August Newsreel: P&GJ Web Updates, Kitimat LNG-Gas Natural MOU, Dresser Aquires iMeter B.V., CO Last Ranking for Energy Investment

A report issued by the nonprofit Fraser Institute ranks Colorado as the least attractive state for oil and natural gas investment. Colorado’s ranking has fallen from first to 81st in two years and is among the bottom half of the 143 global jurisdictions included in the 2009 Global Petroleum Survey. 

Among the 27 producing states, Colorado ranked last or second-to-last in six of 16 categories, including taxation regime (second-to-last), cost of regulatory compliance (second-to-last), regulatory uncertainty (last), and political stability (second-to-last).

All of Colorado’s neighboring states, with the exception of New Mexico, were rated “most attractive” by investors. Colorado is estimated to have more than 9% of the nation’s supply of natural gas while annual production increased more than 380% between 1992 and 2007. The Colorado School of Mines estimates the industry provides more than 70,000 Coloradans with employment, with an economic benefit to the state of $23 billion each year. However, since January, Colorado’s rig count has dropped 54% – the sharpest decline in the nation – compared to a national average reduction of 43%.

 “This study demonstrates the harsh reality of an inconsistent regulatory regime, and these numbers run contrary to the belief of some policy makers that Colorado’s energy industry will grow no matter the constraints placed upon it,” commented Colorado Oil & Gas Association President Meg Collins.

The survey consisted of 16 questions sent out to executives of companies involved in exploration for oil and natural gas reserves, as well as the production of crude oil and both conventional and unconventional supplies of natural gas. More than 275 companies participated.

Gulf Crossing Has Authority To Operate at 72% SMYS, Add Compression

Boardwalk Pipeline Partners, LP reports that its Gulf Crossing Pipeline Company LLC subsidiary has completed remediation of the pipe anomalies on its system and has been authorized by the Pipeline and Hazardous Materials Safety Administration (PHMSA) to operate the pipeline at normal operating pressures of up to 72% of the Specified Minimum Yield Strength (SMYS).

Anticipated peak-day delivery capacity for Gulf Crossing in July was estimated at 1.3 Bcf/d. Boardwalk plans to increase peak-day delivery capacity of the Gulf Crossing pipeline to 1.4 Bcf/d, subject to receiving a special permit from PHMSA to increase operating pressures up to 80% SMYS. Rolf Gafvert, CEO for Boardwalk Pipeline, said, “We have made significant progress on Gulf Crossing and continue to work very closely and cooperatively with PHMSA in order to obtain the authority to operate all of our major pipeline projects at higher operating pressures.”

Boardwalk also announced that the Federal Energy Regulatory Commission has granted Gulf Crossing authority to expand its Mira Compressor Station in Caddo Parish, LA to increase peak-day delivery capacity to 1.7 Bcf/d in 2010, subject to approval by PHMSA. Gulf Crossing consists of 357 miles of 42-inch pipeline originating near Sherman, TX and proceeding to the Perryville, LA area.

KMP Completes First Commercial Shipment of Biodiesel In U.S.

Kinder Morgan Energy Partners, L.P. announced that Plantation Pipe Line Co. is the first pipeline company in the United States to transport biodiesel for commercial purposes. Plantation completed the trans-market commercial shipment of blended 5% biodiesel (B5) on a mainline segment of the pipeline.

The company injected B99 into ultra-low sulfur diesel at Plantation’s Collins, MS pump station and breakout tank farm, creating a 15,000-barrel batch of B5 that it then shipped to marketing terminals in Athens, GA and Roanoke, VA. Upon receipt of the product at both facilities, Kinder Morgan performed testing on samples from the batch and found that the samples arrived on specification.

“We believe the blending and transportation of biodiesel by pipeline will have significant advantages for our customers when compared to the alternative of installing capital-intensive blending facilities at individual marketing terminals,” said KMP Products Pipeline President Tom Bannigan.

In addition to Athens and Roanoke, the company will be able to move blended B5 to the following markets along Plantation:

• Birmingham and Oxford, AL.
• Bremen and Atlanta, GA.
• Belton and Spartanburg, SC
• Charlotte and Greensboro, NC.

Kinder Morgan also is optimistic that it will be able to ship blended biodiesel on Plantation’s Tennessee lateral serving Chattanooga and Knoxville. The company believes jet fuel currently moving on this lateral can be supplied into these markets by means other than Plantation which would open the door for shipment of a blended biodiesel on this lateral line.

Petroplex Plans Liquid Bulk Storage Terminal In Louisiana

PetroPlex International, LLC will build a liquid bulk storage and blending plant in St. James Parish, LA. The initial complement of storage tanks and docking system is scheduled for operation in 2011. The storage facility will be constructed in two stages with Phase One accommodating 4 million barrels of liquid petroleum. Phase Two will add 6 million barrels, constructed as industry demands dictate.

The storage terminal will provide tankage for crude oils, residual fuel oils, middle and light distillates, along with specialty oils. For heavy fuel oil clients, the facility will use a detailed inline blending system in conjunction with an efficient in-tank mixing system to ensure a homogenous end product.

Large-diameter pipelines/high-volume pumps will expedite the loading and discharging of cargoes. The facility will be capable of loading/discharging via truck rack, railcar, waterborne and pipeline connectivity to the Capline System, ship shoal and Houma pipelines.

Synodon Involved In Methane Field Trial In Canada

Synodon Inc. has agreed with Natural Resources Canada’s Earth Sciences Sector to perform a joint field trial to evaluate realSensTM technology’s ability to detect and measure methane seeps from conventional natural gas reservoirs and/or methane hydrate deposits in Arctic environments. The agreement encompasses field testing of the realSensTM technology to determine practical feasibility. The tests are scheduled to be completed by Sept. 30.

Researchers at Natural Resources Canada have studied natural releases of methane gas in the Mackenzie delta area for several years, documenting their widespread occurrence and possible association of some seeps with conventional gas fields and gas hydrates which occur beneath a thick permafrost interval. Development of a technology for detecting natural seepages of methane could result in a useful tool for Arctic exploration, and ultimately contribute to regional assessments of natural emissions of greenhouse gases.

Interest in natural emissions of methane from Arctic environments has grown from an environmental perspective and as a possible tool to prospect for conventional gas and also methane hydrate. Methane hydrates occur naturally in deepwater marine environments, and in Arctic regions beneath thick permafrost, and may represent a potential very large long-term source of energy. However, methane hydrates may also be a significant natural source of greenhouse gas (GHG) emissions, potentially exacerbating climate warming. Estimates of the global methane hydrates resource vary considerably, but the consensus is that the energy potential of methane hydrates exceeds that of all other conventional hydrocarbon resources combined.

The development of the realSensTM technology is supported in part by Sustainable Development Technology Canada, an arms-length not-for-profit corporation created by the Government of Canada. Natural Resources Canada and other Government of Canada initiatives also provided financial support.

Enterprise Central Treating Plant Receives Natural Gas

Enterprise Products Partners L.P. said initial volumes of natural gas have begun flowing into its new Central Treating Facility (CTF) in Rio Blanco County, CO. Located eight miles south of the partnership’s Meeker natural gas-processing complex, the CTF has capacity of 200 MMcf/d and is dedicated to ExxonMobil’s properties in the Piceance Basin, which produce 100 MMcf/d.

Natural gas delivered to the CTF is treated to remove impurities and compressed for transportation to Meeker, where Enterprise will have the option to use its stand-alone 200 MMcf/d dewpoint control plant for processing, or route the natural gas through one of Enterprise’s larger cryogenic processing units. The cryogenic processing capacity of the Meeker complex is 1.5 Bcf/d, allowing it to extract as much as 70,000 bpd of natural gas liquids.

The separation of NGLs makes the processed natural gas acceptable for delivery into interstate transmission pipelines accessible to producers through the White River Hub, which is jointly owned by Enterprise and Questar Pipeline Co. Using Enterprise’s Mid-America Pipeline and Seminole systems, the NGLs extracted at the Meeker complex can be delivered to the partnership’s Hobbs and Mont Belvieu, TX fractionation sites.

Meeker and the new CTF are prominent features of a 30-year midstream services agreement Enterprise has entered into with ExxonMobil, which has estimated 45 Tcf of potential natural gas resources on its acreage in the Piceance Basin.

Report Suggests Oil Shale Is Reliable, Affordable, Secure Energy Source

Research has revealed that oil shale, which is a type of rock rich in kerogen, can be converted into high quality liquid fuels, according to an analysis by the National Center for Policy Analysis.

“America’s dependence on energy imports increases its strategic vulnerability,” said H. Sterling Burnett, NCPA Senior Fellow and co-author of the report. “Diversifying energy production and reducing dependence on imported oil in exchange for more secure domestic sources would enhance national security.”
 
Not only will the production of oil shale enhance national security, but it would also provide substantial economic benefits, added Tomas Castella, NCPA research assistant. According to the RAND Corporation:
 
A 3 million barrel of oil per day industry could generate $20 billion in annual profits while reducing prices for consumers.
As many as 100,000 new jobs could be created by a 2 million barrel per day oil shale industry.
The U.S. Department of Energy estimates that, in addition to tax revenues, federal and state governments would receive royalties and lease payments.
 
Although oil shale production requires more energy than conventional petroleum, it is more efficient than ethanol, at least as efficient as oil from tar sands, and uses less water than ethanol and tar sands, according to the report.
 
“America’s untapped oil shale offers a long-term source of reliable, affordable and secure energy,” said Burnett. “Public lands should be leased and the permitting process for production facilities should be streamlined. Obstacles must be removed in order to realize oil shale’s full potential.”