Tag Archives: natural gas

Three reasons to buy this oil-transport play – MarketWatch

There are plenty of ways to wring shareholder value out of a company, and the more of them that can be employed, the better. In this case, we have a company creating valuable synergies with its partners, building new pipelines and all with a nice distribution yield.

Energy Transfer Partners LP ETP, +0.42%  hiked its first-quarter distribution by about 8% from year-ago levels and generated enough cash flow to cover 118% of this higher payout. Some of this upside came from the partnership’s wheeling and dealing with its general partner, Energy Transfer Equity LP ETE, +0.74% and its sister MLP, Sunoco LP SUN, +1.55% in a series of kick-up and drop-down transactions.

For example, Energy Transfer Equity retired 30.8 million of Energy Transfer Partners’ common units in the first quarter, paid the master limited partnership (MLP) $879 million in cash and transferred a 45% interest in a pipeline project that will transport crude oil from the Bakken Shale.

In exchange, Energy Transfer Partners kicked up the bulk of its remaining general-partner interest and incentive distribution rights in Sunoco Logistics Partners LP SXL, +0.96%  to Energy Transfer Partners.

During the first quarter, Energy Transfer Partners also sold a 31.58% stake in its wholesale fuel-distribution business to Sunoco LP for $775 million in cash and 795,482 common units. Energy Transfer Partners plans to drop down the remaining interests in these assets to Sunoco LP over the next two years, providing another source of liquidity.

At some point, Energy Transfer Partners can kick up the general-partner interest in Sunoco LP to Energy Transfer Equity in exchange for more unit retirements or other considerations.

On Energy Transfer Partners’ first-quarter earnings call, management also provided an update on the opportunities created by its acquisition of Regency Energy Partners LP, which closed on April 30. We analyzed this deal at length in Energy Transfer Partners LP to acquire Regency Energy Partners LP.

Management estimated that if the transaction had closed in the first quarter, Energy Transfer Partners’ distribution coverage would have slipped to 104%, reflecting the equity issued to close the deal. However, this coverage rate improves to 110% when you factor in $165 million to $225 million in recurring synergies.

via Three reasons to buy this oil-transport play – MarketWatch.

Natural Gas Rising on Hotter Weather Forecasts; up 10% in two days – WSJ

Natural gas surged to its highest settlement in more than two weeks as hotter weather forecasts pushed demand expectations higher for a second-straight day.

Prices for the front-month July contract rose 14.1 cents, or 5.2%, to $2.846 a million British thermal units on the New York Mercantile Exchange. It is up 9.9% over two days, the largest back-to-back gains since mid-January.

Weather forecasts grew incrementally warmer for the second-straight day. WeatherBELL Analytics LLC called it a “heat wave” for the Southeast and Mid-Atlantic regions in its midday update. Other weather forecasters have said the heat won’t be that strong, but it is likely to crest 90 degrees Fahrenheit in the Mid-Atlantic region, the hottest weather of the season, said Commodity Weather Group LLC in Bethesda, Md.

via Natural Gas Rising on Hotter Weather Forecasts – WSJ.

Consol Slashing Spending, Yet Still Increasing Gas Production

In a slumping oil and natural gas market, Consol Energy will cut capital spending by $300 million this year compared to 2014. Still, the firm long known for mining coal continues shattering its own Marcellus and Utica shale production records.

From Oct. 1 through Dec. 31, Consol pumped 7.1 billion cubic feet of natural gas from the Utica formation, up from just 0.5 Bcf during the same period in 2013. This is 14 times more gas than the amount the company generated from the Utica in the same three-month stretch the previous year. In the Marcellus Shale field, Consol nearly doubled its natural gas output by collecting 36.5 Bcf from Oct. 1 through Dec. 31, compared to the 19.4 Bcf drawn in the 2013 fourth quarter.

Overall, the company produced 70.5 Bcf during the three-month period, up from 48.5 Bcf the prior year. Consol expects overall gas production to grow 30 percent each year for the next two years.

via Consol Slashing Spending, Yet Still Increasing Gas Production – News, Sports, Jobs – The Intelligencer / Wheeling News-Register.

FirstEnergy plans $35 million in upgrades for shale gas facilities | TribLIVE

FirstEnergy Corp. will spend $35 million over the next two years on several transmission and substation projects aimed at improving electrical service around Marcellus shale gas development.

The upgrades, which include a $31 million substation in Washington County to support a new gas processing facility, also will improve reliability for West Penn Power customers in the area, the utility’s Akron-based parent company said Monday. In addition to the substation, the company this spring will start $1 million worth of work on a transmission substation near Houston in Washington County, and next year will upgrade a 9-mile transmission line between Burgettstown and Weirton, W.Va.

via FirstEnergy plans $35 million in upgrades for shale gas facilities | TribLIVE.

Natural gas shale drillers in US undaunted by 32% price plunge

US natural gas production is poised to reach a record for a fifth year as shale drillers boost efficiency, driving prices toward a low of more than a decade.

Output will rise 3.2% in 2015, led by gains at the Marcellus formation, the nation’s biggest shale deposit, according to the Energy Information Administration. Marcellus production will increase 2.8% through February after a 21% gain in 2014, a year when prices tumbled 32%. Producers in Pennsylvania and West Virginia have cut break-even costs by half since 2008, according to Oppenheimer & Co.

Drilling more wells at one site and extending the length of horizontal wells are among the efficiencies that have helped gas companies cope with falling prices. The EIA expects Marcellus to climb to about 20% of production in the lower 48 states from about 2% in 2007. Cabot Oil & Gas Corp, the biggest Marcellus producer, plans to increase output by at least 20% this year.

“The Marcellus has been a game changer in terms of production, reserve potential, everything,” said Fadel Gheit, a senior energy analyst for Oppenheimer & Co in New York. “They are not waiting for higher gas prices to bail them out.”

Natural gas futures fell 2.1 cents to $2.579 per million British thermal units on Friday on the New York Mercantile Exchange, the lowest settlement since June 2012. Gas has declined 81% from a high in 2008 as production from shale formations increased, touching $1.907 in April 2012, the lowest since 2002.

Break-even prices for Marcellus producers have dropped below $2 per thousand cubic feet ($1.95 per million Btu) from around $4 in 2008, Gheit said in a February 3 interview.

US gas production growth was projected to slow to 1.4% last year, the least since a decline in 2005, the EIA said in December 2013. Instead, output jumped 5.6%.

via Natural gas shale drillers in US undaunted by 32% price plun...

New shale gas pipelines target Chicago – Argus Media

New planned pipelines to carry natural gas from the Marcellus and Utica shales to the Chicago, Illinois, area could spur fierce price competition and displace Canadian and Rockies supply.The projects, which include making part of the Rockies Express (Rex) pipeline bi-directional, could also lead to lower basis prices in Chicago, despite an expected increase in demand.The proposals include the Prairie State pipeline, which could move as much as 1.5 Bcf/d (42mn m³/d) from Douglas County, Illinois, to Chicago. The pipeline system, a joint effort between Tallgrass Development and AGL Resources, would span 140 miles (225km) and include connections to gas distribution systems, storage fields and interstate pipeline companies in the Chicago area.Another plan by Natural Gas pipeline (NGPL) is a potential expansion to its Gulf coast mainline from the Rex connection in Moultrie County, Illinois, to locations north on the pipeline system.That project could increase NGPL’s capacity by up to 435mn cf/d for delivery to markets in and near Chicago, said Kinder Morgan, the midstream group that owns and operates NGPL.The expansion could provide access to more than 100 of NGPL’s interconnects with Chicago-area local distribution companies, power plants, industrial end users, interstate pipelines, and NGPL’s storage and pooling locations.TransCanada is considering an expansion of the ANR pipeline system that could add about 2 Bcf/d of natural gas transportation into the Chicago area.And the potential reversal of Rex could bring 1.2 Bcf/d of gas from the Appalachian basin to Great Lakes demand centers. This is in addition to Rex’s Seneca lateral, which went into service in June, and is moving up to 362mn cf/d of production from the MarkWest Seneca gas processing plant in southeast Ohio into the Rex mainline, providing an outlet for Marcellus and Utica production. The pipeline is planning to increase capacity on the Seneca lateral to 580mn cf/d.The varied projects could lead to an oversupply of gas into Chicago, leading to fierce competition between competing basins, said Ed Kallio, director for gas consulting at Ziff Energy.”Chicago is going to be a blood bath,” Kallio said.

via News – Argus Media.

Linn Energy: When Will The Pain Stop? – Seeking Alpha – Albert Alfonso

About a week ago, I discussed the impact of lower oil prices on Linn Energy (NASDAQ:LINE) (NASDAQ:LNCO). In that article, I noted that Linn Energy was starting to recover, up 30% over 2 days due to the closing of several major transactions, a large reduction of debt, and rumors of lower capital spending for 2015. However, this brief rally was snuffed out almost as fast as it started. The main culprit, in my opinion, are lower natural gas prices.LINE data by YChartsA look at natural gasOver the past few days, natural gas prices have been extremely volatile. The main concerns here are a forecasted mild winter and larger than expected increases in natural gas inventories.So far, December 2014 has been one of the warmest on record, keeping demand for natural gas low for uses such as home heating and power consumption. In addition, natural gas inventories have risen faster than anticipated, thanks to robust supply growth from the Marcellus Shale, while the most recent net drawdown came in below consensus estimates.

via Linn Energy: When Will The Pain Stop? – Linn Energy, LLC (NASDAQ:LINE) | Seeking Alpha.

‘Contrarian’ CEO doubles down even as natural gas prices fall – Houston Chronicle

Despite the fact that natural gas prices last week hit their lowest level in two years – and that many exploration and production companies have largely abandoned natural gas in the age of America’s oil boom – Houston’s Southwestern Energy is doubling down on its investment in gas.”We’re really a gas-driven company,” chief executive Steven Mueller told the Chronicle on Tuesday, a day after the company announced it would increase capital spending next year by $200 million, to $2.6 billion, at a time when other Houston-based exploration and production companies are cutting back.”Today’s gas prices are low,” Mueller said. “We’re a little bit contrarian. We don’t think it will stay in that low $3 range.”The price closed Tuesday at $3.094 per million British thermal units, but Mueller said he expects that to rise in the coming year as utilities continue to shift from coal to natural gas-fired power plants. Inexpensive natural gas in the U.S. maintains a distinct price advantage compared to natural gas sourced abroad, he said.The CEO said Europeans, whether they use liquefied natural gas or imports from Russia, are hard-pressed to find natural gas for less than $9 per million BTU. At that point, manufacturers and other heavy users of natural gas will likely shift more operations to the U.S. to take advantage of its comparatively cheap natural gas – providing a boon for Southwestern. “We’ve got gas, we’ve got the infrastructure, and we’ve got the stable government,” Mueller said.

via 'Contrarian' CEO doubles down even as natural gas prices fall – Houston Chronicle.

Texas has 104 natural gas stations and counting

A new Railroad Commission of Texas map shows more than 100 existing and planned spots in Texas where drivers can fuel up their natural gas vehicles.A few years ago there were 69 stations across the Texas, the agency said.Now there are 60 public fueling stations and 44 private stations. Next year, 67 more stations are expected to open. So far, Texas has more than 7,100 natural gas vehicles.

via Texas has 104 natural gas stations and counting – Eagle Ford Fix.

UTOPIA ethane pipeline to run from Ohio to Ontario

Kinder Morgan Energy Partners LP, the Texas-based pipeline giant, is proceeding with a new pipeline to carry ethane from Ohio’s Utica shale to Ontario.The company on Thursday announced the launch of a binding open season to solicit commitments for its previously announced Utica to Ontario Pipeline Access UTOPIA.It is designed to carry ethane and ethane-propane mixtures from the liquid-rich Utica shales in eastern Ohio.The 12-inch-in-diameter, 240-mile pipeline would run from Harrison County to Kinder Morgan’s Cochin Pipeline near Riga, Mich. From there, the liquids could be moved east to Windsor, Ontario.It would handle 50,000 barrels per day, growing to 75,000 barrels per day, said the Houston-based company.The liquids would be processed in Ohio before being transported via the new pipeline.The pipeline would be built and operated by Kinder Morgan Cochin.The pipeline could, pending commitments by drillers and federal approval, be in service by early 2018.

via UTOPIA ethane pipeline to run from Ohio to Ontario | Norwalk Reflector.