July Newsreel: Polyguard Receives Award, UniversalPegasus Safety Milestone and More

July 2010 Vol. 237 No. 7

Polyguard Products Receives Highest Presidential Award For Exports
UniversalPegasus’ Employees Achieved Safety Milestone On Pipeline Project
Welker Announces Death Of Executive Dennis M. McKay
ABB Agrees To Buy K-TEK

NGL JV In Appalachian Basin
Regency Energy Partners Closes Two Purchase Transactions
George Mitchell Wins Lifetime Achievement Award
Alyeska Target Of 8 Federal Enforcement Actions
Royal Dutch Shell plc Acquires New Positions In U.S. Tight Gas
Canadian Oil Sands Poised As Top Source of Crude Oil Imports To U.S.
Peregrine Announces Rocky Mountains Gas Storage Project
Oil Chiefs Predict Long-Term Price Strength

Polyguard Products Receives Highest Presidential Award For Exports
Polyguard Products, Inc. has received the prestigious President “E” Award, given by the Secretary of Commerce, in Washington DC. The award was created by President Kennedy in 1961 to recognize persons, firms, or organizations which contribute significantly in the effort to increase U.S. During World War II more than 4,000 “E Pennants” were presented to war plants in recognition of production excellence. The famous flag with the emblazoned big “E” became a badge of patriotism in action.

Secretary of Commerce Gary Locke said Polyguard’s achievement in enhancing export growth helps strengthen the economy and creates jobs.

“I want to congratulate you on your achievement, and for supporting critical export-related jobs for American workers,” Locke said.

“President Obama’s initiative was designed with one overriding goal: to get people back to work in jobs that provide security, dignity, and a sense of hope for the future. Businesses like yours with a proven record of success are going to help us meet or exceed that goal,” he said.

Shawn Easthamm vice president of the Corrosion Products Group, said the award was a great accomplishment for the company, and that it would have not been possible without dedication.

“I’m excited about our international growth opportunities for the next 10 years and beyond. The international division is a big part of our future plans,” he said.

UniversalPegasus’ Employees Achieved Safety Milestone On Pipeline Project
UniversalPegasus International’s employees on the TransCanada Keystone XL Project recently received a shared commendation for the vital role they played in the achievement one year without a recordable incident or accident on the entire project, which runs from Ada, OK to Beaumont, TX. The President’s Award for outstanding Safety Performance was awarded to both UniversalPegasus International and Trow Engineering for their joint achievements and safety partnership on the project.
According to a UniversalPegasus International spokesperson, project safety representatives John Weatherall, Jerry Garza, Forrest Nelson and Project Safety Manager Joe Whitaker were vital in the success of this milestone, along with all UniversalPegasus employees who are involved in the project.  The group is comprised of surveyors, inspectors, project managers, engineers and all associated office staff. 

Welker Announces Death Of Executive Dennis M. McKay
Welker, Inc. of Sugar Land, TX announced that long-time energy executive Dennis M. McKay died May 28 in Houston after a recent illness. He was 63.

McKay grew up in East Texas and graduated from Rusk High School. He attended Tyler Junior College before serving in Vietnam where he was awarded the Purple Heart and the Bronze Star for valor.

McKay began his energy career in the early 1970s working for Lone Star Gas in Texas. Bob Welker met McKay during the course of their work and hired him in 1978. McKay was instrumental in developing and building Welker products. He later became involved in the sales group and working with customers. He developed the Welker Representative organization, expanded the sales staff and was ultimately named vice president of sales for the U.S. market.

McKay also served as president of OdorEyes and helped establish its product name in the industry. In recent years his health declined but he continued to mentor to new employees. He leaves his wife of 35 years, Margie, sons Chris and Michael, his parents Marie and John McKay, one sister, grandchildren and other relatives as well as a host of friends.

ABB Agrees To Buy K-TEK
ABB is buying Prairieville, LA-based K-TEK which will join the Measurement Products business unit within ABB’s Process Automation division.

“This acquisition fills an important space in our product line,” said Veli-Matti Reinikkala, head of ABB’s Process Automation division. “K-TEK is well-established, particularly in the oil and gas industry, which is a growth area for ABB. We see a lot of potential between ABB’s extensive geographic reach and exposure to other industries, and K-TEK’s depth in level detection technology.”

With over 350,000 installations since its founding in 1975, K-TEK is recognized as a global leader in magnetic level gauges, magnetostrictive level transmitters and laser level transmitters.

NGL JV In Appalachian Basin
EQT Corporation, DCP Midstream Partners LP, and DCP Midstream LLC plan to create a natural gas processing and related NGL infrastructure joint venture to serve EQT and third-party producers in the Marcellus and Huron Shale areas of the Appalachian Basin.

Under a letter of intent, EQT and DCP would pursue gas processing and related NGL infrastructure opportunities in the Marcellus and Huron Shale areas through the joint venture. The joint venture will be the preferred processor for EQT’s wet gas in the Marcellus and Huron Shale areas.

EQT has a leading exploration and production position in the Appalachian Basin with over 3 million acres of acreage and plans to spend $900 million in 2010 to drill wells in the basin. DCP has a leading position in natural gas processing and the enterprise is one of the largest NGL producers in the U.S. with extensive midstream operations.

DCP and EQT will each initially own a 50% interest in the joint venture. DCP would contribute $200 million in cash. EQT will contribute an equivalent value in existing assets consisting of its 170 MMcf/d of natural gas processing plant and related NGL pipeline in Kentucky.

Regency Energy Partners Closes Two Purchase Transactions
Regency Energy Partners LP has closed two separate transactions. Energy Transfer Equity, L.P. closed on the purchase of the general partner interest in Regency Energy Partners LP. Regency also closed on the purchase of a 49.9% ownership interest in Midcontinent Express Pipeline.

Energy Transfer Equity, L.P. acquired a 100% interest in Regency’s general partner from an affiliate of GE Energy Financial Services for ETE preferred units with a value of $300 million. In connection with the transfer of Regency’s general partner interest to ETE, John Harkey, Jr. was named chairman of the board of Regency. Byron Kelley will remain president and CEO of Regency and stay on the board.

George Mitchell Wins Lifetime Achievement Award
Gas Technology Institute (GTI) presented George P. Mitchell, former chairman of Mitchell Energy & Development Corp., with a Lifetime Achievement Award for pioneering drilling and completion technologies that created a shale gas revolution.

GTI said Mitchell’s “unconventional thinking and passion changed the energy future in the United States and now has the potential to significantly impact the world.”

Energy experts from around the world recently met in The Netherlands at the Global Unconventional Gas 2010: Unlocking Your Potential to recognize Mitchell’s accomplishments.

Alyeska Target Of 8 Federal Enforcement Actions
The operator of the 800-mile Trans Alaska pipeline is the target of eight pending federal enforcement actions that add up to more than $1 million in unpaid fines, according to press reports.

Most of the enforcement actions the Pipeline and Hazardous Materials Safety Administration has taken against Alyeska Pipeline Service Co. have been pending more than two years and involve alleged violations of federal pipeline safety regulations.

Some allegations involve paperwork errors and inadequate procedures. Others are based on safety violations that were discovered after a pipeline accident. Still other cases involve alleged violations of the rules for monitoring and fixing corrosion in the pipeline that carries crude from the North Slope oil fields to the tanker port in Valdez.

The agency said the violations were “cause for concern regarding the operational integrity of TAPS.”

Royal Dutch Shell plc Acquires New Positions In U.S. Tight Gas
Royal Dutch Shell plc continues to build a leading portfolio in North America tight gas, with new positions in high potential U.S. shale gas acreage, in the Marcellus and Eagle Ford plays.

Shell has agreed to acquire subsidiaries which own substantially all of the business of East Resources, Inc for $4.7 billion, from East Resources, its private equity investor, Kohlberg Kravis Roberts & Co. and its advisers Jefferies & Company. East Resources is a privately owned business with its primary activity focused on the Marcellus Shale in the northeastern U.S.

East Resources has 650,000 net acres of highly contiguous, operated acreage in the Marcellus, and 1.05 million net acres of acreage overall. East Resources has some 60 MMscfe/d (10,000 barrels oil equivalent per day) of production, predominantly in natural gas, with substantial medium-term growth potential.

As part of its on-going acreage build strategy, Shell has acquired 250,000 net acres of mineral rights in the Eagle Ford shale play in South Texas. These undeveloped acreage positions are in the liquids-rich window of the Eagle Ford play. Shell will be the operator in this highly contiguous acreage, and will integrate these new assets into its existing South Texas operations.

Canadian Oil Sands Poised As Top Source of Crude Oil Imports To U.S.
The Canadian oil sands have increasingly become an important source of global oil supply growth and are now poised to become the leading source of U.S. crude oil imports in 2010, according to new research from the IHS CERA Canadian Oil Sands Dialogue. Oil sands imports could ultimately increase to a range of 20-36% of U.S. oil and refined product imports by 2030 from the 2009 level of 8%, according to an earlier report, The Role of Canadian Oil Sands in U.S. Oil Supply.

Oil sands production, combined with exports of Canadian conventional crude oil, has already put Canada in the position of number one foreign supplier of oil to the United States. Over the past decade, production from oil sands more than doubled from 600,000 bpd in 2000 to 1.35 million bpd in 2009, more than offsetting declines in conventional Canadian production. The potential is much larger and oil sands growth could be three or four times greater than today to a range of 3.1-5.7 million bpd by 2030, according to the report.

While oil demand in the United States is not likely to return to its 2005 peak, the U.S. will maintain its position as the world’s largest oil market over the next two decades, the report noted.

Peregrine Announces Rocky Mountains Gas Storage Project
Ryckman Creek Resources, LLC, a wholly owned subsidiary of Peregrine Midstream Partners LLC, has received approval to use the Federal Energy Regulatory Commission’s pre-filing review process for its Ryckman Creek Gas Storage Project, a new interstate natural gas storage development in Uinta County, WY near the highly liquid Opal Hub. 

The project involves converting an existing partially depleted oil and gas field, known as the Ryckman Creek Nugget Unit, into a gas storage field. First-phase working gas capacity is being designed for 25 Bcf of high-deliverability, multi-cycle (HDMC) gas storage. Phase I will include maximum injections exceeding 200,000 Mcf/d and maximum withdrawals of 360,000 Mcf/d.
 
The project will be subject to regulation as an interstate natural gas storage facility under the Natural Gas Act. Ryckman Creek Resources intends to file an application for certificates of public convenience and necessity in the fall to construct, own and operate the project, as well as to charge market-based rates for the services it will offer. 

Submissions that Ryckman Creek has made to the FERC may be found through the FERC’s website (www.ferc.gov) in the eLibrary tab at Docket No. PF10-18-000.
 
“Ryckman Creek is ideally located near the Opal Hub where it can serve a large number of producers, shippers and markets,” said Peregrine Project Development Vice President Chuck Sawyer. This will be the largest independently owned gas storage project serving the Opal Hub area.”
 
Ryckman Creek plans to conduct a non-binding open season to gauge prospective customer interest during the fall. Construction on the project will start upon receipt of the certificate, anticipated in spring 2011, with an in-service date by April 2012.

Offshore Technology Conference Attendance Reaches 72,900
Attendance at the 2010 Offshore Technology Conference (OTC) reached 72,900 as offshore energy industry experts gathered at the world’s largest event for offshore resources development in Houston.

Attendance surpassed the 2009 total of 67,700, and the sold-out exhibition was the largest in 28 years, totaling more than 568,000 square feet, up from 557,000 square feet in 2009.

“We are coming together at a very sobering time for the offshore energy industry. Although we don’t yet know what caused the accident, we know that this industry takes safety and environmental stewardship very seriously. That is why when we do learn how this occurred, I know that all of us in the offshore industry will work together to prevent this from happening again anywhere in the world,” said Susan Cunningham, 2010 OTC chairman.

The OTC Brazil conference is scheduled for Oct. 4-6, 2011 in Rio de Janeiro. OTC’s first Arctic Technology Conference will be Feb. 7-9, 2011 in Houston.
 
 
Oil Chiefs Predict Long-Term Price Strength
Any dip in oil below $70 a barrel will likely be brief as possible OPEC action and the prospect of future supply limits prevent a sustained slide, industry executives told Reuters Global Energy Summit in London..

Analysts have cut their price outlooks in response to extreme nervousness across financial markets but industry players, who traditionally take a long-term view, anticipated higher rather than lower prices. In the near term, action from OPEC led by Saudi Arabia, could bolster the market if oil fails to sustain its rally from a low of less than $65 a barrel.

Libya’s most senior oil official Shokri Ghanem said the group was monitoring the situation and saw no need for intervention yet. Oil markets are often skeptical about OPEC’s ability to comply with its production quotas, especially as discipline has slipped to only 51% of agreed curbs. But deep price falls could concentrate minds as was the case the end of 2008 and early 2009.

“If it goes below $70, OPEC will ask their members to comply with the quota,” said Jean-Jacques Mosconi, head of strategy at oil major Total. “When the price was really down, they were very scared and very compliant with the quota.”