Rockies

The buildout of infrastructure to serve growing liquids-rich natural gas production from shale plays is continuing. Driven by natural gas liquids (NGL) production out of the Rockies and the Eagle Ford Shale of South Texas, Enterprise Products Partners LP plans to construct two more NGL fractionators at its Mont Belvieu, TX, facility. These would provide 150,000 b/d of incremental capacity. Pipeline construction also is under way.

With most new oil/gas exploration and production (E&P) moving to the more populated eastern slope of the Colorado Rockies from its traditional rural west-central focus, the Colorado Oil and Gas Association (COGA) embarked last month on a three-month public service advertising campaign as part of a broader community outreach on the use of hydraulic fracturing (fracking). So far the campaign is raising more interest than anticipated, according to COGA, and mostly because anti-fracking groups are crying foul.

Mixed cash market action set the tone for the day Monday with points declining in the gulf Coast and Midcontinent regions while Northeast, Rockies and West Coast points managed moderate gains. The expiring March futures finished on a soft note as the technical environment continued to deteriorate. At the close March had settled at $2.446, down 10.4 cents and April shed 9.2 cents to $2.603. April crude oil dropped $1.21 to $108.56/bbl.

As another indicator of what sub-$3 natural gas prices can produce, MDU Resources Group Inc. will be selling some of its gas assets this year — albeit small ones — and raising its proportional amount of oil production from its exploration and production (E&P) mix in the Bakken, Niobrara, Heath, Big Horn Basin and other shale plays, senior executives told analysts during the company’s 4Q2011 earnings conference call.

Standard & Poor’s Ratings Services (S&P) lowered its corporate credit and senior unsecured debt ratings on Rockies Express Pipeline LLC (REX) to “BB” from “BBB-” with a “stable” outlook and said the decision was based on compressed basis differentials leading to increased recontracting risk in the years ahead.

A Rockies producer had a pithy description of the current gas market: “It stinks!” Industrial firms that use gas as a feedstock and almost everyone enjoying lower gas bills might disagree, but it’s likely that many others in the gas industry also would prefer a sweeter-smelling market.

The Environmental Protection Agency (EPA) is seeking nominations of nationally and/or internationally recognized scientists or engineers to conduct a “thorough and unbiased review” of a draft agency report released in December, which found that groundwater in Pavillion, WY, may be polluted by natural gas drilling and well stimulation practices (including hydraulic fracturing).

Warming trends due Thursday in the South along with much of the Midwest and Rockies caused enough diminution of heating load to push prices a few cents lower at a modest majority of points Wednesday. However, forecasts of windy snow showers and lows generally in the 30s kept quotes moving much higher in most of the Northeast, with several citygates again recording dollar-plus advances.

Rockies Express (REX) said it has been informed of potential operating restrictions on Tennessee, which could impact nominated quantities at their TENN/REX GUERNSEY interconnect. However, there is “no impact at this time due to the current level of nominations on Tennessee’s system,” REX said.