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North America
Canada The US' Devon Energy plans to seek approval in 2010 for the third phase of its Jackfish Lake steam-assisted gravity-drainage project in northeastern Alberta. Like the first two phases, the third phase would have a capacity of 35,000 b/d. If the project is given the go-ahead, site work would begin in 2012 and commissioning in 2014. Jackfish 1 reached full production this year. Output from Jackfish 2 is scheduled to start in 2010. Total recoverable resources are estimated at over 300m barrels. Enbridge is "encouraged by increasing signs of renewed activity in the oil sands as commodity prices recover" and sees "significant growth opportunities". The Calgary-based pipeline company's earnings per share (EPS) more than doubled in the third quarter, rising from $0.41 a year earlier to $0.83 – reflecting "strong operational performance across our liquids pipelines and gas businesses". Enbridge has raised its full-year guidance for adjusted EPS to $2.30-2.36, which would represent a 20% annual increase. The company also described growth opportunities in gas as "favourable", with assets in and near shale-gas plays in the US and Canada giving it a "very strong competitive position". Korea National Oil Corporation is paying C$1.8bn ($1.7bn) in cash and assuming debt of C$2.3bn to take over integrated Harvest Energy Trust. The offer of C$10 per Harvest unit was a 47% premium over the trust's previous 30-day average trading price and amounted to C$63,000 per flowing barrel. The assets include 220m boe of proved plus probable reserves, producing 52,000 boe/d (70% oil and NGLs), 3bn barrels of potential oil sands resources, 2-3 trillion cf of coal-bed methane prospects and a 115,000 b/d refinery in Newfoundland. Crescent Point Energy is buying privately owned TriAxon Resources for C$249m, raising its acquisitions since July to C$1.25bn. The deal includes production of 1,400 boe/d from proved plus probable reserves of 12.4m boe, raising Crescent Point's output to 45,000 boe/d. The purchase cost is estimated at C$142,643 per flowing boe and C$16.10 per boe of reserves. The assets, including 95,000 net undeveloped acres, are concentrated in the Bakken and Viking light-oil plays of Saskatchewan, and the Pembina Cardium play in Alberta. The Canadian Energy Research Institute has set what it calls a "realistic" target for oil-sands output of 5.3m b/d in 2043, 4.5m b/d in 2030 and 1.7m b/d in 2015, compared with 1.3m b/d today. It estimates those levels would generate C$0.852 trillion in royalties for the Alberta government, C$309bn in capital spending and C$130bn in greenhouse-gas compliance costs for producers. The study projects rates of return of 11-23%, based on West Texas Intermediate crude prices in a range of $119-134/b. The National Energy Board projects imports of condensate to improve the flow of oil-sands' bitumen through pipelines will increase to 346,000 b/d over the next decade, up from 78,000 b/d. This will create an urgent need for new pipelines and installations to receive, store and distribute the propane, butane and ethane to oil-sands producers. Enbridge has plans to import 180,000 b/d from the US in 2010 and a separate 190,000 b/d pipeline for imports from the Pacific Rim in 2015. Following the completion of its take over of Petro-Canada, Suncor Energy plans to sell up to C$4bn worth of assets over the next year. The list includes about 30% of its North American gas assets, which produce 0.77bn cf/d, smaller fields in the UK North Sea and offshore exploration prospects in Trinidad and Tobago. The primary objective is to reduce Suncor's net debt to C$10bn from C$13bn. TransCanada expects to raise tolls on its mainline gas-shipping system in 2010 by 39-60%. Because of declining production in Western Canada of 1.0-1.5bn cf/d this year and 0.78bn cf/d in 2008, TransCanada is authorised to increase the tolls to maintain its federally regulated rate of return on its pipeline investment of just under 9%. Some producers have said they may shut in production if the increases are imposed. Two leading industry organisations predict no change to a 4% increase in upstream activity in 2010. The Petroleum Services Association estimates 8,000 wells will be drilled, in line with its expected final tally for 2009. British Columbia is expected to post the largest gain, of 4% to 630 wells. The Canadian Association of Oilwell Drilling Contractors is targeting 8,523 wells compared with 8,278 this year. But the Canadian Association of Petroleum Producers is counting on a rise of 19%, to 9,500 wells. CIBC World Markets says Canada-based E&P companies raised C$8bn in debt and equity capital over the July-October period. It expects most of the proceeds will go to debt reduction, debt retirement and mergers and acquisitions over the "near-term", before shifting to upstream spending, which it forecasts will rise by about C$10bn in 2010 to C$38.6bn, with well completions increasing to 13,400 from an estimated 9,900 in 2009. NAL Oil & Gas Trust is spending C$403m to acquire Breaker Energy. In the process it gains proved plus probable reserves of 23m boe, production of 6,700 boe/d (55% natural gas and 45% oil and NGLs) and 140,000 net undeveloped acres. NAL expects its production will grow to around 30,000 boe/d once the deal is concluded. Talisman Energy is restructuring the company into separate conventional- and shale-gas divisions to accelerate its transition to becoming a significant North American unconventional-gas producer. It has also invested C$0.57bn through acquisitions and swaps over recent months to add a net 170,000 acres to its holdings in the shale-gas plays of Pennsylvania, US, and British Columbia, doubling its portfolio to 350,000 acres and identifying 4,800 net drilling locations. The Geological Survey of Canada, in its initial assessment of the overall hydrocarbon potential of the Maritimes basin, estimates the region holds 39 trillion cfe, mostly natural gas, compared with the 58 trillion cfe remaining in Western Canada. The study said the Maritimes basin could easily rival the potential of the Beaufort Sea and Mackenzie Delta in the country's Arctic region. UTS Energy has sold a 50% working interest in three Alberta oil-sands leases to Imperial Oil and ExxonMobil for C$250m to help finance its continued 20% stake in Suncor Energy's stalled Fort Hills oil-sands project. The buyers said the leases are "complimentary" to their existing holdings of 71,000 acres in the area. United States A take over of Encore Acquisition by Denbury Resources, in a deal valued at $4.5bn, will create the second-largest US-based independent oil producer after Pioneer Natural Resources. Denbury's offer of $50 a share was a 35% premium over Encore's closing price the previous day. The new entity will increase Denbury's proved reserves to 436m boe by incorporating Encore's Rockies and Bakken Shale reserves to Denbury's operations in Louisiana and Texas, and add 0.5bn boe of potentially recoverable resources using enhanced oil-recovery. Marathon Oil plans to start operations in late December at its expanded Garyville, Louisiana, refinery. The $3.35bn project will add 180,000 b/d to the plant's existing capacity of 256,000 b/d and generate an additional 7.5m USG/d of transport fuels. The expansion is designed to run a "very heavy" crude slate. Newfield Exploration has offered $223m for most assets of bankrupt TXCO Resources. The deal covers 630,000 net acres in the Maverick basin of south Texas with exposure to the Eagle Shale. Not included were many of TXCO's non-operated properties in Texas, Oklahoma and the Williston Basin. In response to weak consumer demand, Western Refining is shutting its 17,000 b/d refinery at Bloomfield, New Mexico, to save $25m a year, starting in 2010. The company says the plant could be reconfigured for biofuels production. Buckeye Partners is to buy three refined-product storage and distribution terminals, and two refined-product pipelines and associated storage tanks in the Chicago and St Louis areas from ConocoPhillips for an undisclosed sum. Piedmont Natural Gas will construct a 38-mile, $85m pipeline to deliver gas to Progress Energy Carolinas' planned power plant in Wayne County, North Carolina. The pipeline is expected to be in service by July 2012. China's ENN, which makes thin-film solar panels and develops solar farms, and Duke Energy Generation Services are joining forces to bid on contracts for utility-scale solar farms and large commercial solar projects (see p7). Southern has agreed to acquire West Georgia Generating from an affiliate of LS Power for an undisclosed sum. The acquisition includes a 600 MW, gas-fired peaking facility in Thomaston, Georgia, and DeSoto County Generating, which has a 200 MW plant in Arcadia, Florida. Halliburton has acquired Colorado-based Geo-Logic Systems, which provides advanced structural interpretation, analysis and restoration software for complex geologic environments, for an undisclosed sum (see p22). Holly has agreed to purchase Sinclair Oil's 75,000 b/d refinery in Tulsa, Oklahoma, along with its 2.3m barrels of storage for $128.5m in cash and stock. Additionally, Holly Energy Partners, a Holly affiliated midstream master limited partnership, has agreed to acquire about 1.4m barrels of additional storage at Sinclair's Tulsa facility, along with light products, asphalt and propane loading racks and a product delivery pipeline for $75m. Separately, Plains All American Pipeline is acquiring 400,000 barrels of crude storage capacity, six tanks, three receiving pipelines and related assets and contract rights related to Holly's Tulsa, refinery from Holly for $40m. Petroleum Development and Lime Rock Partners have formed PDC Mountaineer, a joint venture principally focused in the Marcellus Shale unconventional gas play. Petroleum Development will contribute acreage, producing properties, reserves and related gathering assets valued at about $158.5m. Lime Rock funded $45m as a return of capital at closing. Zenergy International has acquired Greenlight Biofuels, a biodiesel company in Lubbock, Texas. Integrys Energy Services has agreed to sell its wholesale gas-marketing business in a two-part transaction. Financial terms and buyers were not disclosed. Enterprise Products Partners and Duncan Energy Partners plan to extend their jointly owned Acadian Gas subsidiary's Louisiana intrastate gas-pipeline system into northwest Louisiana. The 249-mile Haynesville Extension will have capacity to move 1.4bn cf/d to both Acadian's system and its affiliated Cypress Gas Pipeline. Acadian will build the new compressor station as part of the project. Enterprise expects the Haynesville Extension to enter service in September 2011. Entergy Louisiana has agreed to acquire Unit 2 of the 580 MW combined-cycle, gas-fired Acadia Power Station, near Eunice, Louisiana, from Acadia Power Partners for an undisclosed sum. Waste Management has begun operations at the world's largest facility to convert landfill gas to liquefied natural gas (LNG). The plant converts gas from the decomposition of organic waste at a landfill site in Livermore, California, into about 13,000 USG/d of LNG to fuel 300 vehicles that collect waste and recycled products in 20 California communities. Xcel Energy plans to invest $58.1m to convert the remaining coal-fired unit at its Bay Front Power Plant in Ashland, Wisconsin, to biomass-gasification technology, allowing it to use 100% biomass in all three boilers and making it the largest biomass plant in the Midwest. Texas Pacific Group is investing $0.5bn to acquire a majority stake in Valerus Compression Services, a Houston-based gas-processing equipment company. Irving Oil Terminals has agreed to acquire two petroleum terminals in South Portland and Bangor, Maine, and the 124-mile pipeline that connects them from ExxonMobil for an undisclosed sum. Hess LNG Crown Landing has acquired all of BP's ownership interests in Crown Landing, a proposed 1.2bn cf/d LNG terminal in Gloucester County, New Jersey. Beacon Power has begun construction of a $69m, 20 MW energy storage plant in rural Rensselaer County, New York. The plant uses technology designed to transfer energy back to the grid to avoid power surges when extra power is needed. NRG Energy has acquired Bluewater Wind, which develops offshore wind projects in the northeastern, from Babcock & Brown and Aracadia Windpower for an undisclosed amount of cash. American Electric Power (AEP) and Alstom have launched a $70m demonstration project at AEP's coal-fired Mountaineer Plant in New Haven, West Virginia, that will capture at least 100,000 t/y of CO2 from the plant's emissions and store it underground. Williams subsidiary Northwest Pipeline has placed its $60m Colorado Hub Connection pipeline and related facilities into service. The 360,000 dekatherms a day pipeline connects the Meeker/White River Hub, a regional production area hub, with the Northwest Pipeline mainline system south of Rangely, Colorado. SandRidge Energy has withdrawn from its planned take-over of Crusader Energy Group. Kinder Morgan Energy Partners and Copano Energy are forming a joint venture to provide gathering, transportation and processing services to gas producers in the Eagle Ford Shale resource play in South Texas. The venture will construct a 22-mile gas-gathering pipeline that will carry up to 350m cf/d from south of San Antonio east to Duval County, Texas. The pipeline is scheduled for completion in mid-2010. The final 195 miles of Rockies Express-East pipeline, which runs from the Lebanon Hub in Warren County, Ohio, to Clarington in Monroe County, Ohio, has been placed into service. The entire 1,679 miles of the Rockies Express Pipeline, which stretches from northwestern Colorado to eastern Ohio, is now operational. RedHawk Energy has acquired oilfield services company Xxtreme Group for $66m in cash, preferred stock and assumed debt. Xxtreme Group includes Exxtreme Pipe Services, Xxtreme Pipe Storage; Xxtreme Tubular Processors and Wolf Pack Rentals and has operations in Texas, Oklahoma, Arkansas and West Virginia. MasTec has agreed to acquire Precision Pipeline, a Wisconsin company providing infrastructure for oil and gas pipelines, for $150m. Cielo Wind Power and the US Renewable Energy Group have formed a joint venture with China's Shenyang Power Group to construct a $1.5bn, 600 MW wind farm in Texas. Magnum Hunter Resources has agreed to acquire all of the oil and gas exploration and production assets of Triad Energy for about $81m. Triad focuses exclusively on the Appalachian basin, operating in Ohio, West Virginia and Kentucky. MEMC Electronic Materials is acquiring SunEdison, North America's largest solar-energy services provider, for $200m. Dynamic Offshore Resources has acquired Beryl Oil and Gas, an exploration and production company focused on the GOM shelf, for $150m. Algonquin Power & Utilities has agreed to acquire two power companies that own assets in northern Maine and New Brunswick, Canada, with a combined generating capacity of 75 MW from Integrys Energy Services subsidiary WPS Power Development for an undisclosed sum.
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