Pipeline

Tennessee will add a Critical Day 1 OFO in downstream Zones 4, 5 and 6 Saturday to the one it plans to implement Friday in upstream Zones 0, 1, L and 2 (see Daily GPI, Jan. 7). That will leave Zone 3 as the pipeline’s only segment not subject to an OFO.

Gastar Exploration Ltd. has sold its majority interest in the Hilltop Resort Gathering System to US Infrastructure LP (USI). The Hilltop Resort Gathering System is composed of 20 miles of gas pipeline extending through Robertson and Leon Counties, TX, with a gathering capacity of 120 MMcf/d. The system is connected to 24 Gastar-operated wells, which produce from the middle and lower Bossier and Knowles formations in East Texas. Gastar received approximately $21.7 million, net of costs and expenses associated with the transaction. “The sale of our stake in the Hilltop system provides an attractive return on our investment and additional liquidity to pursue our drilling plans in East Texas and the Marcellus Shale while maintaining a very low level of leverage,” said Gastar CEO J. Russell Porter. USI partnered with Metalmark Capital to finance the transaction.

Northern Natural Gas, operator of the Matagorda Offshore Pipeline System (MOPS), said Friday it was nearing the return of service on MOPS dehydration equipment at the onshore Tivoli, TX, facility (see Daily GPI, Oct. 22) and expected it to be fully operational for Monday’s gas day.

Northern Natural Gas reported late Tuesday that Matagorda Offshore Pipeline System (MOPS), which it operates, had encountered an unexpected mechanical failure of the dehydration system on its onshore facilities near Tivoli, TX. “Crews are assessing the damage and determining the scope of repairs necessary to return the facility to service,” Northern said. Until then MOPS has been shut in, affecting 18 receipt points and seven delivery points (see the bulletin board for list).

TransCanada reported experiencing a mainline rupture Saturday upstream of Station 112 in Ontario. The pipeline said it had isolated the affected section, but did not anticipate any capacity restrictions as a result of the event.

Colorado Interstate Gas (CIG) has filed an application to build a 118-mile, 16-inch diameter lateral pipeline that would move natural gas from the Raton Basin in southern Colorado to an interconnect with its mainline in El Paso County in the central part of the state [CP09-464]. The North Raton Lateral would have a design capacity of approximately 130,000 Dth/d, CIG told the Federal Energy Regulatory Commission in its application. CIG estimated the cost of the project at about $132 million.

A subsidiary of Plains All American Pipeline LP (PAA) will pay $220 million for Vulcan Capital’s 50% interest in PAA Natural Gas Storage, the companies said. The purchase price includes $90 million cash, 1.9 million PAA common units valued at $90 million and deferred contingent cash consideration up to $40 million. The transaction is expected to close Thursday. The transaction will give PAA 100% of the natural gas storage business and related operating entities, which will be accounted for on a consolidated basis. At closing PAA will repay the joint venture’s outstanding project finance debt using joint venture cash and borrowings under its revolving credit facility. As of June 30 the joint venture had approximately $450 million of debt and approximately $52 million of cash. PAA management intends to recommend to its board of directors an increase in the partnership’s quarterly distribution level to 92 cents/unit effective with the November distribution.

Rising pipeline and gathering system pressures over the next few months “will likely result in involuntary natural gas production curtailments across the industry,” Chesapeake Energy Corp. officials said last week.

Rising pipeline and gathering system pressures over the next few months “will likely result in involuntary natural gas production curtailments across the industry,” Chesapeake Energy Corp. officials said Thursday.