June 2010 Vol. 237 No. 6

In The News

June Newsreel: ANGA names Robertson VP; rising oil prices may threaten economic recovery; INGAA attracts record turnout and more

ANGA Names Robertson To Lead Legislative, Regulatory Affairs Efforts
Rising Oil Prices Could Hamper Economic Recovery, Clean Energy Policies 
INGAA Foundation Meeting Attracts Record Turnout
Enterprise Completes Acquisition Of Natural Gas Gathering Systems

Panhandle Energy Receives GITA’s Innovator Award
Former Chevron Executive Joins Deloitte’s Oil And Gas Group
Poll Finds Growing Interest In Traditional Oil And Gas
CenterPoint Signs Contract For Work In Haynesville Shale
Regency Acquires Additional Interest In Haynesville Joint Venture From GE
Clean Energy To Provide Natural Gas Fueling Services to SuperShuttle

ANGA Names Robertson To Lead Legislative, Regulatory Affairs Efforts
America’s Natural Gas Alliance (ANGA) named Peter Robertson, a former top official at the U.S. Environmental Protection Agency and a leading government affairs veteran, as senior vice president of Legislative and Regulatory Affairs.

Robertson most recently served as partner and co-leader of the Public Policy Practice Group at the law firm Crowell & Moring in Washington, DC. As an attorney in private practice, he has advised corporations and trade associations on climate and energy policy and Fortune 50 companies on chemical regulations. In the Clinton administration, he served as Chief of Staff to EPA Administrator Carol Browner and later became deputy administrator. He also worked in the House of Representatives for seven years, including five years with the House Budget Committee.

Rising Oil Prices Could Hamper Economic Recovery, Clean Energy Policies 
Increasing oil prices could threaten the country’s economic recovery and limit progress on energy-efficiency policies, according to a report issued by the Joint Economic Committee (JEC) last month.
The report, titled “Rising Oil Prices:  A Potential Threat to Economic Recovery and Energy-Efficiency Policies,” shows that the United States, which has made little progress toward reducing its dependence on oil for transportation, remains vulnerable to oil price spikes. 

The share of Gross Domestic Product (GDP) going to oil expenditures has more than doubled from 1.8% in 1993 to 3.8% today and is close to the 4% level – a level often associated with recessions. The transportation sector has been the largest producer of carbon dioxide since 1999, producing almost one-third of total CO2 emissions in the United States.

INGAA Foundation Meeting Attracts Record Turnout
The INGAA Foundation’s annual spring meeting at the Westin La Cantera Resort in San Antonio attracted a record turnout with over 250 guests pre-registered. Speakers and topics included Allan Bradley, president/CEO of Questar Pipeline Co. speaking on “Striving for Excellence in Project Execution;” and a panel on “Prioritizing Safety: Making Safety Changes Stick” led by moderator Brad MacLean of Willbros. Panelists included Dianne Stober, Ph.D from C Cubed; John Paul Wiggin, Wiggin & Company LLC, Jim Spigener, BST Solutions and Dr. Steven Schiff, Culture Change Consultants, Inc.

Former Gov. Tom Ridge, now president & CEO of Ridge Global, was the featured speaker and addressed “Risk Management & Competitive Issues in the Natural Gas Industry.”
The second day of the conference included “The Washington Report” by INGAA Foundation President Don Santa. A Pipeline Executives Forum was chaired by David Sheehan of Sheehan Pipeline Construction Co., and panelists included Questar’s Bradley; John Michael Howard, Energy Transfer Partners; Gary Sypolt, Dominion Energy and Colin Harper, NiSource Gas Transmission & Storage.
The meeting ended with a panel moderated by Lisa Beal, Director of Environmental & Construction Policy for INGAA on “New EPA Greenhouse Gas Reporting Rules.” Panelists included Thomas Hutchins, El Paso Corp., and James McCarthy, Innovative Environmental Solutions, Inc.

Enterprise Completes Acquisition Of Natural Gas Gathering Systems
Enterprise Products Partners L.P. has completed the purchase of the State Line and Fairplay natural gas gathering and treating systems from subsidiaries of M2 Midstream LLC (“Momentum”). The assets acquired in the $1.2 billion transaction, which are located in northwest Louisiana and East Texas, gather natural gas from the Haynesville/Bossier Shale plays, in addition to the Cotton Valley and Taylor Sand formations.

The addition of Momentum’s assets will complement the extension of Enterprise’s Acadian pipeline system now under way, which will provide shippers with takeaway capacity from the growing Haynesville Shale and flexible options to reach the most attractive markets, including access to nine interstate pipeline systems.

Momentum’s gathering and treating assets will extend the partnership’s integrated value chain through future interconnects of these gathering facilities to Enterprise’s Texas Intrastate natural gas pipeline system, along with supporting deliveries of natural gas liquids into the Panola Pipeline, and to the partnership’s fractionation, storage and distribution complex at Mont Belvieu.

Comprised of 138 miles of natural gas pipelines and two treating facilities in DeSoto and Caddo Parishes, Louisiana, and Panola County, TX, the State Line system has a capacity of 400 MMcf/d which will increase to 700 MMcf/d following the completion of a 50-mile expansion project which is expected in June. The Fairplay system includes 249 miles of natural gas pipelines located in Rusk, Panola, Gregg and Nacogdoches counties, TX. Capacity of this system is 285 MMcf/d.

Panhandle Energy Receives GITA’s Innovator Award
The Geospatial Information & Technology Association (GITA) announced that Panhandle Energy, Houston, is the recipient of the 2010 GITA Innovator Award. The award recognizes the unique and significant contributions of organizations that have used geospatial technology in the innovative development of a technology, service, or application. The award was presented during GITA’s Geospatial Infrastructure Solutions Conference held in April in Phoenix, AZ.

In 2008, Panhandle Energy initiated a project bringing together its extensive GIS map data with the dynamic real-time SCADA information. By identifying a cost-effective method to integrate these, Panhandle Energy would eliminate manual creation of SCADA system schematics, prevent data synchronization problems, and eliminate delays in getting data into the GIS as required before first gas flow.

The project was completed in October 2009 and all goals were met.

Former Chevron Executive Joins Deloitte’s Oil And Gas Group
The Deloitte Center for Energy Solutions has added former Chevron executive Peter Robertson to its roster of energy professionals.

The 35-year Chevron veteran will serve as an independent senior adviser to Deloitte’s oil and gas group, a move that enhances Deloitte’s ability to provide exceptional service to its clients with timely perspective and insights from an internationally recognized executive known for his pragmatic leadership style and deep integrity.

“Peter served Chevron in executive-level positions for several decades, including more than five years as vice chairman,” said Gary Adams, vice chairman and leader of Deloitte’s oil and gas group. “His experience and guidance will help Deloitte increase our level of service to global petroleum clients as they continue to meet worldwide energy demand in an increasingly complex future.”

Robertson joined Chevron in 1973 and held a variety of responsibilities in addition to vice chairman of the board, which ended on April 30, 2009. His other positions at Chevron included the direction of its worldwide exploration and production and global gas businesses, leadership of its corporate strategic planning and policy operations, and oversight of its government and public affairs efforts. Earlier in his career, he served as vice president of finance for Chevron U.S.A. 

He is a non-executive director of Jacobs Engineering, UniversalPegasus International and an advisory director of Campbell-Lutyens.

Poll Finds Growing Interest In Traditional Oil And Gas
Traditional oil and gas remains a key portfolio allocation for institutional investors responding to a poll conducted last month at SMU Cox Executive Education’s Oil & Gas Investing for Institutional Investors program. Ninety-five percent of respondents expect their oil and gas-focused holdings to increase or remain stable over the next three years, with only 5% forecasting a decline in their participation in the sector.

Among the most cited trends influencing oil and gas investment decisions were: shifting global supply and demand, rising demand and influence from Asia Pacific, specifically China, and changing governmental policies and regulations.

“It was clear from their responses that these investors have a solid interest in oil and gas as a growth element in their portfolios,” said Frank Lloyd, Ph.D., associate dean of SMU Cox Executive Education. More than half expect to take a bigger stake in oil and gas in the next three years.

“Their interest in the shifting dynamics of globalization, along with political and policy unknowns, are keeping institutional players interested in staying on top of the shifting industry landscape,” Lloyd continued.

Attendees, comprising portfolio managers and institutional investors from across the U.S., were less optimistic about alternative energy with 66% of respondents citing a lack of interest in the sector at all and no expectation of investment from their firms in solar, wind, nuclear, and other alternative fuels in the next five to 10 years.

“We continue to see strong demand from our institutional investor base for attractive opportunities in the upstream E&P sector, which is confirmed by the responses from this year’s attendees,” said Jason McMahon, Partner of EnCap Investments L.P., a sponsor company to SMU in hosting the investment seminar.

“The combination of a broad recognition of growth in worldwide energy demand and attractive risk/return characteristics of our industry relative to alternatives presents a very compelling case for continued investment in oil and gas.”

Specific results from the survey include:

• 50% believe their holdings in oil and gas will grow over the next three years, 45% expect it to remain the same; 5% expect their oil and gas holdings to decrease
• 84% view Exploration and Production (E&P) as the most attractive industry segment for investment, with midstream/downstream and the service and supply sectors ranking equally at 8% each
• 58% see North American natural gas as somewhat attractive for investment at this time; 24% saw it as very attractive; 18% said not attractive at all
• 66% were not interested in investing in alternative energy at this time; 32% were somewhat interested with only 2% very interested in this sector
• 66% do not expect to invest more in alternative energy in the next five to 10 years
• 19% of respondents currently manage portfolios with 50% or more oil and gas holdings; 81% say oil and gas comprise less than half their holdings
• When asked to name the most pressing industry trends that will likely influence investment decisions in the next three years, the most frequent responses were:

1. Shifting global supply and demand (68%)
2. Rising demand and influence from Asia Pacific, specifically China (55%)
3. Uncertainty about changing governmental policies and regulations (50%)
4. Rising concerns about environmental impact and regulation (32%)

CenterPoint Signs Contract For Work In Haynesville Shale
CenterPoint Energy Field Services, Inc. (CEFS), an indirect, wholly owned natural gas gathering and treating subsidiary of CenterPoint Energy, Inc., has entered into long-term agreements with subsidiaries of Encana Corporation and Shell to provide gathering and treating services for their growing Haynesville Shale natural gas production in portions of De Soto, Red River, Sabine and Natchitoches parishes in northwest Louisiana.

The system will be known as the Olympia Gathering System. It will be interconnected with CEFS’s Magnolia Gathering System, also in the Haynesville Shale, which is being built to support Encana and Shell natural gas production in De Soto and Red River parishes.  

Under the terms of these new agreements, CEFS acquired existing facilities from Encana and Shell and will expand them to gather and treat up to 580 MMcf/d of natural gas. If Encana and/or Shell elect, CEFS will expand its facilities in order to gather and treat up to an additional 520 MMcf/d. The agreements also include volume commitments.

Gathering and treating services from the acquired facilities started immediately.

New construction to reach 580 MMcf/d includes more than 180 miles of pipelines, nearly 8,000 horsepower of compression and over 680 MMcf/d of treating capacity. CEFS estimates that the cost for the Olympia Gathering System, including the purchase of existing facilities, will be between $400-425 million. Depending on expansion elections by Shell and Encana, CEFS would invest as much as $175-200 million for additional facilities.

Under the agreements with Shell and Encana executed in September 2009 for gathering and treating services in northwest Louisiana of the Haynesville Shale, CEFS has 900 MMcf/d of total capacity under construction. The construction of the 700 MMcf/d base facility is running ahead of schedule with substantial volumes flowing. Known as the Magnolia Gathering System, it is expected to be fully in service by year-end. An expansion by 200 MMcf/d requested in March 2010 is under construction and is expected to be placed into service in the first quarter of 2011.

Upon completion of the currently committed expansions of the Magnolia and Olympia Gathering Systems, the combined systems will be capable of gathering nearly 1.5 Bcf/d of natural gas. If all remaining expansions are elected, the two systems will be capable of gathering 2.8 Bcf/d.

“CenterPoint Energy Field Services is extremely pleased to have been selected to provide additional gathering services for two outstanding producers,” said C. Gregory Harper, senior vice president and group president of CenterPoint Energy’s Pipelines and Field Services group. “The combination of the Olympia and Magnolia projects under way with Encana and Shell makes CenterPoint Energy a leading gatherer in the Haynesville Shale both in system capabilities and committed volumes.”

Regency Acquires Additional Interest In Haynesville Joint Venture From GE
Regency Energy Partners LP has acquired 7% of the Haynesville Joint Venture from an affiliate of GE Energy Financial Services for $92 million and the right to vote the interest retained by GE Energy Financial Services. Regency’s total ownership interest in the Joint Venture is now 49.99%. Regency will continue as operator of the Regency Intrastate Gas System, which transports gas from the Haynesville Shale, one of the fastest growing U.S. natural gas fields.

Alinda Capital Partners LLC, an independent private investment firm specializing in infrastructure investments, will retain its 50% ownership interest in the Haynesville Joint Venture.

“Increasing our ownership of the Haynesville Joint Venture is in line with our long-term growth strategy of increasing fee-based assets, which generate stable cash flows,” said Byron Kelley, Regency chairman, president/CEO.

Clean Energy To Provide Natural Gas Fueling Services to SuperShuttle
Clean Energy Fuels Corp. has contracted with SuperShuttle International, a leading shared-ride ground transportation operator, to provide compressed natural gas (CNG) fueling services to SuperShuttle vans operating at major U.S. airports nationwide.

Under the terms of the five-year fuel agreement, SuperShuttle vans will fuel up at existing and future public access Clean Energy CNG stations at airports including Dallas/Fort Worth, Denver, New York City, Phoenix and, in California, Los Angeles, Burbank, Ontario, Orange County, San Francisco and San Diego. As part of the initial deployment, SuperShuttle ordered 40 new CNG vans for San Francisco International Airport through BAF, Clean Energy’s subsidiary.