August 2017, Vol. 244, No. 8

In The News

In the News

PG&E Employees’ Rescue Efforts Earn AGA Meritorious Service Award

What began as a routine meter maintenance job turned into a rescue mission and led to an American Gas Association Meritorious Service Award for Michael Garcia and Miguel Hernandez of Pacific Gas & Electric. The AGA award is presented each year to the “individual who has performed the most meritorious act in the gas industry in saving a human life during the prior calendar year.”

The two men arrived at a home in south San Jose, CA, late in the afternoon when Garcia, a gas control technician, smelled smoke and decided to investigate. As smoke began billowing from a house across the street, Garcia heard a cry for help, immediately grabbed a fire extinguisher from their truck and rushed to the house with Hernandez, a measurement control mechanic for PG&E.

An elderly man had fallen asleep with his stove on, and they found him on the floor on his burning house.  Garcia quickly pulled the man from the house and Hernandez helped him place the man on their kneeling pads near the sidewalk.  As neighbors cared for him and called 911, the two PG&E workers split up to evacuate adjacent homes before firefighters arrived.

“Quick action and a calm demeanor under pressure saved a life that day, and it’s those qualities – seen so often in our industry – that we celebrate today in recognizing Michael and Miguel with this year’s Meritorious Service Award,” the AGA said.

Other 2017 AGA award winners included:

Gild of Ancient Suppliers Award – Cheryl Campbell, Xcel Energy;

Milton W. Heath, Sr. Memorial Award – Mike Snead, Washington Gas;

AGA Achievement Award – Dr. Eric W. Lemmon, National Institute of Standards and Technology; and

John B. McGowan Sr. Research Award –Greg Penza, ULC Robotics.

GE, Baker Hughes Close $23 Billion Merger 

Industrial giant GE and Houston-based Baker Hughes have combined to form the world’s second-largest oilfield services company with the completion of their $23 billion merger last month. The closing came shortly after the merger was approved by the U.S. Department of Justice, which sued last year to block a proposed merger of Baker Hughes and Halliburton on antitrust grounds. In contrast, there was little business overlap between Baker Hughes and GE Oil & Gas, and executives were quick to point out the synergies of the newly combined company.

“Our offering is further differentiated from any other in the industry across the value stream and enables and assists our customers in driving productivity, while minimizing costs and risks,” said Lorenzo Simonelli, president and CEO of Baker Hughes, a GE company (BHGE).  Jeffrey Immelt, chairman and CEO  of GE, added that the BHGE team “will focus on accelerating the company’s capability to extend the digital framework in ways oil and gas customers have never seen before.”

The Baker Hughes deal capped a multibillion-dollar acquisition spree by GE to build up its Oil & Gas division, including Hydril, Vetco Gray, Lufkin Industries and Wellstream.

Fossil Fuel’s Declining Share Still Dominates 

A new report from the U.S. Energy Information Institute (EIA) shows that fossil fuels captured their smallest share of the nation’s energy consumption in a century during 2016 and renewables took their largest share since the 1930s, when Americans used less energy overall and burned more wood as fuel.

Most of the fossil fuel decline is due to plummeting coal consumption, however, as petroleum and natural gas consumption have continued to gain share. Oil, natural gas and coal combined have provided over 80% of total U.S. energy consumption for over 100 years, and despite the overall decline, still accounted for 81% of total consumption in 2016.

Petroleum remains the largest source of energy in the United States, increasing in each of the past four years. Natural gas consumption increased in nine of the past 10 years while coal has dropped nearly 38% since 2005, including a 9% drop last year. As recently as 2006, the EIA report noted, the country consumed more coal than natural gas, in energy-equivalent terms.

Renewables’ share of the energy mix rose to 10.5% last year, the EIA said, with the greatest growth over the past decade in solar and wind electricity generation.

Enbridge Puts Northeast Access Pipeline on Hold

Enbridge and its partners in the proposed Access Northeast Pipeline notified the Federal Energy Regulatory Commission (FERC) of their decision to halt the permitting process for the $3.2 billion project, citing a lack of policies to support project financing in the region.

Eversource Energy and National Grid had partnered with Enbridge in the 125-mile project, which was intended to serve natural gas generators in New England through an expansion of the Algonquin pipeline system.

Pipeline proponents have been seeking a mechanism for cost recovery in the New England states, such as a tariff on ratepayers. Eversource and National Grid said the new pipeline could reduce electric bills by nearly $1 billion across New England, more than covering the cost of the tariff. However, the Massachusetts Supreme Judicial Court last year rejected a plan to let utilities to charge ratepayers for the cost of a new pipeline to the region.

Energy Drone Conference Debuts in Houston

The inaugural Energy Drone Summit demonstrated the growing application of unmanned aerial vehicles (UAV) in energy industry operations. More than 450 people from all facets of the industry attended the event in Houston, and organizers said plans are already underway for a second summit in 2018.

The summit included case sessions providing real-world examples for drone technology and outcomes, while panel sessions gathered experts to discuss strategic planning and issues related to enterprise-level drone use in high-risk environments. Over 30 UAV solutions providers showcased the expanding range of hardware, software and services developed specifically for energy and engineering enterprise.

Anadarko Caps 6,000 Lines in Colorado

Anadarko Petroleum’s Kerr McGee subsidiary said it has temporarily shut in more than 3,000 vertical wells in Colorado’s DJ Basin, plugged and abandoned about 3,600 related 1-inch supply lines, and abandoned over 2,400 inactive 2- and 3-inch flowline risers following a fatal house explosion in April.

Investigators blamed the blast on a severed gas line that was thought to be abandoned but was still connected to an Anadarko well with a valve in open position. In response, state regulators ordered companies to report the location of all oil and gas lines within 1,000 feet of occupied structures, then pressure test all active lines and abandon inactive lines.

Regulators said companies reported the locations of nearly 129,000 lines, of which 113,000 were active, and that the vast majority of lines that were pressure-tested had passed those tests.  Anadarko tested about 4,000 active lines and reported that all but 16 of them passed. Those were slated for repair and retesting.

Enterprise to Expand West Texas Processing Unit

Enterprise Products Partners is responding to continued production growth from the Delaware Basin with the addition of a second processing train that will double the capacity of its Orla cryogenic natural gas-processing facility under construction in Reeves County, TX.  The Orla II expansion will increase inlet capacity to 600,000 MMcf/d and extraction of NGLs to 80,000 bpd.  Orla II capacity is expected to be available in the third quarter of 2018, the partnership said.

Orla will deliver to Enterprise’s fully integrated system, including the recently announced 24-inch, 250,000 bpd Shin Oak Pipeline that will connect its Hobbs NGL fractionation and storage facility to its Mont Belvieu NGL complex with an initial capacity of 250,000 bpd. Orla’s residue natural gas will be transported to the Waha area through the partnership’s Texas Intrastate system. After the expansion, Enterprise’s total natural gas processing capacity will exceed 1 Bcf/d.

EQT Acquisition Creates Leading Gas Producer

EQT Corporation’s agreement to acquire Rice Energy for $8.2 billion will create the leading U.S. and Appalachian natural gas producer with estimated 2017 production of 3.17 Bcf/d, according to Rystad Energy data. After the merger, EQT will own 670,000 core net Marcellus acres, 149,000 core net Upper Devonian and 681,000 core net Utica acres, Rystad said, adding that the aggregation of acreage positions in Pennsylvania will allow for longer laterals and reduce per-unit operational costs.

“Significant improvement is expected in the Green and Washington counties where Rice Energy has recently been able to achieve higher well productivity. Looking at both factors combined, we expect a higher return per well post acquisition. However, high investments from the EQT side may push back planned activity on its own acreage in 2017-19,“ said Alisa Lukash, shale analyst Rystad Energy, the Oslo-based energy consulting and business intelligence data firm.

Sanchez Midstream Selling Texas Assets

Sanchez Midstream Partners said it has agreed to sell some of its non-operated Texas production assets to a private buyer for $6.3 million in support of its strategy to shed non-core assets and focus on midstream activities concentrated in the Western Eagle Ford in South Texas. The Sanchez Production Partners subsidiary said it expects to close both the Texas deal and its previously announced $5.5 million sale of operated Oklahoma production assets in the third quarter.

Sanchez Midstream said an expansion of the recently started Raptor Gas Processing Facility, its 50% joint venture with Targa Resources, also will be complete by the end of the third quarter. The 200 MMcfe/d facility, which began taking deliveries from the Carnero Gathering Pipeline in June, will add 60 MMcfe/d of capacity with the expansion. The processing facility began operations as the partnership neared completion of its wholly owned, dry gas Raptor SECO Pipeline Phase 1, which will provide takeaway capacity from the Raptor Gas Processing Facility to South Texas markets.

Marcellus Drilling Perks Up in PA

After struggling through low prices and a lack of infrastructure to deliver product to market, Pennsylvania’s drilling industry is showing some signs of life.  Natural gas producers drilled 397 wells during the first six months of 2017 – more than twice the number of wells drilled during the same period last year.  About 20 additional drilling rigs are exploring for natural gas, and fracking crews have reportedly been in short supply.

The pace is dramatically slower than it was in boom years, and drilling is more narrowly focused.  Three counties – Washington, Greene and Susquehanna – accounted for 60% of all wells drilled in the state during the first half of this year.  Though fewer in number, wells are being drilled more efficiently with longer laterals, and producers are coaxing more gas out of each.  Over the last decade, Pennsylvania drilling for the first six months of the year peaked in 2007, with 2,470 wells and hit a low of 215 last year.

Liquefaction Project Considered for Louisiana

Energy Transfer announced that its Lake Charles LNG Export Company entered into a memorandum of understanding (MOU) with South Korea-based Korea Gas Corporation (Kogas) to study the feasibility of joint participation in the Lake Charles LNG Liquefaction Project in Louisiana. Houston-based Shell subsidiary BG LNG Services also is participating in the study.

The Lake Charles LNG facility is owned 60% by Energy Transfer Equity and 40% by Energy Transfer Partners. The planned liquefaction project would utilize Energy Transfer’s existing regasification import facility to accommodate development of the liquefaction project. The 440-acre site is located near the Henry Hub and connected to ETP’s Trunkline Gas Pipeline System, which is a more than 2,200-mile natural gas pipeline system that interconnects with over a dozen interstate and intrastate pipelines.

 Fracking Ban Restricts Gas Supply in Maritime Provinces

Tough decisions are ahead for Nova Scotia and New Brunswick as a gap looms between domestic natural gas supply and demand, the Canadian Energy Research Institute indicated in a study released July 4. Natural declines in both offshore and onshore production will increasingly conflict with rising demand in both provinces over the next 20 years, CERI said, noting that hydraulic fracturing of wells, which could unlock large resources, is currently prohibited.

“With dwindling offshore production and increasing local demand for natural gas, both jurisdictions will need to weigh the options moving forward, how and where local demand for natural gas will be met,” CERI said. “The interesting irony is that Nova Scotia and New Brunswick have extensive histories in oil and gas exploration and production, New Brunswick dating back to 1859 – the same year as Pennsylvania’s famous Drake well – and may yet become larger oil and gas players in the future.”

Combined, the Frederick Brook Shale in New Brunswick and the Horton Bluff Shale in Nova Scotia are estimated to hold up to 136 Tcf of gas. CERI developed three scenarios in its report, based on whether the provinces develop additional gas resources: Imports, self-sustaining, and exports. In its “We are Exporters” scenario, CERI envisions lifting the fracking moratoriums and the provinces pursuing more production growth with investment in liquefied natural gas exports.

Apache Sells Remaining Canadian Oil and Gas Assets; Will Exit the Country

Apache has sold its assets in British Columbia, Alberta and Saskatchewan for nearly $1 billion in a strategic exit from Canada. Apache said leaving Canada was part of its goal of streamlining its portfolio to focus on projects in the United States, United Kingdom and Egypt.

Apache said the sell-off will mean a significant reduction in its costs, as well as improve the revenue and cash generated on the energy it produces. It said the $125 million in spending planned for 2017 and 2018 in Canada would be redirected to other areas of its portfolio. The company said it is selling off its Canadian assets in a trio of deals worth about $927 million to Paramount Resources, Cardinal Energy and an undisclosed privately owned company.