midstream news2010/04/09 · midstream news friday, april 9, 2010 2 call pls to place your listing:...

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conocophillips offloading U.s. marketing ops & pipelinesU.S. major divesting 25% of Rex Pipeline and 9% of Syncrude

Another major is thinning out its downstream operations. ConocoPhillips’ capital improve-ment plan includes divestment of its ownership in Syncrude and the Rex Pipeline, as well as 10%of its remaining Lower 48 and Western Canada portfolio, and all U.S. downstream marketingassets. The company will also sell half of its interest in Russian E&P Lukoil (which is ~10% of

Lukoil and worthabout $4.7 billion).

The company isimplementing the $10 billion capital improve-ment plan to reduce debt, increase returns,increase dividends and resume share repurchases. Roughly half of the $10 billion divestmentplan will occur this year including U.S. downstream marketing assets which are slated fordivestiture in Q3, and divestment of the Western Canada portfolio, 10% of the Lower 48 port-folio and the Rex Pipeline.

Elsewhere, ConocoPhillips plans to restart its 260,000 b/d Wilhelmshaven refinery in Ger -many in late April, which has been shut down since early October.

The company received highly competitive bids from a South Korean firm regarding the con-struction of three large units for Saudi Aramco’s 400,000 b/d Yanbu refinery.

GE invests $150 MM inMississippi lnG terminal

GE moving with its strategy to invest incore energy infrastructure.

It bought Houston-based Crest Group’s30% stake in the under-construction, $1.1 bil-lion U.S. Gulf Energy terminal project, inwhich operator El Paso Corp.holds a 50% interest and Angola’sSonangol holds the remaining 20%.

The terminal will import LNGand have a base send-out capacity of 1.3 BCFDand two storage tanks with a combined capac-ity of 6.6 BCF. The project has secured 20-yearLNG supply agreements with major energycompanies to meet all terminal capacity.

The project is next to the Bayou CasotteShip Channel in the Port of Pascagoula. Theproject includes connections to the Gulf -stream, Destin, Florida Gas Trans mission andTransco pipelines.

“Representing our expansion into LNG,this transaction complements our investment inUS natural gas pipelines – 30,000 miles ofpipelines in North America – that help ensure asteady supply of clean, efficient energy,” saidDan Castagnola, a managing director with GEEnergy Financial Services in Houston.

Meanwhile, GE purchase is not the onlynew LNG investment activity that has poppedup this spring. J.P. Morgan Chase andHouston-based Cheniere Energy Inc. haveentered a multiyear agreement that providescapacity rights for J.P. Morgan at Sabine Pass inLouisiana, which is the biggest LNG terminalin North America. Terms of the deal have notbeen disclosed.

El paso pipeline buying midstream affiliates for $810 MMAnother domestic midstream drop-down

El Paso’s corporate midstream fortification continues unfettered through the recoveringeconomy and low gas prices. El Paso Pipeline Partners will buy 51% stakes in bothSouthern LNG Co. and El Paso Elba Express from parent company ElPaso Corp. for $810million. El Paso will retain the remaining

interests in each company.Southern LNG owns the Elba

Island LNG terminal near Savannah, Ga., and El Paso Elba Express owns the ElbaExpress Pipeline which went into service March 1. Nearly all total revenues from the Elba Islandterminal and the Elba Express pipeline come from monthly demand charges which are supportedby long-term contracts. The terminal has 1.8 BCFD send-out capacity and 7.3 BCF storage capac-ity, which is expected to increase to 11.5 BCF after commissioning of a new tank this summer.

The Elba Island terminal is fully contracted through agreements with subsidiaries of Shelland BG Energy Holdings. BG has an option to further expand the terminal to 15.7 BCF ofstorage and 2.1 BCFD of peak send-out capacity.

Enterprise buying M2 Midstream assets for $1.2 billionDeal involves 387 miles and 685 MMCFD transport capacity

In the wake of the passing of Chairman Dan Duncan, Enterprise Products Partners LP ischarging ahead. The firm executed definitive agreements to buy two gas gathering and treatmentsystems from M2 Midstream subsidiaries in a negotiated transaction for about $1.2 billion.

The systems are in Northwest Louisiana and East Texas, servicing Haynesville/Bossiershale gas production, and that of the CottonValley and Taylor Sands formations.

The State Line system is inDesoto and Caddo Parishes, La., andPanola County, Texas. It comprises

two treatment facilities and 138 miles of gaspipelines with a 400 MMCFD capacity. The system began operations in February 2009 andcurrently gathers 260 MMCFD. A 50-mile expansion of the system is expected to be finishedin June, increasing its capacity to 700 MMCFD. The State Line system is supported by long-term acreage dedications and volumetric commitments from producers. It will interconnectwith the 42-inch Haynesville Extension of Enterprise’s Acadian gas pipeline system, which isexpected to be completed in Q3 2011. Once connected to the Haynesville Extension, the StateLine system will have expansion capacity for up to 1.2 BCFD for a nominal cost.

April 9, 2010 • Volume 03, No. 05

MIDSTREAMNEWSServing the marketplace with research, insight and transaction opportunities

A trend this spring toward domesticLNG investment emerges.

GE Continues On Page 7

conoco Cont. On Pg 2

El paso Continues On Page 7

EntErprisE Continues On 0

Deal firms up El Paso’s Georgia footprint.

The State Line System and FairplaySystem service Haynesville Shale volumes,as well as Cotton Valley and Taylor Sandsproduction.

There is some speculation of whetherKMP would be willing to pick-up COP’s25% stake in the Rex Pipeline.

MIDSTREAMNEWS Friday, April 9, 2010 2

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ConocoPhillips offloading Continued From Page 1

Since 2003, more than $5.0 billion of ConocoPhillips dispositions have been down-stream assets – with a billion dollars divestedso far in 2010. ConocoPhillips refinery com-binations, refinery joint ventures, commer-cial arrangements, and international oppor-tunities underlie its downstream portfolio strategy; dispositions and joint ventures since2002 have comprised six refineries, 39 terminals, 2,800 miles of pipeline, and ~3,000 mar-keting retail sites.

ConocoPhillips Divestment Snapshot

Source: ConocoPhillips 2010 Analyst Meeting, March 24

Asset sales• $5 Billion + of assets sold since 2003• $1 Billion in asset sales in 2010• Evaluating further dispositions

Implement portfolio options at the right time and value• COP refinery joint ventures• Commercial arrangements to capture synergies and avoid capital• International opportunities

Asset sales1 - $ Billion

2003 2004 2005 2006 2007 2008 2009 2010E

1.6

1.2

0.8

0.4

0.0

Dispositions and Joint Ventures2

Refineries 6Terminals 39Miles of Pipelines 2,800Marketing Retail Sites ~3,000

A note from PLS analystsIt’s a NASCAR market. Like the great oval racetracks, the main themes in midstream are unchanged, though

the particulars over the last 30 days show the race goes on. LNG surfaced more frequentlyin news flow. Though global in nature (with Australia a recent news focus), LNG still attractsinvestment in the U.S. Of note is GE Energy Financial Services $150 million investment fora 30 percent stake in the U.S. Gulf Energy terminal project at Pascagoula,Mississippi. The 6.6 BCF terminal will have send out capability of 1.3 BCFDwhen it comes online. Other LNG news in this Midstream News includesanother step forward for the 1.2 BCFD Florida LNG deepwater port at PortDolphin (Tampa Bay), which inked a 20 year agreement with the Manatee County PortAuthority. Construction won’t begin until 2013, but the project will deliver 400 MMCFD toFlorida when done.

Almost unnoticed is the flow of news outlining midstream expansion along theMarcellus fairway. Enbridge is gaming out NGL routes to Chicago interconnects and plansto conduct an open season before June 2010. In northeastern Pennsylvania, the El Paso-owned Tennessee Gas Project plans 636 MMCFD in incremental transportation to ferryMarcellus gas to New Jersey interconnects and markets in the Northeast.

Gentlemen, start your compression.

For more insight and analysis on midstream, look for our email AlertSubscribe by calling Susan Coburn at (713) 600-0122

All COP’s remaining U.S. marketingoperations are on the block.

Friday, April 9, 2010 MIDSTREAMNEWS3

Enbridge enlarges n.D. crude line to 161,000 b/dEnbridge Inc. more than doubled its capacity of the U.S. regional North Dakota crude

pipeline, which can now handle up to 161,000 b/d.The capacity expansion is due to increased crude production in the area. The pipeline orig-

inates in eastern Montana and bisects North Dakota on its way to Clearbrook Minn., where itlinks with Enbridge’s southbound 1.4 MMBPD Lakehead pipeline system.

The Calgary-based company spent $145 million to double the North Dakota linecapacity form 80,000 since 2007 – which has included the upgrading of 13 pumping stations.

North Dakota’s crude and gas production has spiked in recent years as the Bakken playheats up. There is some consensus that a refinery project may be in the area’s future – at a timewhen refineries elsewhere have been shuttered because of the recession.

ruby pipeline gets FErc approvalEl Paso’s $3 billion Ruby Pipeline project was approved by the FERC. Construction will

begin later this spring, pending BLM rights-of-way permission.The Ruby Pipeline is expected to be a 675-mile, 42-inch interstate gas pipeline with an

initial design capacity of up to 1.5 BCFD. Global Infrastructure Partners is investing up to$700 million in the project, and will buy a half interest once closing conditions are met.

The pipeline will run from an existing supply hub in Opal, Wyoming to interconnectionsnear Malin, Oregon for distribution to markets in California, Nevada, and Pacific Northwest.

Midstream Projects

Garyville refinery expansion on-stream at 436K BopDThe nation’s first refinery built in 33 years is on-stream and operating at full nominal

capacity, after a scheduled turnaround of half the old plant was completed in March.Marathon four-year, $3.9 billion crude-unit project has utilized the Garyville, La. refinery.

The project is integrated with the original site and has approximately doubledthe capacity from 256,000 BOPD to 436,000 BOPD. Further more, the projectmakes the Garyville refinery complex the fourth largest U.S. refinery.

Design began in 2004; the facility is now processing at 436,000 BOPD. As refining mar-gins have caused suffering among refiners since the market crashed in late 2008, the huge,state-of-the-art Marathon project is bad news for the competition and may push weaker com-petitors out of business.

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FErc wouldn’t regulate in-state alaska pipeline

An in-state gas pipeline in Alaska likelywould not be regulated within FERC jurisdic-tion, according to the FERC, but a projectthat went interstate via the Pacific Oceanprobably would.

Alaskan officials had inquired of FERCabout its would-be role in three different in-state pipeline scenarios, however the agencysaid it would not officially rule on such amatter unless formally asked to do so.

The first scenario would have all NorthSlope gas brought by an in-state line projectand sold directly to Alaskan end users. Forthe second project scenario, some if not mostof the gas would be delivered through con-nections with existing intrastate pipelines toKenai LNG for export to foreign markets.Neither of these would fall within federaljurisdiction, FERC said.

In the third project scenario, part of thegas would also proceed to Kenai LNG, butwith some of it being shipped from there toU.S. customers if a West Coast terminal wereconstructed in the Lower 48. FERC said thatinterstate commerce involved in the thirdplan could result in the line being fully sub-ject to FERC jurisdiction.

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266 MMcFD Utah project gets positive FErc reviewKern River Gas Transmission Co.’s Apex Expansion Project in Utah received a positive

draft environmental statement from FERC.The project comprises the Wasatch Loop, a new 28-mile, 36-inch pipeline in Davis,

Morgan and Salt Lake counties, as well as a new compressor station near Milford. The projectalso includes replacement of a unit at the Fillmore compressor station,installation of more compression at three other stations in Wyoming, Utah

and Nevada, and three pig launchers, two pig receivers and six new mainline valves.The project would increase the company’s transmission capacity by 266 MMCFD, and the

system’s capacity to beyond 2.14 BCFD. Construction will begin next January and be brought on-stream about March 26. The agency is accepting comments on the draft through May 17.

Kern River Gas Transmission is a subsidiary of MidAmerican Energy Holdings Co.

carBo adds $62 million line at proppant facilityResponding to demand for shale reservoir treatment support, CARBO Ceramics Inc. is

building a fourth production line at its proppant manufacturing facility in Toomsboro, Ga.The new production line will be designed to increase capacity by another 250 million

pounds per year, and bringing the company’s global capacity to up by nearly 40% to ~1.75 bil-lion pounds per year. The fourth line should be completed by the end of next year and will costabout $62 million.

CARBO is a global leader in high conductivity ceramic proppant to the oil and gas industry.The company also provides a popular fracture simulation software, fracture design and consultingservices, and technologies for spill prevention, containment and geotechnical monitoring.

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Midstream NewsMartin Midstream getsfavorable irs ruling

The IRS made a ruling in favor ofMartin Midstream Partners’ tax character-ization of income it derives from its marinetime charter agreements, as “qualifying

transportationincome.”

This means that the IRS concludesMartin Midstream’s income as declared in itstax filings – derived from transporting crude,refined fuels and other products under marinetime charter agreements – were conformingto IRS tax rules.

The partnership’s concern came afterbecoming aware of a federal Fifth CircuitAppellate Court decision that the grossincome derived by another firm via its char-ter agreements was “rental income” ratherthan “transportation income.” With that rul-ing Martin Midstream became uncertain as towhether it would continue to be classified asa partnership for tax purposes.

In order to be classified as a partnershipfor federal income tax purposes, at least 90%of gross income each year must be “qualify-ing income” – whether it be income andgains from the exploration, development,mining or production, processing, refining,transportation, or marketing of any mineralor natural resource.

Martin Midstream announced inJanuary that it was seeking such a rulingabout qualifying transportation income. Thepartnership has a focus on the Gulf Coastregion with primary business lines to includeterminal and storage services for petroleumproducts and by-products, gas gathering andprocessing, NGL distribution services, sulfurand sulfur-based products processing, manu-facturing marketing and distribution, andmarine transportation services for petroleumproducts and byproducts.

atmos & Delhi Gas storage enter salt-dome dealAtmos Pipeline and Storage and Fort Necessity Gas Storage have entered an option

and acquisition agreement with Icon NGS subsidiary Delhi Gas Storage on a salt-dome stor-age plan. APS and Fort Necessity (both Atmos Energy subsidiaries) per the agreement willprovide Delhi the exclusive option to develop the proposed Fort Necessity salt-dome gas stor-

age project in Franklin Parish, La.If Delhi chooses to proceed with the project, it will contribute the brine

well test results and acquire a controlling interest in Fort Necessity, andAPS will retain a capital position in Fort Necessity and share profits. Delhi will have manage-ment/operating responsibility and provide funding for future development costs. Delhi mayopt to purchase APS’ interest.

Atmos Energy Marketing has agreed to purchase firm storage service for a portion ofthe first cavern, once it’s placed into service.

tesoro may turn 93,500 b/d Hawaii refinery into terminalThe poor refining market may lead Hawaii’s largest refinery to become a fuel terminal.

Tesoro’s facility at Oahu’s Campbell Industrial Park has a 93,500 BOPD capacity and oper-ated well below capacity last year at an average of 68,200 BOPD.

The company said Asian demand is driving up crude prices, and as an inde-pendent refinery Tesoro’s Kapolei, Hawaii, facility must buy its own crude at thoseprices while margins are still down.

The pending decision is part of a general review of Tesoro’s seven refineries in theWestern U.S., Alaska and Hawaii.

Hawaii’s only other refinery makes 54,000 BOPD and is owned by Chevron. The com-pany recently considered the same option but decided against it.

tenaska and superior enhance West Va. midstream systemMore gathering infrastructure is coming in upstream of the interstate Texas Eastern

Transmission pipeline.Tenaska Midstream Services and Superior Appalachian Pipeline are building 16 miles

of gas gathering line to serve a portion of West Virginia. The project will transport gas fromwells in Preston County, W. Va. wells, to those of the Columbia Transmission System which

serves markets in Virginia, Washington D.C. and Maryland. The projectdesign allows for expansion to link with the Texas Eastern TransmissionCorp. interstate pipeline. Project completion is slated for Q4 of this year.

Superior will be the operator and is actively seeking additional gas supplies from third parties.Tenaska units Tenaska Resources and Tenaska Drilling Services are active in the

Marcellus Shale and have drilled seven wells to date in Preston County. “The Marcellus Shaleis proving to be a highly productive source of new gas supplies, but opportunities are con-strained by the absence of modern transportation infrastructure,” said Tom Boyd, GM ofExploration, Production and Midstream at Tenaska. Boyd added, “This gathering line will bethe first in Preston County to provide a 21st century path to market for this important devel-oping energy source.”

pVr adding 25 MMcFD compression in MarcellusMarcellus gathering infrastructure projects continue, as PVR Midstream has contracted

to build and operate gas gathering lines and compression facilities in the Wyoming County, Pa.portion of the Marcellus Shale play.

PVR signed the agreement with an unnamed firm, and will build a 12-inch gatheringpipeline as well as compression facilities with a 25 MMCFD throughput capacity. The assetsare expected to be brought on-stream in Q2 2010 with the potential for system extensions.

The company’s 2010 capital investment in the system is in the $6-$7 million range, withpotential future system extensions costing up to $10 million.

Ruling clears ambiguity in precedent formidstream operator’s qualifying incomefrom maritime charter agreements.

MidstreamFor more details on how PLS canhelp you sell your midstream assets, call (713) 650-1212 or access www.plsx.com


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Enbridge planning Marcellus nGl pipeline to chicagoEnbridge Inc. is planning an NGL pipeline from the Marcellus Shale to U.S. Midwestern

markets. The proposed project will deliver into existing NGL infrastructure in and aroundChicago, to include the Aux Sable facility which handles gas from the Alliance pipeline and

fractionates NGL from various supply sources.NGL markets elsewhere – such as Ontario – can be accessed via Chicago using

existing infrastructure. Enbridge will develop, construct, own and operate the plannedpipeline, and is now evaluating various routing and market alternatives. An open season for theline is expected in Q2 2010.

1.2 BcFD Florida lnG port gets 20-year port authority dealThe Port Dolphin deepwater LNG port is a step closer after securing a $30 million agree-

ment with the Manatee County Port Authority. Port Dolphin Energywas granted FERC approval last November, for the 1.2 BCFD proj-

ect that includes a deepwater port in federal waters 28 miles offshore Tampa Bay, Fla. Theproject is designed to deliver 400 MMCFD to Florida, supplying the state witha second major gas source. Construction is set to begin in 2013, to be broughton-stream later that year. As the Florida Public Service Commission has fore-

cast steadily rising gas demand in the state, several planned coal-fired plants have been can-celed and the state is increasingly turning to gas power for electricity production.

The long-term agreement with the port authority precedes a pending decision by the U.S.Maritime Administration to issue a deepwater port license for construction of the port. Theport will be designed to connect with a new undersea pipeline system that would come onshoreat Port Manatee. The offshore LNG port itself will be equipped for regasification.

The $30 million agreement reinforces the port’s financial strength with a new recurringrevenue stream, Port Authority Chairman Larry Bustle said. In 2002, Florida’s first trans-GOM gas pipeline linked with Port Manatee.

Port Dolphin Energy is a subsidiary of Norwegian shipping company Hoegh LNG.

LNG ProjectsFErc approves trunklinelnG units

As the gas shales build out, the LNGinfrastructure follows. Southern Union’sTrunkline LNG Infrastructure Enhance -ment Project received FERC approval fordeploying ambient air vaporization units.Four such units were installed at the NGLextraction facility in Lake Charles, La.

The enhancement project had two parts– 1) installation of the four ambient air vapor-ization units, and 2) the construction of anNGL extraction facility. The new vaporiza-tion units are designed to improve fuel effi-ciency during the regasification process.

Trunkline’s customer is BG LNGServices, to which the terminal is fully con-tracted through 2030.

Overall, the project cost Trunkline about$430 million (excluding capitalized interest),and is expected to generate operating incomeof about $55 or $60 million per year.

Burks Oil & Gas Properties, Inc.

www.burksoilandgas.com

STONEHENGE is a asset-backed midstream company thatoffers considerable engineering, operating and financial resources that can be applied to the midstream needs ofnatural gas producers.

Our mission is to support customers in the production of natural gasand natural gas liquids by:• Maximizing the value received for the produced gas• Responding quickly to new facility needs • Maintaining industry-best online times• Maintaining an inventory of processing equipment to accelerate project development

We have technical and financial backing from three proven companies:• Energy Spectrum Capital, a leading private equity firm• Kahuna Ventures, a full-service midstream engineering consulting firm• Kahuna Operating, a midstream facility operator

www.StonehengeEnergy.com

Chuck Wilkinson, PresidentDirect: [email protected]

Richard Carl, Director, Business DevelopmentDirect: 720-889-9953 [email protected]

Mike Brinkmeyer, Director, New VenturesDirect: [email protected]

For more insight and analysis onmidstream, look for our email AlertSubscribe by calling Susan Coburn at (713) 600-0122



o’Malley firm moving on Delaware city & paulsboro refineriesValero also considers Pembroke refinery for European toehold

While the oil majors let go of certain downstream operations whole-hog, independentrefiners are playing chess with theirs to get through the recession. Investment fund PBFInvestments, has reached an agreement with Valero on its 210,000 b/d Delaware City refin-ery, and PBF will also bid on Valero’s 195,000 b/d refinery in Paulsboro, N.J.

PBF, which was formed expressly for purchasing U.S. refineries and whoseCEO is Tom O’Malley, was launched with a $2.0 billion commitment fromSwiss-based refiner Petroplus, Blackstone Group, and First Reserve Corp.,

expressly to purchase U.S. refineries. The Delaware City assets and operations will be sold for$220 million to PBF Energy Partners LPsubsidiaries Delaware City Refining Co. andDelaware Pipeline Co. Valero had been los-ing $1 million per day at the Delaware Cityrefinery before it closed. The deal is expected to close sometime this quarter. Valero will retainthe de minimis levels of remaining crude and refined products inventories that haven’t yetbeen liquidated. After the closing, Valero will continue to supply its area customers via a ter-minaling agreement with the sites new owners.

Across the pond, Valero has also expressed interest in Chevron’s 220,000 b/d refinery inPembroke, Wales, as a way to access the European market. The Pembroke refinery divestitureincludes Chevron’s European fuels marketing, aviation and lubricants operations. Pembrokedistributes throughout the UK and Ireland as well as international markets including the U.S.Its distribution helps stock terminals which supply 1,100 Texaco-branded UK service stations.

Chevron is also selling businesses acrossEurope, the Caribbean and some CentralAmerican markets.

On the other hand, the future of Valero’sshuttered 235,000 b/d Aruba refinery is less clear. The company seems to be looking for abuyer, however, a partnership could be formed to operate the plant. Valero said it may restartthe plant if no buyer surfaces. Also at this time, Valero is overhauling the 68,000 b/d fluid cat-alytic cracker at its 195,000 b/d refinery in Memphis, and Valero’s Marketing & Supply unithas entered a five-year biodiesel supply agreement with Mission NewEnergy.

Elsewhere, Tesoro is considering turning its Hawaii refinery into a fuels terminal. AndChevron recently considered the same option for its refinery in Hawaii but chose not to, asglobal integrated companies are still downsizing downstream as they can. Shell has announcedit will sell its 17.1% interest in the Marsden Point refinery and more than 220 retail outlets inNew Zealand. Previously, Shell disclosed plans to cut its worldwide refining capacity by 15%and retail operations by 35%. Marathon is cutting its refineries budget by more than 50% thisyear. And ConocoPhillips, while moving forward with a divestment plan which includes itsstakes in Syncrude, the Rex Pipeline, and its remaining U.S. downstream marketing assets,nevertheless recently announced it will re-open its Wilhelmshaven, Germany.

Mesa Energy buys two pipeline/gathering systemsWhen it bought the Java Field project, Mesa Energy Holdings acquired two Wyoming

County, N.Y. pipeline and gathering systems.The Sheldon Pipeline is a 12.4-mile pipeline and gathering system serving Mesa’s exist-

ing field, carrying production from 15 of the 19 existing Java Field wells. The Sheldon pipelinehas an existing tap into a Dominion public intrastate transport line about 12 miles to the north,which leads directly into eastern New York.

The Letchworth Pipeline is a separate 2.5-mile system near Perry in eastern WyomingCounty, currently not in use but under evaluation. It has an existing tap into a 22-inchDominion pipeline.

A&D NewsKeystone Xl gets regulatoryapproval

The Keystone Gulf Coast PipelineProject is a step closer to reality afterreceiving South Dakota permission to con-struct and operate.

The overall TransCanada proposal is a1,980-mile, 36-inch crude pipeline runningfrom Hardisty, Alberta, through Saskatche -wan, Montana, South Dakota and Nebraska.From the Keystone’s original terminus inPakota, Ill., construction will continuethrough Kansas to the hub in Cushing,Okla., then to a delivery point near existingterminals in Nederland, Texas to serve thePort Arthur marketplace. Right now line-fillis underway with first crude expected toarrive midyear. It hits the U.S. border atMonchy, Saskatchewan.

The Keystone expansion project willincrease the commercial design of theKeystone system from 590,000 BOPD to 1.1million BOPD. The U.S. portion is a $12 bil-lion system and is 83% subscribed with long-term commitments of 910,000 BOPD for anaverage of 18 years.

Canadian regulators also approved theproposal, and applications with other U.S.jurisdictions are pending with decisionsexpected in Q4. Construction is expected tobegin in Q1 2011 with crude deliveries to theGulf Coast expected in Q1 2013.

Midstream Projects

Petroplus affiliate bidding on two EastCoast refineries.

Integrated refiners still shoring updownstream operations.

Sourcing Capital.Energy Finance.Call (713) 650-1212 today to discusspotential opportunities.

El paso pipeline buying midstream affiliates cont’d From Page 1The Elba Express has ~190 miles of interstate gas pipeline with a capacity of 945

MMCFD which is fully subscribed to Shell for 30 years. It provides Elba Island terminal vol-umes with access to Georgia markets – and through other pipeline interconnections providesaccess to the U.S. Eastern and Southeastern markets. A BG subsidiary has a 25-year contractfor a $30 million compression expansion to increase the pipeline’s capacity up to 1.165 BCFD

and could be in service as soon asJanuary 2014.

The transaction will be fundedthrough $236 million in cash proceeds fromEl Paso Pipeline’s recent equity issuance,$149 million from El Paso Corporation’s recent equity issuance, a current issuance of $425million of senior notes due 2020, and a $3 million general partner capital contribution. The$810 million deal is El Paso Pipeline’s largest to date.

El Paso Pipeline is a Delaware limited partnership formed by El Paso Corp., which owns60% of the limited partner units and 2% of the GP interest, and El Paso Pipeline which ownsWyoming Interstate Co., a 58% stake in Colorado Interstate Gas Co., and a 25% interest inSouthern Natural Gas Co.


Dominion divestment reflectsits focus on utility business

Dominion Resources continues tostrengthen its key focus on its power, storageand transport operations as it sold itsAppalachian E&P business to ConsolEnergy for $3.48 billion.

Dominion’s E&P unit is one ofthe oldest and most active in WestVirginia and Pennsylvania, but the movereduces its commodity sensitivity by morethan 20%, and also eliminates Dominion’sneed to issue new shares to fund its infra-structure growth program through 2011.

Dominion is one of the largest U.S.energy producers and transporters with~27,500 megawatts of generation, 12,000miles of gas transmission, gathering and stor-age pipeline, and 6,000 miles of electrictransmission lines. The company operates thenation’s biggest gas storage system with 942BCF capacity.

Looking back, Dominion announcedplans in 2001 to acquire Louis DreyfusNatural Gas Corp. for $2.3 billion, whichincreased Dominion’s reserves by 60% andexpanded its fast-growing energy tradingbusiness. In 2007 however, Dominion soldmost of its E&P production properties as partof its strategic refocusing on its power gener-ation, energy distribution, transmission, stor-age and retail businesses. Dominion divested5.5 TCFE for about $13.9 billion that year.This new divestment continues that trend.

A&D News


The terminal capacity is 1.8 BCFD send-out, 7.3 BCF storage; the 190-milepipeline has 945 MMCFD current capacity.

El Paso’s Pipeline’s committed project backlog

source: El Paso Corp. Howard Weil Energy Conference presentation

El Paso PiEl Pa

pe il ne,p

GE invests continUED from page 1Also, in general, the J.P. Morgan-

Cheniere joint venture will seek additionalLNG market opportunities, with Chenierebenefitting from J.P. Morgan’s financialexpertise.

For more LNG coverage see page 5.

targa makes $420 million in-house midstream dealTarga Resources Partners LP is buying gas gathering and processing businesses from

its parent company Targa Resources Inc. for $420 million. The transaction is expected to closethis month.

Assets involved include the Sand Hills Complex, the West Seminole and Puckettgathering systems located in West Texas, and coastal straddle plants. The Sand Hills cryo-genic plant is connected to pipelines owned by affiliates of Enterprise Products Partners and El Paso.

All volumes are processed under percent-of-proceeds contracts. The coastal straddleplants are on mainline gas pipelines and process gas gathered from offshore producing areasvia offshore gathering systems and pipelines. The plants consist of three fully-owned and sixpartially-owned straddle plants.

Also included in the purchase are two offshore gathering systems, the Pelican andSeahawk pipeline systems, which have combined capacity of 320 million cubic feet per

day and supply a portion of the natural gas delivered to the Barracuda and Lowry processingfacilities. The Seahawk system also gathers some gas from the onshore regions of theLouisiana Gulf Coast. About half the volumes are processed under hybrid contracts. The otherhalf are processed under almost equal shares of keep-whole and fee-based contracts.



pEMEX contracts telvent on national oil pipeline network Mexico’s Pemex is taking steps to improve its midstream infrastructure. Telvent signed a

contract with Pemex for implementing data and oversight systems on seven multiproductpipelines of Pemex Refinancion’s National Oil Pipeline Network.

Telvent will install OASyS supervision, control, and data acquisition systems, asPemex seeks to increase efficiency and productivity through centralized managementof its overall transportation pipeline network. Once finished, all of the Pemex

National Transport Network will be unified under one system. Already, Telvent infrastructureis managing Pemex Gas y Petroquimica’s 7,700-mile gas and NGL pipeline network.

The new system will provide centralized and redundant, real-time control of operationsdata such as pressure, temperature and composition from the geographically scattered trans-port, storage and distribution facilities.

Telvent has operated Mexico’s oil and gas operation, production, transportation and dis-tribution segments since 1990. It signed a contract to integrate and update the Gas NaturalMexico S.A. de CV’s 9,500-mile gas distribution network in January 2009.

Midstream Technology• chesapeake Utilities is hooking up

Mountaire Farms of Delaware inc. with agas services contract. Bringing gas toMountaire Farms requires Chesapeake toextend its distribution main by 2.5 miles,and extend its Sussex County transmissionpipeline system, Eastern shore naturalGas co., by 1.7 miles.

• A new Alaska cooperative is showinginterest in the Kenai LNG plant. The co-op,called Natural Gas Supply Co., representsfour utilities: chugach Electricassociation, Matanuska Electric, HomerElectric and Golden Valley Electric inFairbanks. In a letter to conocophillipsand Marathon oil the co-op expressedinterest in purchasing some or all of theplant’s assets. The 40-year-old facility is runby ConocoPhillips.

• A seven-mile stretch of the MississippiRiver was shut down March 23 by the U.S.Coast Guard after a cloud of sulfur trioxidewas released from the BasF plant innortheast Missouri. BASF had a mechanicalsystem failure in one of its stacks.

• chevron unit chevron pipe line co.spilled 18,000 gallons of crude into a canalabout 60 miles southeast of New Orleansearly April 6. The U.S. Coast Guard reportedthat the company closed off the leakingsection, and investigation is ongoing.

• Bp unit Bp solar will is closing itsFrederick, Md. Manufacturing plant due tofalling solar-power module prices. Thecompany will shift its remaining in-housesolar panel production to cheaper jointventures in China and India, and contractfor the rest with other manufacturers.

• Martin Midstream partners sold $200million in 8.875% senior unsecured notes due2018 in a private placement. Proceeds will bespent on long-term debt service.

Briefs

Gl noble Denton announces new pipeline softwareGL Noble Denton has released new software designed to reduce two main cost factors

of pipeline operation – drag-reducing agents and energy used for pumping.The software is called SynerGEE Liquid Transmission, which optimizes flow rate, pump

station operation and drag-reducing agent injection per batch at pump stations simultaneously,according to the company. The interface provides a schematic of the batches andthe pipeline with variable displays, time and distance charts.

The company offers a comprehensive portfolio of software for large, complex, integrated,multi-pressure oil and gas systems related to gravity, heating value, viscosity, compressors,regulators, friction factor calculations, heat transfer methods and flow equations.

rEs serves producers and midstream firmsA year ago RES LLC began providing wetland mitigation credits and related solutions

for clients in the northeast Texas and northwest Louisiana area. Its midstream pipeline andinfrastructure customers now include Centerpoint Energy, Chesapeake Gas Marketing,Chevron Pipeline, Enbridge Pipeline Texas, Energy Transfer Partners, and Regency EnergyPartners. RES’ upstream clients now include BP, EnCana, Petrohawk, and Questar.

As Haynesville Shale operations often involve U.S. Army Corps of Engineers permittingas well as compensatory wetland mitigation of oil & gas operations, Resource EnvironmentalSolutions (RES) provides services specializing in wetland mitigation, and to date is the largestsupplier of wetland credits for Haynesville producers and infrastructure providers. The com-pany conducts environmental impact assessments to include those of pipeline operators’ right-of-way impacts. RES also does wetland restoration.

Bp shipping contracts Dyadem for transport oversightBP unit BP Shipping picked Dyadem’s Stature Workgroup for oversight related to BP’s

global shipping operations. Stature Workgroup will facilitate BP Shipping’s Hazard and Operability, and Failure Mode

Effects Analysis risk assessments for oil and gas cargoes and marine operations in general.Dyadem specializes in operational and quality risk management for leading oil

and gas companies. Stature Workgroup entry-level risk management platform willallow BP Shipping more efficient operations with a web-based risk assessment platform forclient employees to access, edit and update data, and also provides operators and managementvisibility into the risk assessment process and outcomes.

J. ray adds new pipelay vessel to fleet---J. Ray McDermott has added the LB32 pipelay vessel to its global fleet. The LB32 has

shallow-water lay capability, and is designed to S-lay pipe up to 60 inches in diameter. Thevessel is equipped with high-tech pipe tensioning equipment with a capacity of up to 120 MT.

The vessel will deploy rigid as well as a buoyant stingers which enable it to work in waterdepths of anywhere from 2.5 to 300 meters. The ship is 111 meters long and also incorporatesJ. Ray’s advanced Automatic Welding Systems. The fleet addition is part of J. Ray’s fleetrenewal strategy with its focus on offshore field development.


PLS Fax: (713) 658-1922

A&D News• rockies Express pipeline sold $1.7

billion worth of notes in three tranches –the first of which comprised $450 millionin notes maturing April 15, 2015 at acoupon rate of 3.9%. The second trancheconsisted of $750 million in notesmaturing April 15, 2020 at a coupon rate of5.62%. The third comprised $500 million innotes maturing April 15, 2040 at a couponrate of 6.87%. REX will use the proceeds toservices its ~$2 billion credit facility.

• Dcp Midstream sold $600 millionworth of 5.3% notes maturing March 15,2020, in a private placement. (The placementwas originally a $500 million offering.) JpMorgan, the royal Bank of scotland, andsun trust robinson Humphrey were theactive joint bookrunners.

• teekay offshore partners is offering4,400,000 common units representinglimited partner interests in a publicoffering, and granting underwriters a 30-day option for over-allotments asnecessary. The proceeds will be used fordebt service as well as toward financingpurchase of FSO unit “Falcon Spirit.”

• According to an 8-K filing with theSEC, Western Gas partners completed itsdrop-down acquisition of midstream assetsfrom anadarko petroleum for $254.4million. The assets, in Wyoming, compriseda 750-mile gathering system and relatedequipment, two cryogenic plans with 200MMCFD capacity.

• penn Virginia Gp Holdings lp priced10 million common limited partner units at$18.45 per unit, amounting to $184.5million. Underwriters have a 30-day optionto buy up to 1.5 million additional units tocover over-allotments as needed. Proceedswill go to Penn Virginia Resource LP, whichmanages coal and natural resourceproperties and operates a midstream unit.

• Two cVr Energy subsidiaries havecompleted an offering of $275 million ofsenior noted due 2015 and $225 million ofsenior notes due 2017. With the proceeds, therefiner intends to repay $453.3 million in debt.

Briefs

petrobras U.s. unit ordered to pay $639 MMA U.S. District judge upheld an arbitration ruling that Petrobras America Inc. pay Astra

Oil Trading NV $639 million, stemming from a refinery dispute. The unit of Brazil’s state-owned oil company may still appeal the award.

In February 2006, Petrobras agreed to buy Astra’s stake in the 100,000 b/dPasadena Refining System Inc. located on the Houston Ship Channel, for about $370million. But Astra said Petrobras still wouldn’t pay even after it turned over its 50%

stake to the company. Arbitrators at the International Centre for Dispute Resolution subse-quently ordered Petrobras to pay $639 million plus interest. The disagreement reportedly stemsfrom a joint venture between the refinery and PRSI Trading for supply of feedstock.

Flying J and pilot travel centers merger date extendedThe deadline for the retail merger of bankrupt Flying J and Pilot Travel Centers has been

extended to April 30, pending FTC approval.Last summer the companies announced Pilot would pay Flying J $100 million worth of

debtor-in-possession financing in return for combining their operations with FlyingJ’s truck stops. Flying J has ~270 trucks stops, and Pilot owns about 300.

The deadline has been extended from the original March 31 cut-off date. Duediligence has been completed, transaction documents drafted, and specified consents from Shelland ConocoPhillips have been received. Additionally, the arrangement of more than $2 billionin financing has been filed with the Delaware bankruptcy court and approved by creditors.

Flying J declared bankruptcy in December 2008; a judge recently approved the saleto Alon of its Big West Oil 70,000 b/d refinery in Bakersfield, Calif. Last year it sold its700-mile Longhorn pipeline system to Magellan Midstream Partners at a discount price of$340 million.

clean Energy grabs national Grid stations The CNG retail campaign is still growing in the background of the gas shale boom. Clean

Energy Fuels Corp. contracted with National Grid to assume management of 13 existingCNG retail vehicle fueling stations in New York, Massachusetts and Rhode Island.

Clean Energy will operate and own the existing National Grid outlets, sell CNG to thirdparties, upgrade equipment and increase fueling capacity for growth of the National Grid CNGtruck fleet and collaborate with National Grid to keep growing the CNG vehicle market.

Four of the National Grid stations are on Long Island, four are in New York City, three arein Massachusetts and two are in Rhode Island. The agreement also provides for service to thirdparty vehicle fleets. The locations in Massachusetts and Rhode Island represent Clean

Energy’s entry into the retail CNG market in those states.Clean Energy also contracted with AT&T to supply CNG fueling stations in

support of AT&T’s commitment to deploy 8,000 CNG fleet vehicles in the United States. Aspart of the agreement with AT&T, Clean Energy will build, operate and supply CNG stations.AT&T announced plans in March 2009 to invest up to $565 million in a long-term strategy todeploy 15,000 vehicles through 2018.

National Grid delivers electricity to ~3.3 million customers in Massachusetts, NewHampshire, New York and Rhode Island, and manages the electricity network on Long Islandunder an agreement with the Long Island Power Authority.

Clean Energy has already established a presence in CNG/LNG for transportation at morethan 195 locations, for refuse, transit, ports, shuttle, taxi, trucking, airport and municipal fleetsin North America. It owns and operates two LNG production plants, one in Willis, Texas, andone in Boron, Calif.

The M&A Transactions Database is an invaluable tool for professionals engaged in upstream oil and gas transactions. For information email Brian Lidsky at [email protected] or visit www.plsx.com/ma

M&a DatabaseAccess market intelligence with PLS’ U.S. andGlobal M&A Database*



• robert Herman, who is currentlyconocophillips’ President of EuropeRefining, Marketing and Transportation will

become Vice Presidentof Health, Safety and

Environment. He succeeds Bob ridge whowill retire after 31 years of service. larryZiemba, who is currently the President ofU.S. Refining will become President ofGlobal Refining.

• Zion oil & Gas inc. of Dallas namedWilliam l. ottaviani as President and CEO.

• national Fuel elected David F. smithas Chairman of the Board of Directors. Hehas been with the company since 1978and has also served in the positions ofPresident of the national Fuel supplycorp., national Fuel Gas Distributioncorp., Empire pipeline, and national Fuel resources.

• anadarko petroleum CEO JimHackett was selected as the new chairmanof america’s natural Gasalliance. Before joiningAnadarko, Hackett was president and COOat Devon Energy. He succeeds Davidtrice, ANGA’s founding chairman.

• El paso announced susan B.ortensone was promoted to Executive VP and CAO which includes responsibility

for administrative services forpipeline, E&P and midstream

HR, as well as IT for shared services,pipeline and E&P systems.

• sasol appointed Greg lewin as thenon-executive director of the company.Lewin has held positions including ShellGlobal Solutions President and ExecutiveVice President of Shell’s DownstreamLeadership Team.

• tesoro will name Greg Goff as itsCEO. Goff is currently an SVP at conoco -phillips. Tesoro’s current CEO Bruce smithsaid late last year that he will retire once asuccessor is found.

• James E. Wade was appointed SVP of copano Energy and COO of Copano’sTexas operating segment subsidiaries.

• Enterprise products partnerscofounder Dan Duncan, 77, passed away March 28. Enterprise went public in

1998, and later in 2009 merged withtEppco partners to create

one of the largest U.S. pipeline companies. The richest man in Houston, Duncan wasalso an avid hunter and philanthropist aswell as an entre preneur and businessman.

People BriefsValero linking Quebec city refinery with Montreal

Valero Energy is moving to meet demand with a hook up between Quebec City andMontreal. Valero will build a 100,000 BPD pipeline between its Quebec City refinery and a

fuel storage location on Montreal. Construction will begin in Q3 or Q4.Valero ships ~50,000 b/d of fuels from the refinery by train and ship to

Montreal and imports some fuels as well to meet the demand. The pipeline proj-ect may be expanded 170,000 b/d of gasoline and distillate with additional pumps. The refin-ery imports feedstock from the North Sea, Algeria and Kazakhstan.

Shell’s 130,000 b/d Montreal East refinery will soon be converted into a fuel terminal.

Canada

Enterprise buying M2 Midstream assets continued From Page 1The Fairplay system is in Rusk, Panola, Gregg and Nacogdoches counties, Texas, and

includes 249 miles of gas pipelines (including 62 miles leased from third parties) with a capac-ity of 285 MMCFD and currently gathering about 180 MMCFD. The Fairplay system isexpected to be connected to the Enterprise Texas Pipeline system by Q1 2011. Like the StateLine system, the Fair Play system is also supported by long-term acreage dedications and vol-

umetric commitments from producers.The transaction is expected to close in early May.“This purchase offers producers on the State Line system an alternative to the

takeaway pipelines going to Perryville, as a result of our planned connection to the HaynesvilleExtension, which provides producers with an outlet to markets in South Louisiana and inter-state pipelines that serve natural gas markets in the Southeast United States,” said EnterpriseCEO Michael A. Creel. “The State Line and Fairplay systems complement Enterprise’s down-stream assets and provide multiple opportunities for synergies, including a long-term gather-ing conduit for our Haynesville Extension pipeline and Enterprise Texas Pipeline, as well asNGL volumes for our Panola Pipeline and downstream Mont Belvieu fractionation, storageand distribution complex. Natural gas volumes on the State Line system are expected toincrease significantly over the next five years based on producer forecasts.”

nova gets nod for 1.66 BcFD pipe from alberta to BcNova Gas Transmission’s application to build and operate the 48-mile Groundbirch

Pipeline was approved by Canada’s National Energy Board.The project is designed to run from a new interconnection at the Gordondale Lateral

downstream of the Gordondale Meter Station on TransCanada’s Alberta system, to a meterstation in Groundbirch about 23 miles west-northwest of Dawson Creek, British Columbia.

The project will be Canada’s first federally regulated facility for moving shale gas fromWestern Canada. TransCanada applied last May to build the pipeline after the NEB agreed toregulate the Alberta system.

Kisbey Gas plant capacity tripled to 5.0 MMcFDThe $44 million Kisbey Gas Plant expansion project in southeast Saskatchewan is com-

plete. The expansion which tripled the capacity of the plant to five MMCFD was funded bySaskEnergy’s Bayhurst Energy Services Corp. and ATCO Midstream. The project alsoexpanded the gathering system.

The increased production had led to increased flaring and the project allows the plant tocapture those excess volumes.

The ATCO-BESCO joint venture bought the plant in 2007.

It’s Here! Covering The Global Deal MarketplaceThe InternationalDeals report includes market analysis and aggregated news on global m&a, acquisitions, divestitures, international exploration, new discoveries, lease concessions, farmouts, capital markets, midstream and downstream news. PLS supports the composite reports with international alerts on content-driven market activity.Subscribe to PLS’ InternationalDeals by calling (713) 650-1212



International NewsHess sells north sea assets $423 million

As Hess Corp. liquidates non-core assets, it is divesting a North Sea pipeline systemalong several gas fields, for a total consideration of $423 million cash.

Perth-based Scottish & Southern Energy is buying Hess’ stakes in theEvereset and Lomond gas fields and the Central Area Transmission System in thecentral North Sea. The deal also includes the Bacton Corridor and Easington

Catchment Area gas fields in the Southern North Sea.The transaction is expected to close in Q3 of this year, pending UK government approval.

The deal includes hydrocarbon resources of ~383 BCF or 64 MMBOE.

International Briefs• Offshore Australia, subsea 7 installed

a rigid pipeline to connect underwaterproduction trees at the Henry-2 andNetherby locations with four rigid spoolpieces, as well as installation of an electro-hydraulic umbilical from Casion-4 toPecten East locations. santos ltd.awarded the project to Subsea 7 lastAugust for tying back Casino fieldoffshore Victoria in the Otway Basin. TheHenry and Netherby fields are operatedby Santos on behalf of its JV with aWEltd. and Mitsui E&p australia.

• sasrEF co. (saudi arabia shellrefinery) finished a project thatincreased its production of ultralow sulfurdiesel at its 305,000 b/d refinery at Jubail,Saudi Arabia. The plant is a 50-50 jointventure between saudi aramco andshell, and they built a high-pressurediesel hydro desulfurization unit,revamped two crude units and an existingdiesel unit. More inline blending andamine treatment facilities were alsoincluded in the project. The SASREFoperation mainly yields middle distillatesfrom Arabian Light crude.

646 BcFD, 249-mile pipeline project offshore VietnamPetrovietnam Gas Corp., Chevron Vietnam Ltd., Mitsui Exploration Co. and PTT

Exploration & Production Public Co. have contracted for construction of the Block B GasPipeline Project off the southwest coast of Vietnam.

The 249-mile (153 miles offshore) project with a planned maximum capacity of 646BCFD will be the longest pipeline in Vietnam. Petrovietnam will operate the $1 billion instal-lation that will move gas from blocks B 48/95 and 52/97.

Bid for arrow on table; transport contract extendedLiquefied Natural Gas Ltd. of Perth extended its heads of agreement deal with

Brisbane-based Arrow Energy for transport of proposed Fisherman’s Landing coal-seammethane production to an LNG plant in Gladstone through the end of June.

This allows LNG Ltd. to keep its options open in case the Arrow sale is cancelled. InFebruary, it was announced that Arrow will buy Fisherman’s Landing from LNG Ltd. for (A)$168million. But the recent takeover plan for Arrow by Shell and PetroChina is the reason for the pre-cautionary measure. Reportedly Shell and PetroChina don’t want to proceed with the LNG plant,preferring instead to send Arrow’s CSM volumes to Shell’s CSM-to-LNG plant project.



ARK-LA-TEXARK-LA-TEX MIDSTREAM INTERESTWells Operated By SellerHAYNESVILLE SHALESubstantial & Rapidly Growing EBITDAMidstream Interest Available MIDSTREAMThird Party Agreements In Place

G 2725

EAST TEXAS GATHERING SYSTEM8-Mile Gas Pipeline.MARSHALL/HARRISON AREANear Penn Virginia Well.MultiPay East Texas Reservoirs. PIPELINECotton Valley, Travis Peak.Haynesville Development Possible.Pipeline Capacity: 10,000 MCFDMultiple Line Right-Of-Way.High Pressure Line.Interconnects w/ Two Main ETX Lines.SUBJECT TO PRIOR SALECONTACT SELLER FOR MORE INFO

G 1425PL

VAN BUREN & CLEBURNE COS., AR8-Wells. 488-Net Acres.Fayetteville Production.MINERAL And/Or ROYALTY INTERESTAvg Gross Production: 2,612 MCFDAvg Net Production: 102 MCFD FAYETTEVILLE February Net Cash Flow: $17,900/Mn ROYALTYNEW PIPELINE IN PLACEChoke Released; Production IncliningCALL PLS FOR MORE INFO ON PKG

RR 4180M

PERMIAN BASINHIDALGO CO., NM PROJECT±147,262-Gross Acres.PEDREGOSA BASINPercha Shale Play. PEDREGOSA2-Wells To Be Drilled.Shows Produced In 7-Formations.Participation In 2-D Seismic Program.OPERATIONS Avail; 79.5%-81.85% NRIGas Pipeline 5-25 Miles From Location.Up To 50% Leasehold Interest. $53/Acre.CONTACT AGENT FOR MORE INFO

DV 3613

WEST TEXAS PROSPECT>370,000-Contiguous Net Acres.DELAWARE BASINPresidio, Culberson, Reeves, Jeff DavisBARNETT SHALE >370,000 100% OPERATED WI; 80% NRI NET ACRESPotential Reserves: 3.0-6.0 TCFESolid Infrastructure In Place.14 Mi. Gathering System & Gas PlantCALL PLS FOR MORE INFORMATION

DV 4300

Wti up to $85.64; Henry Hub spot at $4.08/MMBtu From March 31 to April 7, the spot price for West Texas Intermediate crude has increased

$2.19/bbl, to $85.64/bbl. And gas spot prices climbed at most market locations across the Lower48 with increases of as much as 8%. The Henry Hub gas spot price went up $0.15 (~4%) to$4.08/MMBtu, in the week of trading that was shortened by the Good Friday holiday.

At the NYMEX, the futures contract for May delivery at the Henry Hub settled April 7 at$4.02/MMBtu, rising by $0.15 or about 4% since March 31. Gas in storage as of April 2 was1,669 BCF – about 12% above the five year average, and the implied net injection for the weekwas 31 BCF.

The number of natural gas-directed rotary rigs was 959 as of Friday, April 09, 2010according to the Baker Hughes rig count. The rig count has risen for 13 weeks in a row, up 10on the week and up 169 on the year.

Pricing

Regional Spot Prices for Natural Gas

Source: NGI’s Daily Gas Price Index (http://www.intelligencepress.com)

Spot Prices Thu. Fri. Mon. Tue. Wed.($ per MMBtu) 1-Apr 2-Apr 5-Apr 6-Apr 7-AprHenry Hub 3.72 Holiday 3.93 4.16 4.08

New York 3.97 Holiday 4.26 4.55 4.44

Chicago 3.72 Holiday 3.99 4.24 4.19

Cal. Comp. Avg.* 3.97 Holiday 4.25 4.44 4.35Futures ($/MMBtu)April Delivery 4.086 Holiday 4.277 4.096 4.019

May Delivery 4.177 Holiday 4.371 4.189 4.109

*Avg, of NGI’s reported average for: Malin, PG&E citygate and Southern California Border.

Estimated Average Wellhead Price

Source: Energy Information Administration, Office of Oil and Gas.

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10

Price ($ per Mcf) 3.60 3.64 4.44 5.14 4.89 4.36

Price ($ per MMBtu) 3.50 3.54 4.31 5.00 4.75 4.24Note: Prices were converted from $ per Mcf to $ per MMBtu using an average heat content of 1,029 Btu per cubic foot as published in Table A4 of the Annual Energy Review 2008.

Current Natural Gas Stocks by Region

Source: Energy Information Administration: Form EIA-912, “Weekly Underground Natural Gas Storage Report,” and the Historical Weekly Storage Estimates Database. Row and column sums may not equal totals due to independent rounding.

Estimated Percent Current One-Week Implied Net Prior 5-Year DifferenceStocks Prior Stocks Change from (2005-2009) From 5 Year

All Volumes in Bcf 04/02/10 03/26/10 Last Week Average Average

East Region 750 753 -3 663 13.1

West Region 292 289 3 227 28.6

Producing Region 627 596 31 599 4.7

Total Lower 48 1,669 1,638 31 1,489 12.1

Listings Marked By PLS’ Logo Are Opportunities Being Handled By PLS’ Marketing Arm.



NYMEX Natural Gas Futures Near-Month Contract Settlement Price, WTX Intermediate Crude Oil Spot Price & Henry Hub Natural Gas Spot Price

Source: Natural gas prices, NGI’s Daily Gas Price Index (http://intelligencepress.com), WTI price, Reuters NewsService (http://www.reuters.com)

Ecopetrol seeks $3.5 billion pipeline consortiumColombia’s Ecopetrol is looking for players for a big midstream investment. The com-

pany is seeking a strategic partnership to build a pipeline with an estimated investment of $3.5billion. Ecopetrol’s business plan aims to reach a production of 1.0 MMBOED in 2015, and

includes investments to modernize and expand refineries and transporta-tion systems to accommodate expected production increases.

Ecopetrol has increased the capacity of its transportation systems inrecent years and is evaluating further options. Currently negotiations are underway with otherE&P companies with sights set on establishing future capacity requirements. Once the trans-portation needs are defined, the size of an eventual oil pipeline project as well as the requiredinvestment business model for its development will be laid out.

International News International Briefs• china national offshore oil corp.

signed a 20-year sale-and-purchaseagreement for LNG out of Queensland,Australia. At (A)$60 billion, it’s reportedlyAustralia’s largest-ever natural resourcesdeal, by which CNOOC will buy 3.6 MMTYLNG, and invest in transport property andequipment.

• otto Energy announced that theEdirne Gas Plant System is completed, andgas sales will commence after Turkey’sstate-owned BOTAS Petroleum PipelineCorp. puts a hot tap on the 14-inch mainlineto create a delivery point for Edirne gas. Firstgas is expected in late March or early April.Otto has finalized gathering and tollingagreements with the joint operators of theEdirne plant. All production from the licensewill be sold through dedicated salesarrangements to AKSA Dogalgaz ToptanSatis A.S. at a 15% discount. The Edirne JVpartners are Otto with a 35% stake in theEdirne license, with joint operatorstransatlantic Mediterraneaninternational with 55% stake and Turkishcompany petraco with 10%.

• Weatherford’s pipeline & specialtyservices group won a Saipem contract forpre-commissioning services on theUruguà-Mexilhão pipeline offshore Brazil inthe Santos Basin. The 108-mile gas pipelinewill link the FPSO Cidade De Santos inblock BS-500 at Uruguá field, to theMexilhão gas platform. Weatherford will fill,test, dewater, condition and inspect thegeometry of the pipeline and prepareonshore operations. The project isexpected to be finished this year.

• Enbridge Gas Distribution wasapproved for new rates by the OntarioEnergy Board effective April 1. Primarilydue to increased commodity costs, the ratechange will result in an increase per year ofabout $37 per customer.

265 MMcFD gas pipeline crosses strait of MagellanA $314 million, 23-mile gas pipeline project linking Tierra Del Fuego’s Cabo Espiritu

Santo with Cabo Vírgenes in Santa Cruz, across the Strait of Magellan is coming on-stream.The line will begin transporting 194 MMCFD in June, with another 71 MMCFD coming

on-stream early next year. With the addition of these pipelines, Argentina will see an increaseof ~70% in 2011, compared with current transport volumes.

The project is an expansion to the San Martin pipeline to increase supplies to the main-land from Tierra Del Fuego. The new line should boost gas production after six years of tightsupplies and shortages. The new pipeline may allow the restart or start up of several gas fieldsboth onshore and offshore.

DonG and iberdola enter 35 BcFY lnG shipping contractDONG Energy and Spain’s Iberdola have entered a 10-year commercial agreement for

LNG delivery by Iberdola to DONG. The agreement amounts to about 35 BCFY and has afive-year extension option.

The LNG will be delivered to the port of Rotterdam’s Gate terminal, ofwhich DONG is a co-owner. From there the Dutch transmission systemaccesses northwest Europe. The companies see this agreement as a step toward security of sup-ply and toward ongoing development of the Netherlands as a northwest European gas hub.

Vopak and the Netherlands’ state-owned transmission company Gasunie each own 40% ofthe terminal. RWE-Essent, OMV-Econgas, E.ON Ruhrgas and DONG Energy each have 5%.

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Note: The West Texas Intermediate (WTI) crude oil price, in dollars per barrel, is converted to $/MMBtu using a conversion factor of 5.80 MMbtu per barrel. The dates marked by vertical lines are the NYMEX near-month contract settlement dates.

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NYMEX Closing Dates

12/29/2009 1/27/2010 2/24/2010 3/29/2010

nYMEX natural Gas settlement priceWti spot priceHenry Hub spot price

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MIDCONTINENTPITTSBURG CO., OK PROPERTIES14-Producing Wells. 1,600-Acres.CANADIAN FIELDMiddle Booch Coal. 1,800 Ft. 312 MCFDCromwell Sand. 6,500.Mostly Mineral Rights Thru Cromwell——160-Acres Of Deep Rights Only.3.0%-100% WI; Avg >81.25% Lease12-Wells Are OPERATED WI.Current Net Production: 312 MCFDEst PV9 (PDP) Value: $3,520,000Also Includes 100% WI In Pipeline.CONTACT SELLER FOR DETAILS

PP 2717PL

TEXAS PANHANDLE PROSPECT150,000-Net Acres.CANYON SHALEUnconventional Gas Play. CANYON SHALEProposed Depth: 6,000-7,000 Ft.Interval Thickness: ~1,000 Ft.Numerous Secondary Objectives.85% OPERATED WI Available.Est Recoverable Rsrvs: 2.0-4.0 TCF4-Wells Drill/Complete: $6,000,000CALL GENERATOR FOR MORE INFO

DV 2707

TULSA CO., OK GATHERING SYSTEMShutIn Pipeline w/ Equipment. 10 Sq Miles.OKLAHOMA SYSTEMSignificant CBM Exploration w/i Acreage.Shallow Coal Seam Gas Production. CBM/PIPEShutIn Pipeline: Raw Unleased AcreageSuitable To: Production & Pipeline BuyerOptimal Scenario: Buy Pipeline & Drill

G 5617PL

WAGONER CO., OK PROJECT9,400-Total Acres. 200 Vertical LocationsSHALLOW DEVELOPMENTWoodford & Caney Shale. 1,000-1,800 Ft.Upside Potential In Dutcher & Cromwell.3-Year Leases. 2 Year Options.75% OPERATED WI; 77% Lease (Avg)6-Area Vertical Completions WOODFORD~300 MMCF Per Dual Completion Well.Est Reserves: 60 BCFe Potential.Finding & Development Costs: Under $1Solid Pipeline & Infrastruture In PlaceCost: ~$200,000/Dual Completion Well.

DV 5678

EASTERN & APPALACHIAKNOX CO., IN PROPERTY18-Gas Wells. 1-SWD. 6-ShutIn.NEW ALBANY SHALE GAS30,000-Net Acres. NEW ALBANYMississippian Oil Potential. 500-1,500 Ft.~20% NonOperated WI; 80% LeaseGross Production: 3,600 MCFDNet Production: 625 MCFD— 19% Working Interest; 19% NRI

PP 2792DV

SOUTH TEXASNUECES CO., TX PROPERTY1-Oil Well. 40-Net Acres.AQUA DULCE FIELD 30 MCFDVicksburg Formation. 8,020-Ft.Operated By Texas Southern Petroleum.100% OPERATED WI; 72% NRIGross Prod: 1-2 BOPD & 20-30 MCFDPotential 10 BOPD & 60 MCFD On Pump.CONTACT SELLER FOR MORE INFO

PP 4454

MIDCONTINENTCHAPTER 11 ASSET SALE20-Operated Wells. 5-NonOp Wells.BARNETT SHALENewark East Field & North Hill County20,333-Net Acres (33% HBP).3-D Seismic: ~88 Square Miles168 Net Locations Held By Production.~70% OPERATED WI; ~55% NRI~18% NonOp WI; ~14% NRI >4.6 MMCFDGross Production: >10.6 MMCFDNet Production: >4.6 MMCFDNet PDP Rsrvs: 12.8 BCFENet Proved Rsrvs: 49.8 BCFENet 3P Reserves: 230 BCFEMOTIVATED SELLER. QUICK FUSE.PLS IS HANDLING ASSET SALE

PP 4376DV

JACK CO., TX SALE PKG107-Wells. 15-Producers. 7,661-Acres.SHALLOW PRODUCTION SHALLOWRights Limited To Top of Barnett Shale.100% OPERATED WI Available.Gross Production: 2 BOPD & 554 MCFDLeasehold. Pipelines & Facilities.Seller Requires-Confidentiality Agreement.ORIGINAL OFFERS WANTED APRIL 1

PP 4999DV

NORTH TEXAS PROPERTY PACKAGE77-Wellbores. 60-Producing. 6-SWD.JACK, CLAY, WISE & PALO PINTOProduction & Midstream Asset Sale.2-Pipeline Systems In Place. 814 Avg 86.5% OPERATED WI; 66.2% Lease MCFEDNet Production: 700 MCFD & 19 BOPDCONTACT SELLER FOR DETAILS

PP 2906G

OKLAHOMA PROPERTY SALE107-Active Wells.WOODFORD SHALE (6,500 Ft.)COAL & ATOKA60,634-Gross & 27,916-Net Acres.59% NonOperated WI; 80% NRI (Lease)Net Production: 3.0 BOPD & 620 MCFD 650Gross Prod: 294 BOPD & 7.0 MCFD MCFD2010 Reserve Report Is Available.2.4% WI in Pipeline/Processing FacilityCurrent Cash Flow: $7,500/MonthCONTACT AGENT FOR MORE INFO

PP 2985

CapitalMarketsThe latest news articles online:

Oasis proposes $350 MM IPO for Bakken exploitation

Southwestern beats Q4 estimates; replaces592% reserves

CIT Group emerges from bankruptcy

2009 M&A review: Foreign buyers & corpo-rate deals

IPAA and others ask Congress to reject EPAregulations

Shell to divest 15% refining capacity, 35% of retail markets

Republicans bristle at fee & royalty hike proposals

COP, CAT and BP pull out of Climate Action Partnership

Doral enters forbearance

PetroHunter gets debt extension

NASDAQ delists Glen Rose, but Wardlawfunded

Consol funds $3.5 billion purchase with equity & debt

Central GOM lease sale lures $949 MM in high bids

Drilling contractors getting back to business

Marathon tendering for $3.2 billion of debt

Anadarko tenders ~$1 billion in debt at6.75% & 6.125%

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ROCKIESUTAH & COLORADO PROPERTY12-Total Wells. 1,080-Acres.ASHLEY VALLEY FIELDWeber & Park City Formations. 4,100 Ft. ASHLEY Entrada Formation. 2,000 Ft. VALLEYCO2-EOR Growth Opportunity Project20 Plugged Wells Available For ReEntry~87-100% OPERATED WI; ~75-81% LeaseEst March 2010 Production: 2,589 BOPDProjected Cash Flow: $93,461/MnNet Proved Reserves: 6.4 MMBOInfrastructure Access To CO2 Pipeline.CONTACT AGENT FOR STATUS

PP 2740RE

WEST COASTWASHINGTON EXPLORATION867,459-Gross / 416,959-Net Acres.COLUMBIA RIVER BASIN SUB BASALT3-Expl Wells Drilled ‘03-’05.——(1-Well Penetrated To Target.) EXPLORE7-Expl Wells In ‘80s - 5 w/ Gas Shows.Magnetotelluric & HRAM Data, Plus 2-D.Large Untested Structures Identified.40-50% NonOperated WI; ~34-43% NRI~43k Ac. 100% OPERATED WI; High NRI1980’s Tests Flowed Up To 5.0 MMCFD.In Proximity To Pipelines / Gas Markets.About 1/3 Of Lands Expire In 2013.GENERATOR HAS MORE INFO

DV 2846

OFFSHOREOFFSHORE TEXAS PROSPECT2-Blocks. 1-HBP, 1-Primary Term.GALVESTONStacked Middle Miocene Amplitudes.Proprietary Reprocessed PSTM Seismic.Water Depth: 62 Ft.Permitted & READY TO DRILL OFFSHORE50% Working Interest Available.Processing & Infrastructure Nearby.Reserve Potential: 80+ BCF & 1.2 MMBODHC: $5,860,000; Compl: $5,350,000Facilities/Pipeline: $6,650,000GENERATOR HAS MORE DETAILS

DV 2827

WANTEDMIDSTREAM ASSETS WANTEDNeed Gathering; Pipelines; Equipment.UNITED STATES BASINSOPERATED & NonOperated WI ASSETSPLS SCREENING DEALS FOR BUYER

W 6360G

7:15 P.M.THURSDAYAPRIL 15, 2010AT THE ALLEY THEATRE

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Kiogo MidYear MeetingApril 22-23, 2010Great Bend, KSwww.kioga.org

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