November 2021, Vol. 248, No. 11

Global News

Global News November 2021

US Supreme Court Refuses Stay Request for Spire Missouri Pipeline  

The U.S. Supreme Court refused natural gas company Spire Inc’s request to stay a lower court decision that vacated a federal permit to operate the company’s STL pipeline in Missouri.  

Spire has warned that the shutdown of the 65-mile (105-km) pipeline could cause gas outages for as many as 400,000 in St. Louis this winter.  The company, however, already has permission from the U.S. Federal Energy Regulatory Commission (FERC) to continue operating the pipe through at least mid-December as Spire and FERC figure out what to do about the permit problem.  

“While we are disappointed by today’s decision ... STL Pipeline will continue to operate under the currently effective emergency certificate issued by the (FERC),” Scott Smith, president of Spire STL Pipeline, said in a statement.  

FERC issued the temporary emergency certificate to operate after the U.S. Court of Appeal for the District of Columbia Circuit vacated in June the certificate FERC issued for the roughly $285 million pipe in 2018. The line began operating in November 2019.  

The appeals court said the problem with the 2018 certificate was that FERC found a market need for the pipeline despite only one gas supplier, an affiliate of the line’s operator, committing to use it.  

Summit Midstream Settles Criminal Pollution Charges for $36 Million  

Pipeline operator Summit Midstream Partners pleaded guilty in federal court in Bismarck, North Dakota, to criminal water pollution charges stemming from a produced water spill from oil drilling.  

The company agreed to pay $36.3 million to settle the criminal charges, as well as parallel civil charges filed by the U.S. government and the state of North Dakota.  

In a statement when the plea agreement was announced, Summit Chief Executive Heath Deneke said, “We have accepted responsibility for the produced water spill at the Blacktail Creek site from the beginning and have been working diligently over the past seven years on efforts to fully remediate the environmental impacts to the area.”  

Head of Ukraine’s Naftogaz: Russia Blackmailing Europe Over Gas  

The head of Ukraine’s state energy company Naftogaz said Russia was trying to blackmail Europe into certifying its Nord Stream 2 pipeline by keeping natural gas supplies lower.  

Both the Kremlin and gas giant Gazprom have repeatedly said Russia is meeting all the requests for gas supplies from European customers.  

“All specialists understand that Gazprom deliberately does not supply additional volumes of gas to the European market,” Naftogaz’s Yuriy Vitrenko told a televised briefing.  

“Everyone understands that this (additional) gas exists, everyone understands that Gazprom is deliberately delaying the supply of this gas, blackmailing Europe in order to obtain the Nord Stream 2 certification,” he added.  

Vitrenko said Ukraine can transit up to 140 Bcm of gas to Europe annually, while the volume could stand at around 40 Bcm in 2021.  

Analysts have said that Gazprom has not booked larger volumes in a move to push for the Nord Stream 2 gas pipeline, which is awaiting regulatory clearance from Germany to start gas exports.  

Gazprom and Ukraine agreed a five-year deal on Russian gas transit to Europe at the end of 2019 after prolonged talks, complicated by political tensions between the two ex-Soviet republics.  

Saudi Aramco Taps Banks for $12-14 Billion Gas Pipeline Loan  

Saudi Aramco has asked banks to arrange a loan expected to be in the $12 billion-$14 billion range that it plans to offer to buyers of its gas pipeline network, sources said, as the oil giant advances plans to raise funds from asset sales.  

Aramco could raise at least $17 billion from the sale of a significant minority stake in its gas pipelines, sources had previously told Reuters. The stake would be offered with a loan financing package already in place, worth about 80% of the price.  

Banks that financed a $12.4 billion acquisition of the company’s oil pipelines earlier this year received a request for proposals from Aramco last week, said three sources familiar with the matter.  

That deal, which included all of Aramco’s existing and future stabilized crude pipelines, was backed by $10.5 billion financing from a large group of banks including Citi, HSBC and JPMorgan. Aramco is working with JPMorgan and Goldman Sachs on the gas pipeline deal, sources have said.  

Egypt Close to Finalizing Arrangements for Gas Supplies to Lebanon  

Egypt is finalizing arrangements to start supplying gas to Lebanon soon under a plan to help ease Lebanon’s power crisis, the two countries’ energy ministers said.  

Under an agreement announced last month, Egypt will supply natural gas to Lebanon via a pipeline that passes through Jordan and Syria to help to boost Lebanon’s electricity output. The deal, agreed to by all four countries, is part of a U.S.-backed plan to address Lebanon’s power shortages.  

Lebanese Energy Minister Walid Fayad said that Egypt could provide more gas than originally anticipated if necessary but gave no details.  

Life in Lebanon has been paralyzed by the crisis, which has deepened as supplies of imported fuel have dried up. It is part of a wider fiscal crisis that has sunk the Lebanese currency by 90% since 2019. The energy plan, however, is complicated by U.S. sanctions on the Syrian government of President Bashar al-Assad. Lebanese officials have called on Washington to grant an exemption.  

SoCalGas Testing Hydrogen Blending in Closed Loop System  

Southern California Gas Co. (SoCalGas) announced it is blending hydrogen to fuel a household system and appliances at its Engineering Analysis Center and Centralized Training Facility.   

As part of the testing, technicians are measuring the performance of common household appliances like stoves, wall heaters and forced-air furnaces when they are fueled with a blend of hydrogen and natural gas. This is the next step moving out of the lab and toward future blending into the natural gas grid, with an emphasis on safety and training.   

SoCalGas is among the first utilities in the nation to test the effects of a hydrogen blend on natural gas infrastructure and equipment in a controlled field environment. This effort utilizes the same engineering and technology that will be used to blend into the natural gas grid in the future.   

Preliminary results of testing that began earlier this summer show the household natural gas appliances are compatible with up to a 20% hydrogen blend, consistent with other research and lab testing.   

Dominion to Sell Questar Pipeline to Southwest Gas   

Dominion Energy said it has agreed to sell Questar Pipeline to Southwest Gas Holdings Inc. in a deal valued at $1.975 billion.  

For Southwest Gas, the acquisition would mark a northward expansion of its natural gas operations and boost its regulated business.  

The deal, which is expected to close in the fourth quarter, comes after activist investor Carl Icahn sent a letter to Southwest Gas, urging the company to abandon the acquisition and instead focus on improving its share price.  

Questar Pipeline is an interstate natural gas pipeline company that provides transportation and underground storage services in Utah, Wyoming, and Colorado. It also owns the Clay Basin storage facility, the largest underground storage reservoir in the Rocky Mountains, according to the company’s website.  

Southwest Gas provides natural gas service to more than two million residential, commercial, and industrial customers in most of Arizona and Nevada, and parts of northeastern and southeastern California.  

Shell Exits Permian with $9.5 Billion Shale Sale to ConocoPhillips  

Royal Dutch Shell said it would sell its Permian Basin assets to ConocoPhillips for $9.5 billion in cash, an exit from the largest U.S. oilfield for the energy major shifting its focus to the clean energy transition.  

For ConocoPhillips, it is the second sizable acquisition in a year in the heart of the U.S. shale industry, as American and European producers diverge in whether to focus on hydrocarbons going forward.  

Like all of the world’s largest oil companies, Shell is under pressure from investors to reduce fossil-fuel investments to help reduce global carbon emissions and fight climate change.  

ConocoPhillips is acquiring around 225,000 net acres, as well as over 600 miles of oil, natural-gas and water pipelines and other energy infrastructure, according to its statement announcing the transaction. This builds on its existing portfolio of 750,000 net acres in the Permian.  

To help pay for the deal, ConocoPhillips will hike its own divestment targets by 2023 to between $4 billion and $5 billion, up from between $2 billion and $3 billion.  

Plains All American, Oryx Midstream Form Permian Basin JV  

Plains All American and Oryx Midstream Holdings, a portfolio company of Stonepeak Infrastructure Partners, announced they have successfully completed the formation of their Permian Basin strategic joint venture.  

The Plains Oryx Permian Basin joint venture includes all of Oryx’s Permian assets and, except for Plains’ long-haul pipeline systems and certain of its intra-basin terminal assets, most of Plains’ assets located within the Permian Basin.  

“This is a significant milestone that positions Plains, Oryx and the JV to create significant value for our customers, partners, and investors,” said Willie Chiang, Chairman and CEO of Plains All American.   

Chief Oil & Gas Explores Sale in Excess of $3 Billion  

Chief Oil & Gas LLC, the Appalachian exploration and production company founded and controlled by Texas wildcatter Trevor Rees-Jones, is exploring a sale that could value it at more than $3 billion, including debt, Reuters reported in October, citing unnamed people familiar with the matter.  

Rees-Jones launched Chief Oil & Gas in 1994, and it is now one of the largest privately-owned natural gas producers in the United States. His decision to attempt a sale now comes as energy prices have surged to multi-year highs, boosting corporate valuations in the industry.  

Chief Oil & Gas operates in the Marcellus shale in northeastern Pennsylvania and has around 600,000 net acres, producing more than 1 billion cubic feet per day (Bcf/d) of natural gas.  

Another privately held Marcellus natural gas producer, Alta Resources, was sold in July to EQT Corp for $2.9 billion. Alta had around 300,000 net acres and produced 1 Bcf/d of gas.  

Shale Producer APA Ends Flaring, Captures More Gas as Prices Soar  

Shale oil and gas producer APA Corp, Apache’s holding company, said it has ended routine gas flaring at its U.S. onshore operations, delivering ahead of schedule on a pledge to halt the practice as natural gas prices soar.  

Energy producers routinely flare, or burn, natural gas during well or processing disruptions and when they lack access to pipelines. APA had previously invested more than $850 million in long-haul pipelines through its affiliate Altus Midstream, in deals backed by commitments from its subsidiary Apache.  

Those agreements, which have helped move more gas out of the basins where it operates, as well as new investments in compressors and connections to gas-gathering systems, have allowed APA to end routine flaring ahead of its year-end goal.  

In 2019, producers in the Permian Basin of Texas and New Mexico flared and vented some 293.2 Bcf of gas. But flaring there has declined with recent oil bust, falling in May to the lowest level since 2017, according to consultancy Rystad Energy.    

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