Page 10 - NorthAmOil Week 18

NorthAmOil PIPELINES & TRANSPORT NorthAmOil
NGPL declares force majeure on Sabine Pass gas flows following storms
LOUISIANA
NATURAL Gas Pipeline Co. of America (NGPL), a subsidiary of Kinder Morgan, said on April 29 that gas transport to the Sabine Pass delivery point was temporarily suspended after “severe” storms damaged the pipeline. Describ- ing the incident as a force majeure event, NGPL said that immediate investigation and repairs were required.
The Sabine Pass facility was the first LNG export terminal to come online in the Lower 48 US states, and has been operating since 2016. Operator Cheniere Energy was reported by Reu- ters as saying the NGPL outage would have no impact on its operations at the 25mn tonne per year (tpy) plant.
Data from Refinitiv show that around 600mn cubic feet (17mn cubic metres) per day had been flowing to Sabine Pass on the NGPL pipe- line over the past two weeks. According to the data provider, the total volume of gas flowing to Sabine Pass on all pipelines – including NGPL – averaged 3.6 n cubic feet (102 mcm) per day for the month so far, up to April 29. Despite weak
global demand amid the coronavirus (COVID- 19) pandemic, this marked an increase from 3.4 bcf (96 mcm) per day in March, but was down from a record monthly high of 4.0 bcf (113 mcm) per day in December 2019.
Buyers normally have to give Cheniere 45-60 days’ notice if they wish to cancel a contracted cargo, and this is expected to materialise in the coming weeks and months. Argus Media reported this week that around 16 cargoes scheduled for June loading at Cheniere’s two Gulf Coast terminals may have been cancelled, out of a total of up to 25 cancelled cargoes from US LNG terminals. As these cancellations emerge, Cheniere may seek to reduce gas flows to Sabine Pass and its other terminal, Corpus Christi LNG in Texas. There has been specu- lation since March that the company is consid- ering curbing its LNG production during the worst of the slump.
Nonetheless, exports from US LNG termi- nals are still anticipated to hit an annual average record high in 2020 for the fifth year in a row.™
INVESTMENT
Shell strikes deal to exit Appalachian Basin
PENNSYLVANIA
ROYAL Dutch Shell announced this week that it has agreed to sell its Appalachian Basin shale gas assets in Pennsylvania, in a deal that will mark its exit from the region. Through its SWEPI affiliate, Shell agreed to sell its assets to National Fuel Gas, and its subsidiaries, Seneca Resources, National Fuel Gas Midstream and NFG Midstream Cov- ington, for $541mn.
The transaction includes roughly 450,000 net leasehold acres (1,821 square km) across Penn- sylvania, with around 350 producing Marcellus and Utica shale wells in Pennsylvania’s Tioga County, as well as associated facilities. The wells currently produce about 250mn cubic feet (7mn cubic metres) per day on a net basis. The trans- action also includes the transfer of midstream infrastructure that is owned and operated by Shell, the company said in a May 4 statement.
National Fuel agreed to pay for the assets in cash, but will have the option of providing up to $150mn in common stock at an adjusted price of $38.97 per share, with the balance paid in cash. The deal is due to close by the end of July.
Shell noted that the transaction was in line
with its plans to shed non-core assets while focusing its shales portfolio on higher-margin, light tight oil (LTO) properties.
“Divesting our Appalachia position is con- sistent with our desire to focus our shales port- folio,” said Shell’s upstream director, Wael Sawan. “While we maximise cash in the current envi- ronment, our drive for a competitive position in shales continues. It is a core part of our upstream portfolio along with the deepwater and conven- tional oil and gas businesses.”
Shell has been less active in US shale than domestically based super-majors Chevron and ExxonMobil. It entered Appalachia in 2010 through its $4.7bn acquisition of East Resources, as well as buying shale assets elsewhere. How- ever, many of the assets acquired during this spending spree turned out to be of a lower qual- ity than expected, and in 2014 the company embarked on a push to dispose of all but the best assets in its shale portfolio.
Shell has said it remains committed to Penn- sylvania, including through the petrochemical complex it is developing in the state.™
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w w w . N E W S B A S E . c o m Week 18 07•May•2020