously announced deal to acquire additional natural gas and midstream assets from subsidiaries of Anadarko Petroleum Corp. in the Atlantic Rim Project area in Wyoming’s Washakie Basin.

Boosted by activity in the Marcellus Shale and Mississippian Lime, Range Resources Inc. said Thursday it has beaten its 3Q2012 forecast for natural gas and natural gas liquids (NGL) production, with output up 47% year/year (y/y) and 10% sequentially.

Marathon Petroleum Corp. agreed to pay $598 million plus inventories estimated at $1.2 billion for BP plc’s 451,000 b/d Texas City, TX, refinery, three instrastate natural gas liquids pipelines originating at the refinery, an allocation of BP’s Colonial Pipeline Co. shipper history, four terminals, retail marketing contract assignments for about 1,200 branded sites and a 1,040 MW cogeneration facility. The agreement contains an earnout provision under which Marathon could pay up to an additional $700 million over six years, subject to certain conditions. The acquisition is expected to be funded with cash on hand and is anticipated to close early in 2013. The deal continues BP’s plan to sell assets to shore up its share price and help fund a $20 billion trust fund set up following the April 2010 Macondo well blowout in the Gulf of Mexico (GOM) (see Daily GPI, Oct. 26, 2011). Last month Plains Exploration & Production Co. said it would pay BP $5.55 billion for deepwater GOM oil and gas properties (see Daily GPI, Sept. 11).

Calgary-based Keyera Corp. is planning a $210 million enhancement project to recover ethane and other natural gas liquids from the raw gas stream at the Rimbey gas plant in the Hoadley region of central Alberta. The project would include installing a 400 MMcf/d turbo expander unit and constructing a 34 kilometer, six-inch diameter ethane pipeline to connect to the Alberta Ethane Gathering System. The enhancements would allow Keyera to recover more than 90% of the ethane at the plant. Upon completion of the project, Keyera expects to extract up to 20,000 b/d of ethane through the turbo expander unit, which would be sold to a large consumer in Alberta under a long term sales agreement. The company has also secured a long-term, fee-for-service processing agreement and is in discussions with other producers interested in contracting processing capacity at the plant. Subject to regulatory approvals, construction of the expansion is anticipated to begin in 4Q2012, with start-up expected in late 2014.

The U.S. Energy Information Administration (EIA) said the nation set new records for natural gas gross withdrawals, onshore production and the number of producing wells, figures that were boosted in part by shale gas development. Records were also set in domestic consumption, exports and dry and marketed production.

Industry investment in infrastructure and more emphasis on infill developmental wells are helping to contain North Dakota’s wellhead flaring of natural gas in the oil/liquids-rich Bakken Shale formation, a state official said.

With its oil and liquids-rich play, the Bakken Shale in North Dakota keeps attracting prospective drilling operations even as the formation’s overall rig count has declined slightly since January, according to the state’s latest monthly statistics at the end of August.

Calumet Specialty Products Partners LP said it plans to expand its existing refinery in Karns City, PA, to include a natural gas-to-liquids (GTL) plant with a nominal processing capacity of 1,000 b/d.