SAN RAMON, Calif. (AP) — Chevron will buy Anadarko Petroleum for $33 billion in a cash-and-stock deal as the company seeks to grow stronger in deep water exploration in the gulf and the energy-rich southwest region of Texas called the Permian Basin.
The companies put the enterprise value of the deal at $50 billion. The deal, announced Friday, arrives with U.S. crude prices up 40% this year.
“This transaction builds strength on strength for Chevron,” said Chairman and CEO Michael Wirth. “The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deep water Gulf of Mexico capabilities and will grow our LNG business.”
With the deal announced Friday, it gets access to Anadarko’s LNG operations in Mozambique. The combined company will also control a 75-mile-wide corridor across the Delaware Basin, just beside the Permian Basin, a region bountiful with natural gas that has been exploited through shale drilling.
There has been some pressure in energy markets as OPEC tries to push prices higher through production cuts.
When the organization of oil-producing states released its monthly report this week, it revealed that energy output from OPEC had declined to levels not seen since early 2015.
That is largely being driven by the energy powerhouse Saudi Arabia, which last month removed another 324,000 bpd from the market.
Still, U.S. crude was selling for less than $65 per barrel Friday. That’s far from levels well above $100 per barrel reached just before the economic downturn in 2008, and there are signals that global economic growth is slowing.
The acquisition of Anadarko could give Chevron a little more breathing room when crude prices do fall.
With savings the companies plan to book and rising cash flow, Chevron said it will bump up annual stock buybacks to $5 billion, from $4 billion a year, once the transaction is complete.
Chevron plans to divest $15 billion to $20 billion of assets between 2020 and 2022, with proceeds being used to lower debt and to return additional cash to shareholders, the company said.
Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each share they own, or $65 per share. Chevron will issue about 200 million shares and pay approximately $8 billion in cash. It will also assume about $15 billion in debt.
Chevron Corp. will keep its headquarters in San Ramon, California. Anadarko Petroleum Corp. is based in The Woodlands, Texas.
The deal is expected to close in the second half of the year. It still needs approval from Anadarko Petroleum Corp. shareholders and regulators.
Shares of Anadarko jumped 30.3% before the market opened, while Chevron’s stock fell 3.2%.
Trump Signs Orders to Ease Pipeline Approval, Construction
CROSBY, Texas (P&GJ) – President Donald Trump on Wednesday signed a pair of executive orders intended to ease permitting and construction of pipelines and other energy infrastructure – an action that quickly drew the praise of industry organizations.
One of the orders directs Environmental Protection Agency (EPA) Administrator Andrew Wheeler to review the agency’s permitting process to speed up the construction of natural gas pipelines. It specifically directs EPA staff to review regulatory language that gives authority to states under the federal Clean Water Act (CWA), which has been used by New York regulators to block the construction of pipelines to transport natural gas from the nearby Marcellus and Utica basins.
Another order, intended to streamline approval of cross-border pipelines, clarifies that the President will make the decision on whether to issue permits for such projects. Currently, the Secretary of State has the authority to issue permits for such cross-border projects as the proposed Keystone XL pipeline, which would extend from Hardisty, Alberta, to Steele City, Nebraska.
Trump timed the executive orders Wednesday with a fund-raising trip to Texas, where he spoke at the International Union of Operating Engineers International Training and Education Center in Crosby, northeast of Houston. The orders are part of a broader initiative to achieve a goal that the Trump Administration refers to as global “energy dominance.”
The Interstate Natural Gas Association of America (INGAA) and the American Gas Association (AGA) were among organizations that responded with praise for the actions on behalf of the industry.
“Currently, the process for reviewing and approving new or expanded interstate natural gas pipelines is robust and transparent – two things that we continue to believe are essential – but procedural inefficiencies can delay a process that already spans several years,” said Don Santa, president and CEO of INGAA, in a statement. “Streamlining the process to ensure it is safe, comprehensive and predictable is a top priority, along with EPA clarifying Clean Water Act section 401 water quality certification requirements so that one state cannot interfere with interstate commerce.
“We look forward to learning more about the administration’s plans to expedite the permitting and review process for the critical infrastructure that allows Americans to continue enjoying the many benefits of natural gas,” Santa said.
AGA President and CEO Karen Harbert said Trump’s executive orders “clear the way for development of new natural gas pipelines, enabling greater access to natural gas thereby benefitting American families and our environment.”
America’s natural gas utilities add an average of one new customer every minute nationwide servicing the millions of Americans who want access to gas, the AGA noted in Harbert’s statement Wednesday. The association, which represents many of the nation’s local distribution companies (LDC), also cited a recent study from the National Bureau of Economic Research found that the drop in natural gas prices averted 11,000 winter deaths per year in the U.S.
“When states say ‘no’ to the development of natural gas pipelines, they force utilities to curb safe and affordable service and refuse access to new customers including new businesses. Limiting access and choice for Americans – driving up costs and emissions in the process – is simply bad policy,” Harbert said.
INGAA’s Santa added, ““We are pleased that the administration is building upon earlier actions to streamline the permitting and review process for critical energy infrastructure projects. Ensuring that our abundant domestic supply of natural gas can safely reach end users is critical if we are to fully realize the benefits of this clean-burning, job-creating resource and natural gas infrastructure is the foundation of that vision.
According to AGA, increased use of natural gas has led to U.S. energy-related carbon dioxide emissions hitting 25-year lows. The association said public policy at every level should recognize the role that the direct use of natural gas will continue to play in reducing greenhouse gas emissions.
“Americans deserve a choice when it comes to their energy and enabling the development of natural gas pipelines gives them an opportunity to choose reliability, affordability and a clean energy future,” Harbert said.
In addition to the EPA directives, Trump also instructed the departments of Transportation, Agriculture, Commerce and Interior to review ways to ease LNG transport by rail and LNG’s ability to build electric power lines across private land.
A group of business organizations submitted a letter to EPA Administer Wheeler last week alleging that states have been using the CWA’s environmental review and permitting process for energy projects as an activist tool to oppose production and use of fossil fuels. The Trump administration, however, has emphasized that its goal is to ensure states follow the intent of the CWA and not to take power away from them.
Trump issued a new presidential permit for the Keystone XL last month, two years after he first approved it and more than a decade after it was first proposed.
President Donald J. Trump issued an updated presidential permit for the proposed Keystone XL crude oil pipeline on Mar. 29. The move was seen as an attempt to jump-start the project’s construction after a federal judge in Montana blocked it in November and ordered further environmental reviews (OGJ Online, Nov. 9, 2018). US District Judge Brian Morris modified, but did not rescind, his order a few months later (OGJ Online, Feb. 18, 2019).
“This permit acknowledges the project’s importance to the White House once again, and the steps TransCanada Corp., the project’s sponsor, has taken over the years,” a Washington energy observer said. “But there is an injunction still in place which halts construction. The steps from here regarding that injunction depend on what steps the US Department of Justice and TransCanada want to take.”
Business and labor organizations welcomed the president’s action. “The Keystone XL pipeline is one of the most studied pieces of infrastructure in American history. Over the course of a decade, it has been through five environmental reviews on the main route and an additional two on an alternative route,” said Christopher Guith, acting president of the US Chamber of Commerce’s Global Energy Institute.
Noble Midstream announced it has secured a $200 million equity commitment (“Preferred Equity”) from Global Infrastructure Partners Capital Solutions Fund (“GIP”) to fund capital contributions to Dos Rios Crude Intermediate LLC, a newly-formed subsidiary holding Noble Midstream’s 30% equity interest in the EPIC Crude Pipeline.
The 30-inch EPIC Crude Pipeline is being designed with an initial capacity of 590 MBbl/d from the Permian Basin and Eagle Ford to the Gulf Coast. With the installation of additional pumps and storage, EPIC can increase the 30-inch capacity to approximately 900 MBbl/d. Interim service remains on track for startup in the third quarter of 2019 and permanent service is anticipated in January of 2020.
Commenting on the announcement, John Bookout, Chief Financial Officer, said, “We look forward to having GIP as our partner given their extensive energy investing track record and believe this transaction is a further endorsement of our investment in the EPIC Crude Pipeline. This Preferred Equity provides an attractive funding source for the Partnership, allowing us to maintain a prudent balance sheet without issuing common equity as the EPIC Crude Pipeline progresses. We are excited to capitalize on the growing demand for crude oil takeaway and export capability from the Permian Basin and look forward to adding a high-quality source of cash flow to our portfolio. The EPIC Crude Pipeline, together with our other recently announced joint ventures, is a crucial piece in building a leading Permian Basin midstream platform and delivering long-term value for our unitholders.”
Wood has been awarded a $34 million contract from RH energytrans LLC to construct 28 miles of new pipeline designed to carry natural gas from Pennsylvania to Ohio.
Awarded through a competitive tender process, Wood’s scope also includes the construction of the North Kingsville meter station in Ashtabula County, Ohio.
The project is underway and expected to be completed in Summer 2019.
The Risberg pipeline will connect to 32 miles of existing pipeline, originating in the area of Meadville, Penn., extending in a northwest direction and terminating at the North Kingsville meter station.
About 16 miles of new pipeline will be installed in Pennsylvania and 12 miles in Ohio.
A Minnesota regulator has confirmed its approval of Enbridge Inc’s Line 3 crude oil pipeline replacement, allowing the $7 billion project that will ship more barrels out of western Canada to move forward, the company said on Wednesday.
The Minnesota Public Utilities Commissioninitially approvedEnbridge’s plan to rebuild the aging 1,031-mile (1,660-km) pipeline that runs from Alberta to the U.S. state of Wisconsin in June, but that decision was challenged by Minnesota’s governor in February.
On Tuesday, the PUC denied all petitions asking for its decision to be reconsidered, according to minutes of the meeting. Minnesota PUC spokesman Dan Wolf said a formal order will be issued soon.
“The PUC confirmed its decision to approve the conditions placed on L3R’s (Line 3 Replacement) Certificate of Need – conditions meant to protect Minnesotans – allowing this critical energy infrastructure modernization project to move forward,” Enbridge said in a statement.
The decision clears a hurdle for the pipeline and is welcome news for Canadian oil producers struggling with congestion on export pipelines as crude production increases. The discount last year on Canadian heavy crude versus U.S. barrels widened to record levels, prompting the Alberta government to impose production curtailments to draw down crude storage inventories and help shore up prices.
In a blow to Alberta’s oil and gas sector, Line 3 hit a snag earlier this month when Enbridge said its replacement will bedelayed by almost a yearuntil the second half of 2020 while the project awaits state and federal permits.
“It (the PUC decision) is good news for Enbridge undoubtedly, but they still have the issue of local permits that are delayed,” Wood Mackenzie analyst Mark Oberstoetter said.
In its statement, Enbridge said it is hopeful the remaining permitting schedule stays on track.
Line 3, which began service in 1968, currently operates at half its capacity. Its replacement would allow it to return to approved capacity of 760,000 barrels per day.
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(Reuters) – New York energy company Consolidated Edison Inc said on Friday it still plans to impose a moratorium on new natural gas service in parts of Westchester County after March 15 despite a $250 million plan by the state to reduce energy usage.
“The moratorium will still go into effect after March 15,” Con Edison spokesman Allan Drury said, noting the company needs to stop hooking up new gas customers to avoid compromising gas system reliability because of limited space on existing interstate pipelines into the region. Westchester County is north of New York City.
New York State has blocked construction of new interstate pipelines for environmental reasons for years as Governor Andrew Cuomo and other state officials want utilities to focus more on renewable power sources and energy efficiency programs, instead of building more gas and other fossil fuel-fired power plants and infrastructure.
Consumers, however, want access to more gas to heat homes and businesses because it is cheaper and cleaner to burn than oil. This winter, U.S. Northeast households, on average, are expected to spend $723 to heat with gas and $1,646 with oil, according to federal estimates. Drury said Con Edison has received more than 1,300 applications for new gas hookups since notifying the state of the moratorium on Jan. 17, well above the number the company normally receives during a two-month period.
On Thursday, the state announced several steps totaling $250 million to reduce energy consumption and fund alternative energy programs. The state said the programs will “provide immediate relief to Westchester County businesses and residents affected by Con Edison announcement that it will put new applications for firm natural gas service on a waiting list beginning March 15.”
The programs, which are estimated to reduce energy consumption equivalent to the amount of gas needed to heat over 90,000 homes, include funding for clean energy alternatives like electric heat pumps and high-efficiency appliances.
The problem with those programs is they only reduce demand, not boost gas supplies.
To provide gas to more customers and maintain system reliability, Con Edison has said it needs more programs to reduce demand and more interstate pipelines and storage facilities. Several energy companies have tried for years to build gas pipelines from the Marcellus shale in Pennsylvania to New York, but regulators in Albany have denied some of those projects, like Williams Cos Inc’s long-delayed Constitution pipeline.
(Reporting by Scott DiSavino; Editing by Steve Orlofsky)
CALGARY—The National Energy Board has endorsed an expansion of the Trans Mountain pipeline following a reconsideration of its impact on marine life off the B.C. coast.
The energy regulator says an increase in tanker traffic resulting from the pipeline would hurt southern resident killer whales and increase greenhouse gas emissions.
But it says those consequences can be justified in light of what would be the pipeline’s benefits.
“While these effects weighed heavily in the NEB’s consideration of project-related marine shipping, the NEB recommends that the government of Canada find that they can be justified in the circumstances, in light of the considerable benefits of the project and measures to minimize the effects.”
The energy board says it will impose 156 conditions on the project if it is approved. It has also made 16 new recommendations to the federal government.
Among those recommendations are measures to offset increased underwater noise and the greater chance that a whale could be hit by a ship. They also include suggestions for better spill response and reducing emissions from tankers.
The board notes that the new recommendations deal with areas outside its jurisdiction, but within the purview of the federal government.
Reaction from environmental groups was swift.
Stand.earth, which had tried unsuccessfully to widen the scope of the board’s reconsideration, had said before the ruling that it expected the board to endorse the project again.
“Today’s recommendation is the direct result of the Prime Minister’s Office telling the NEB and federal bureaucrats to ‘get to yes’ on this project,” Tzeporah Berman, director of the Vancouver environmental group, said in a statement.
“Scientific evidence filed with the NEB clearly shows that there is not enough data to ensure the safety of the marine environment … and that the NEB failed to address the climate impacts of this project.
“The Trans Mountain pipeline is not in the public interest and will never be built.”
Alberta has been fighting hard for the Trans Mountain expansion so that the province could move more crude oil to ports and from there to lucrative overseas markets.
The energy board’s original approval of the project was set aside last summer by the Federal Court of Appeal, which said the regulator had not properly considered marine life.
The NEB’s report starts the clock on a 90-day period for the federal government to decide whether the project should proceed.
Officials in Natural Resources Minister Amarjeet Sohi’s office have said a final decision won’t be made until consultations with affected Indigenous groups are complete.
The consultations were also an issue the federal Appeal Court raised when it put a halt on the project. It said talks with First Nations in the area had been insufficient.
The regulator’s support does not guarantee restart of construction on the controversial pipeline. Sven Biggs, climate campaigner for Stand.earth, predicted before the ruling that there will be more lawsuits and delays resulting from the board’s support of the project. He also said there will be protests in the streets and along the pipeline route if Ottawa decides to go ahead
Vanessa Adams, spokeswoman for Sohi, wouldn’t comment on Thursday on whether a cabinet ruling could be delayed.
She said in an email the federal government wants to “achieve the required public trust” to help move resources to market by first addressing environmental, Indigenous and local concerns.
She said a 60-member consultation team in British Columbia and Alberta has met with more than 85 of 117 Indigenous groups that would be affected by a Trans Mountain expansion and more meetings are taking place daily.