Propane inventories continued to reflect seasonal declines last week with inventories moving down by 2.8 million bbls to an estimated 64 million bbls as of Dec. 15, according to the Energy Information Agency.
Enterprise Products Partners said it will have substantially completed the implementation of its South Texas corridor strategy by Jan. 1.The strategy involves a combination of pipeline acquisitions, new pipeline construction and upgrades to existing assets to provide producers and consumers of NGLs along the Texas Gulf Coast with significantly enhanced access to Mont Belvieu.
Wachovia Securities derives a pre-MLP valuation for Spectra Energy of $23 to $25 per share with an additional $1 or $2 upside.This reflects a 9x to 9.5x EBITDA multiple for U.S. pipeline assets, 8x to 8.5x for gas distribution, and 8.5x to 9x for midstream assets and Canadian assets. Spectra’s spin-off from Duke Energy is set for Jan. 2. Shares began trading on a “when needed basis” Dec. 14. Wachovia analyst Yves Siegel says Duke Energy shares have been performing well in anticipation of the split.
Hiland Partners is getting into the booming Woodford Shale with a new gathering pipeline and processing facilities to service acreage owned by Continental Resources.Hiland plans to make an initial capital investment of $13 million by the end of 2007 and will invest a total of $23 million over four years to build a 40 million cfd refrigeration processing plant and install field gathering, compression and associated equipment. Construction is expected to begin in the first quarter of next year.
MarkWest Energy Partners has completed the initial phase and has begun operations of its Woodford Shale gathering system.The initial phase was completed approximately 90 days ahead of schedule and was needed to support the significant drilling success that Newfield Exploration has experienced in the area. Newfield estimates its gross Woodford Shale production will increase from the current rate of 65 million cfd to 350 million cfd by the end of 2009.
Oliktok Pipeline Company has filed a tariff revision with the Regulatory Commission of Alaska to lower its tariff rate per barrel on its NGL pipeline to the Kuparuk River Unit to 63¢ from 85¢ effective Jan. 1.
Propane inventories moved moderately lower by 2 million bbls in the first week of December to settle at an estimated 66.8 million bbls as of Dec. 8, according to the Energy Information Administration. This is about 1.7 billion bbls below the same level at this time last year, based on weekly data.
One clear message permeated Wachovia’s fifth annual Pipeline & MLP Symposium held in New York last week: Organic growth will trump acquisitions in 2007.“Without exception, each presenting company stressed its focus on organic growth and noted that the returns on internal projects are greater than returns from acquisitions,” noted Yves Siegel in a report on the conference. “Overall, our MLP universe is projected to spend $8.3 billion and $9.3 billion on organic projects in 2006 and 2007, respectively. This is up from $5.7 billion in 2005.”
Duke Energy says its planned natural gas spin-off Spectra Energy expects to pay a dividend of 88¢ per share in 2007 and receive investment-grade debt rating. The company reiterated a 2007 earnings target of $1.40 per share.The Duke Energy board formally approved the tax-free spin-off of Spectra Energy on Dec. 8. The new company will be traded on the New York Stock Exchange under the symbol SE. The spinoff is set to occur prior to market opening on Jan. 2.
Despite above-average temperatures in much of the nation during November, U.S. propane inventories slid by over 2.6 million barrels during the month, surpassing the most recent five-year average of 2 million barrels, according to the Energy Information Agency..
Conventional wisdom says that methane hydrates won‘t be commercially viable for 20 to 30 years and will be expensive to produce. Plus, they won’t be able to compete with other resources such as coal bed methane or LNG and will require new extraction technology.For Art Johnson, president of Hydrate Energy International, and other key players in the fledgling methane hydrates business, these are myths that need to be busted. Johnson told Hart’s Commercializing Methane Hydrates Conference in Houston Tuesday that real progress is already being made in commercial development. “All the pieces are coming together very quickly,” Johnson said. “Existing technology is being leveraged, and new technology is rapidly emerging.”
Ziff Energy forecasts an overall annual Henry Hub price of $7.60 per mmBtu for next year with the growth of power generation, the decline of the industrial market and gains in LNG being the primary price drivers.Richard Tucker, vice president of marketing and client services for Ziff Energy Group, told Hart’s Commercializing Methane Hydrates Conference Tuesday that LNG imports will continue to put a lid on the ability of the market to get higher prices. Construction of LNG plants remains critical; delays in plants coming on line should help keep prices stronger.
Calgary-based AltaGas’s Enhanced Ethane Recovery project is now operational and has increased processing capacity by 15 million cfd and increased ethane production to roughly 799 b/d.At a recent investor conference in Toronto, Marshall Thompson, senior vice president for gathering and processing, said the capital cost of the project works out to be C$3,000 per barrel which is roughly 60% of the per barrel cost of other ethane projects.
A new pipeline looping project, constructed as part of the Phase V expansion of the Jonah Gas Gathering System, is now in service.The project is a joint venture between TEPPCO Partners and Enterprise Products Partners.
U.S. propane inventories fell last week by 1.2 million bbls, leaving the Nation’s primary supply of propane at an estimated 69.7 million bbls as of November 24, 2006, according to the Energy Information Agency.