October 2009 Vol. 236 No. 10

In The News

October Newsreel: Energy Transfer Completes Texas Independence Pipeline; Equitable Gas Top in Customer Service and More

Energy Transfer Completes Texas Independence Pipeline
Equitable Gas Company Earns Top Industry Performance In Customer Service
EQT Plans Expansion To Accommodate Marcellus Shale Production

Baker Hughes Acquires BJ Services For $5.5 Billion
Quanta Services To Acquire Leading Pipeline Infrastructure Service Provider
NAPCA Summer Workshop Draws Record Numbers
Report Addresses Safe Subsurface Storage Of CO-2
Common Ground Alliance Reports Fewer Underground Utilities Damaged
KMP Acquiring Gas Treating Assets From Crosstex
Plains All American Acquires Remaining 50% Interest In Gas Storage JV
Dresser-Rand Reports Sale Of 700th DATUM Centrifugal Compressor
PetroChina Spending $1.7 Billion For Oil Sands Stake

Energy Transfer Completes Texas Independence Pipeline
Energy Transfer Partners has completed the 160-mile Texas Independence Pipeline. The natural gas pipeline increases the Partnership’s take away capacity in Texas by an incremental 1.1 Bcf/d. Energy Transfer has also completed the Rulison expansion project in Colorado. These projects are important parts of the Partnership’s overall expansion efforts to increase the take away capacity of its pipeline systems nationwide.

The 42-inch Texas Independence pipeline serves the Bossier and Barnett Shale natural gas resource plays in east and north central Texas. Originating just west of Maypearl and ending near Henderson, Independence Pipeline connects the Partnership’s existing central and north Texas infrastructure to its east Texas pipeline network. With the addition of compression, the project may be expanded to transport natural gas volumes in excess of 1.75 Bcf/d.

The Rulison expansion project includes the 10-mile, 24-inch Rulison pipeline and the Holmes Mesa compressor station in Garfield County, CO. These projects are designed to increase capacity of the Partnership’s South Parachute – Rifle pipeline system. The project will also create a new outlet for producers to access the Meeker processing plant at the White River Hub. The Rulison pipeline will initially add more than 70 MMcf/d of capacity with the ability to expand to more than 200 MMcf/d in the future.

Equitable Gas Company Earns Top Industry Performance In Customer Service
Pittsburgh-based Equitable Gas Company, LLC said results from the recent Pennsylvania Public Utility Commission’s annual Customer Service Performance Report indicate continued improvement and top gas industry performance in Pennsylvania for Equitable Gas in customer service.

“Outstanding customer service is a priority for Equitable Gas,” said M. Elise Hyland, president. “Our employees strive to provide courteous, professional and high-quality interactions with our customers. The improvement in Equitable Gas customer satisfaction demonstrates that our employee’s hard work coupled with the significant investments we have made in technology and infrastructure is working.”

Equitable’s call center had top Pennsylvania gas company performance. Its call abandonment rate was the lowest, with only 3%t of customers abandoning their calls prior to speaking to a customer representative, and service level ranked second with 80% of customer calls answered within 30 seconds. No customer received a busy signal when calling the call center. The company tied for first in timeliness of responses to customer disputes, with none exceeding 30 days.

The report includes data from 700 random customer transaction surveys. Equitable ranked first in western Pennsylvania in satisfaction with the ease of reaching the company and use of its automated phone system. Equitable had the top rankings for three field representative categories – courtesy, knowledge and respect for property – with 100% of respondents answering they were either “very satisfied” or “somewhat satisfied” when asked how satisfied they were with a field visit.

As part of its focus on improving customer service through technological improvements, Equitable installed new automated readers on gas meters enabling it to provide customers with bills based on actual monthly meter readings. Equitable launched a Web site in April to assist customers manage accounts online.

EQT Plans Expansion To Accommodate Marcellus Shale Production
Rigzone report that EQT Corp., formerly Equitable Resources, is planning to triple the capacity of its 1,500 mile Equitrans natural gas pipeline network. EQT has amassed 3.4 million acres of leases across the Appalachian Basin where it can drill new natural gas wells, including 400,000 acres in the gas-rich Marcellus Shale region of Pennsylvania and bordering states.

In the near term, EQT plans to start an open season to gauge other gas producers’ interest in its planned expanded capacity on Equitrans. The project eventually could cost $650-750 million and run through 2013 or longer. A major advantage of Equitrans is that it’s an existing pipeline that wouldn’t need land acquisitions or a lengthy permitting process — and it already connects to five major interstate pipelines run by other companies.

Baker Hughes Acquires BJ Services For $5.5 Billion
Oil field services company Baker Hughes has agreed to buy rival BJ Services Company in a cash-and-stock deal worth $5.5 billion. Baker Hughes CEO Chad Deaton said the purchase would allow it to expand internationally and compete for projects with companies engaged in all phases of the oil business.

The deal is expected to produce $75 million in cost savings for Baker Hughes in 2010 and $150 million in 2011, and add to earnings per share in 2011, the company said. Deaton said the transaction would assist customers with unconventional gas and deepwater fields.

“It will better position us to drive international growth and to compete for the growing large integrated projects by incorporating pressure pumping into our product offering,” Deaton said. Pressure pumping comprised less than 1% of Baker Hughes’s 2008 revenue, but is now expected to account for 20% of revenue.

Quanta Services To Acquire Leading Pipeline Infrastructure Service Provider
Quanta Services Inc. has signed an agreement to acquire privately held Price Gregory Services Inc. in a cash and stock transaction valued at $350 million.

“The acquisition of Price Gregory is a strategic move that will significantly expand the scale and scope of Quanta’s existing natural gas operations. We are confident that the additional resources, expertise and client relationships that Price Gregory brings will support our efforts to capture attractive opportunities in the natural gas pipeline infrastructure market, which is projected to grow significantly in the next decade and beyond,” said John R. Colson, chairman and CEO of Quanta.

Price Gregory was formed on Jan. 31, 2008 through the combination of H.C. Price Company and Gregory & Cook Construction, Inc. With roots dating back to the 1920s, the companies have played a significant role in the build out of the transmission pipeline infrastructure across the U.S.

NAPCA Summer Workshop Draws Record Numbers
The National Association of Pipe Coating Applicators (NAPCA) saw a record number of registrations for its summer workshop Aug. 20 in Houston. Managing Director Merritt B. Chastain, II said it was the “largest NAPCA workshop in our history.”

After a welcome message from NAPCA President Merry Brumbaugh, presentations included the role the shale regions will play in the domestic natural gas market; the economic outlook for steel production, demand and price; issues confronting railroad transportation of coated pipe; dual certification of steel pipe and the challenges that poses for constructors; UV protection of coating line pipe; and pipeline safety issues related to high-strength line pipe.

“For the first time, the U.S. has the potential to become energy independent,” said Greg Kelleher of Devon Energy and a member of the American Natural Gas Alliance. He cited the recently announced large increase in the resource base represented by natural gas reserves being developed in the shale regions.

He said the growing local natural gas supply, in combination with other traditional and non-traditional energy forms and applications could allow America to become energy-independent if there are rational tax policies, rational carbon tax policies and prudent treatment of permitting for the fracturing of tight reservoir formations.

Report Addresses Safe Subsurface Storage Of CO-2
A report published by the CO-2 Capture Project (CCP) provides a definitive treatment of the CO-2 storage subsurface technical issues and how oil and gas experience technology and protocols are available now to address them.

Entitled “A Technical Basis for Carbon Dioxide Storage,” the report, edited by Cal Cooper (formerly of ConocoPhillips), provides guidance on how to assess and manage industrial-scale CO-2 Geological Storage (CGS) projects through site assessment, operational parameters and monitoring. The Intergovernmental Panel on Climate Change believes CCS could contribute 15-55% of the cumulative mitigation effort until 2100, while the International Energy Agency found that the cost of containing climate change would be 70% higher without CCS.

Scott Imbus, CCP Storage team leader said, “With this report, the oil and gas industry is transferring decades of experience and nine years of technology development to the fledgling industry of CCS. We hope this will provide the critical boost to turn the potential of CCS into a practical reality. The findings further validate that, with the right site selection, CO-2 can be – and is – safely stored in geological formations, and that the expertise available to select and manage storage sites is available now.”

The report can be downloaded from www.co2captureproject.com.

Common Ground Alliance Reports Fewer Underground Utilities Damaged
The Common Ground Alliance (CGA), an organization focused on protecting underground utility lines and the safety of people who dig near them, recently reported the estimate of underground utility damages occurring in the U.S. in 2008 has decreased to 200,000 from the 2004 and 2007 estimates of 450,000 and 256,000 respectively.

The number of events submitted for 2008 was 135,521, which represents facility damages, near misses and/or downtime incurred. Submissions rose for the fifth consecutive year, which is indicative of broader support for voluntary data submission into DIRT.

The following stakeholder groups submit data to DIRT: Natural Gas – 41%; One Call Center – 27%; Telecommunication – 23%; Excavator – 3%; Electric – 3%; and Other – 3%. In addition to the larger number of records submitted; the quality of the records improved in 2008. The Data Quality Index (DQI), a measurement of each record’s level of completeness, improved from 50% to 57%.

Of incidents reported in 2008, more than half (73,152) had a known root cause, and were identified as follows: notification not made – 37%; excavation practices not sufficient – 37%; locating practices not sufficient – 22%; notification practices not sufficient – 3%; and miscellaneous root cause – 1%.

The DIRT Annual Report is available at http://www.commongroundalliance.com. Stakeholders interested in submitting data to the 2009 report or establishing a Virtual Private Dirt account can visit http://www.cga-dirt.com.

KMP Acquiring Gas Treating Assets From Crosstex
Kinder Morgan Energy Partners, L.P. has entered into an agreement to acquire the natural gas treating business from Crosstex Energy, L.P. for $266 million, including working capital, subject to certain closing adjustments. KMP is purchasing 290 amine-treating and dew-point control plants predominantly located in Texas and Louisiana, with additional facilities in Mississippi, Oklahoma, Arkansas and Kansas. The transaction will make KMP the largest provider of contract-provided treating plants in the United States.

Rich Kinder, chairman and CEO of KMP said, “We look forward to offering natural gas treating services to our Texas intrastate customers and to other producers in various supply basins, including the rapidly developing shale plays.”

Plains All American Acquires Remaining 50% Interest In Gas Storage JV
Plains All American Pipeline, L.P. and Vulcan Capital recently executed definitive agreements under which a subsidiary of Plains will acquire Vulcan’s 50% indirect interest in PAA Natural Gas Storage, LLC (PNGS). The deal is valued at $220 million. Plains will own 100% of the natural gas storage business and related operating entities.

“We are extremely pleased to announce this transaction and are excited about the near-term and long-term potential of the natural gas storage business,” said Greg Armstrong, CEO of Plains.

“The cash-flow stream of our natural gas storage business is essentially 100% fee-based, with available storage capacity substantially committed under contracts ranging up to 10 years in duration. Moreover, the cash-flow profile is expected to increase steadily over the next several years as we continue to expand the storage capacity through our development activities at our Pine Prairie facility,” Armstrong said.

Dresser-Rand Reports Sale Of 700th DATUM Centrifugal Compressor
Dresser-Rand Group Inc. announced the sale of its 700th DATUM centrifugal compressor. It is one of six purchased by Rolls-Royce to package with its TRENT and RB211 gas turbines. Gazprom will install these compressor packages in Russia’s Nord Stream pipeline.

This is the first DATUM compressor order for Gazprom which is managing construction of the booster compression station in the 750-mile pipeline. As a new leg of an existing network, the Nordstream pipeline will extend under the Baltic Sea from eastern Siberia to Germany and transport an estimated 55 Bm3/year of natural gas upon completion in 2012.

PetroChina Spending $1.7 Billion For Oil Sands Stake
PetroChina Co. is making a $1.7 billion investment in the Canadian oil sands after Athabasca Oil Sands Corp. reported that PetroChina is buying a 60% working interest in its Mackay River and Dover oil sands projects in northeastern Alberta.

Bill Gallacher, chairman of privately held Athabasca, said a joint venture with one of the world’s largest oil companies will ensure the two projects are completed on time.

“Oil sands projects are very capital-intensive, long-term investments and difficult to fully finance in the traditional equity market,” Gallacher said. The projects are estimated to contain 5 billion barrels of oil.