Alyeska's Barrett calls for urgent action to increase oil production

JUNEAU, Alaska - Alaska's economic artery, the trans-Alaska pipeline, could require expensive upgrades or even shut down if more oil doesn't begin coursing through it soon, the line's operator said on March 18.

"This needs to be a wake-up call for the state," Tom Barrett, president of Alyeska Pipeline Service Co., told the House Finance Committee.

The testimony comes in the midst of a heated debate over whether to cut oil production taxes, as Gov. Sean Parnell has proposed.

Oil provides nearly 90 percent of Alaska's unrestricted revenue, and Parnell believes the tax change is needed to boost investment and increase declining production. He is getting support from prominent House Republicans, including Rep. Mike Hawker.

But House Democrats see the plan as little more than a corporate giveaway, and members of the Senate's bipartisan majority are have questioned whether the proposal will work as intended and not deplete the state's multibillion-dollar reserves.

While Barrett did not endorse Parnell's plan, he said in an interview that he would encourage lawmakers to do whatever they could "to get me more oil."

Barrett said he would like to move between more than 800,000 and one million barrels of oil a day. The total currently averages around 640,000 b/d and is declining.

He said it would take at least five years for an oil development project to get online; for a larger field, it would be about 10 years, he said.

"We are already, from my perspective, behind," he told the committee.

Copano Energy rises on bid to buy back $332.7 million in notes with new issue

Copano Energy LLC (Nasdaq: CPNO) on March 22 jumped to an intraday high of $35.15, up $1.13, on news that it was going to float a new senior notes issue to use in repaying older notes with a higher rate of interest. CPNO closed at $34.86, up $0.84. The stock is up about 46 percent the past year.

Copano is offering to buy back all $332.7 million of a series of senior notes due in 2016, the latest in a flurry of companies seeking to reduce leverage amid a low interest-rate climate.

The gas company has reported higher revenue in recent quarters, but rising costs have weighed on its bottom line. It has focused on growth targeting the Eagle Ford and Barnett shale rock formations underlying parts of Texas.

Copano is offering a 4.4 percent premium, including a premium for holders who consent to certain amendments to the indenture under which the notes were issued. The notes have an 8.125 percent coupon.

Copano Energy, L.L.C. and its subsidiary Copano Energy Finance Corp. announced on March 22 that they intend to begin a public offering of $360,000,000 in aggregate principal amount of senior unsecured notes due 2021.

Copano intends to use the net proceeds from the 2021 Notes offering to (1) fund its pending tender offer for any and all of the $332,665,000 aggregate principal amount outstanding of its 8.125 percent Senior Notes due 2016, and (2) redeem any of the 2016 Notes not acquired in the tender offer related to such notes, although it has no legal obligation to do so and the selection of any particular redemption date is in its discretion. Any remaining net proceeds will be used to provide additional working capital for general corporate purposes.

Buckeye Partners to buy BP assets for $225 million

EMMAUS, Pa. - Buckeye Partners LP said on March 18 that it has agreed to acquire 33 refined petroleum products terminals and about 1,000 miles of pipelines from BP for about $225 million.

The terminal and pipeline assets are spread across the midwestern, southeastern and western U.S.

Buckeye's proposed acquisition includes BP's 50 percent stake in Inland Corp, which represents $60 million of the purchase price and is subject to approval by Inland's other shareholders.

Buckeye expects the deal to close in the second quarter.

BP has been selling off assets aggressively to help pay for the Gulf oil spill. The British oil company expects to pay nearly $40 billion to handle the spill. In addition to suspending its dividend and selling bonds, the company has sold off nearly $22 billion in assets. It plans to shed up to $30 billion in company assets by the end of 2011.

Enbridge may sue in response to Web site hoax over human hair

CALGARY, Alta. – April Fool’s Day came early for Enbridge, and the company is not amused by a hoax that makes it appear the company behind the Northern Gateway pipeline project in B.C. is planning to use human hair to clean up oil spills.

Enbridge was the victim of what amounts to a double spoof.

The first hoax was an authentic-looking news release, posted online for news reporters in the U.S. and Canada. It claimed that Enbridge Inc., which has a pipeline in Wisconsin, had an elaborate plan to turn hair salon clippings into "super-absorbent oil cleanup booms" on the route of the proposed Enbridge Northern Gateway pipeline across British Columbia.

"Human hair has been successfully used to clean up oil spills for nearly two decades, ever since Alabama hair stylist and inventor Phil McCrory patented the technology in 1995," the fake release says. "With MyHairCares, Enbridge expects to collect 450,000 pounds of hair."

The release goes on to quote Enbridge as saying it will turn 450,000 pounds of hair from salons across North America into “super-absorbent hair booms.” “When we’ve finished collecting hair, we will stuff it into old nylons and put it in mesh to strengthen the exterior. These sausage-like booms will be tied together to contain and absorb oil spills.”

The spoof news release cited an oil spill last summer in Michigan's Kalamazoo River.

That spill, which actually did occur, resulted in an estimated 877,000 gallons of oil or more flowing into the river, killing fish and other wildlife.

In the second part of the spoof, another release purportedly issued by Enbridge in response to the first hoax says the company would post a $20 billion liability bond for the proposed Canadian pipeline.

Enbridge says it is not collecting hair clippings from salons, and it also says it did not write either news release.

A spokesman for an environmental group that has pulled similar pranks on oil companies claimed responsibility, saying the latest hoaxes were meant to bring attention to the industry's environmental record.

Several Web sites were fooled into posting the fake MyHairCares initiative news releases as authentic.

In a March 15 statement, Gina Jordan, spokesperson for Enbridge Pipelines, called the MyHairCares hoax a “cynical attempt to take advantage of public concern about the environment.”

“Enbridge will vigorously defend its reputation, and is considering an appropriate legal response to this media campaign attack,” Jordan said.

The No Tanks Coalition, which is fighting Enbridge's proposed oil pipeline, sent out a news release critical of the hoax MyHairCares initiative.

“Enbridge should trim their project not the hair of the nation to make British Columbians feel safer,” said Rex Weyler, a No Tanks member, in the release. “This outrageous campaign is just the latest of many feeble attempts to convince the public not to worry about the inevitable devastating consequences of oil pipelines and tankers on the west coast. Instead, it serves as a powerful reminder that there is simply no good way to clean up oil spills and that oil spills are inevitable in a project of this scope and daring.”

Reached by phone this afternoon, Weyler told the Straight Web site that he didn’t know MyHairCares was a hoax when he provided his quote for the release.

Asked if he knows who put up the hoax sites, the long-time environmentalist replied, “No, I don’t know who did.”

Weyler noted MyHairCares is clearly a hoax and “kind of funny."

Some journalists also fell victim to the hoax. The fake news releases were picked up by a Canadian wire service, at least one newspaper and several web sites. The Province headline “Greenpeace slams Enbridge’s ‘hair-raising’ campaign” can be found in Google News, but the story is not available on the newspaper’s site.

Shell's bid to build two new pipelines in Canada rejected

CALGARY, Alta. - In a rare move, Alberta's energy regulator has rejected Shell Canada's application for two new pipelines at the company's Waterton field site in southwestern Alberta.

But the Energy Resources Conservation Board ruled on March 9 that Shell Canada will be allowed to drill a new sour gas well in the area and add a fuel-gas compressor.

The board added that given the way that the company has operated its existing infrastructure in the area 20 kilometers west of Pincher Creek, it has not demonstrated that it has followed its own procedures.

In a hearing last fall that led to this decision, Shell acknowledged a sour gas leak in November 2007 eroded the trust of residents near the small community of Beaver Mines.

Several residents in the area were evacuated as a result of the release, and others were required to seek shelter in their homes.

On March 9, the board said it agrees "that the operational procedures and pipeline technologies proposed by Shell may work for corrosion mitigation."

However, "these considerations have been outweighed by examples of its poor operating practices, such as improperly secured open excavations, odor complaints, pipeline and associated equipment failures, spills, poor reclamation efforts and weed growth at Shell's facilities."

The board noted Shell's proposed project has received a number of objections from landowners, recreational users and others stating concerns about public safety, the environment and the company's operational history.

New natural gas pipeline proposed for central Maine seeks tax breaks

PORTLAND, Me. - A new Portland-based energy company is seeking tax breaks from 12 communities in central Maine for a proposed 56-mile natural gas pipeline.

Kennebec Valley Gas Co. recently pitched its $70 million line from Richmond to Madison to local officials at a meeting organized by the Kennebec Valley Council of Governments, according to the Kennebec Journal.

Kennebec Valley Gas is seeking tax breaks from 12 central Maine communities and is trying to secure anchor customers to move forward with the project, which it hopes to complete in 2013.

The company is the newest venture of Mark Isaacson and Richard Silkman, founders of Competitive Energy Services and GridSolar. They are hoping to negotiate tax-increment financing arrangements with 12 municipalities that would host the pipeline and are currently working to attract large customers interested in using natural gas, according to the paper.

Isaacson said the project would provide another energy option to a large portion of the state. Currently, three companies provide natural gas in greater Portland, Lewiston-Auburn, greater Bangor, the Brunswick area and Kittery.

Isaacson said he and Silkman formed Kennebec Valley Gas Company in 2010 because they saw a need for another energy option in the region.

"It's the largest population and industrial center in Maine that doesn't have natural gas," he said.

When the Maine portion of the Maritimes and Northeast natural gas pipeline was built in the late 1990s, there was a plan to construct a spur that would run east of the Kennebec River, but that never happened.

The plan for the new pipeline is to connect to the Maritimes and Northeast pipeline at a compressor station in Richmond and run parallel to the river on the west side. It would be built in the road right of way in "comparatively rural areas," Young said, and smaller pipelines would distribute the gas to customers from as many as nine different points.

S&P downgrades LP units of TC Pipelines from Buy to Hold

Standard & Poor's said on March 7 that it was downgrading units of TC Pipelines (Nasdaq: TCLP) from Buy to Hold based on valuation. The TCLP unit price has increased over 11 percent in the past four months.

S&P said it was encouraged that the partnership's Great Lakes segment has sold all its available capacity through October 2011, and that its Northern Border segment is fully contracted through March 2012. It believes that TCLP will increase its cash distribution 3.4 percent to $3.06 per unit in 2011.

S&P maintained its 2011 earnings per unit estimate of $2.89. It also kept its target price of $58, based on TCLP's 12-month forward distribution estimate and target yield of 5.3 percent, in line with its peers.