Daily Archives: January 26, 2012

Another Stimulus-Backed Energy Company Files for Bankruptcy

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After months of financial turmoil, an Energy Department-backed lithium ion battery company has filed for Chapter 11 bankruptcy protection.

Lachlan Markay

January 26, 2012 at 10:39 am

The company, Ener1, received a $118 million grant from DOE in 2010 as part of the president’s stimulus package. The money, which went to Ener1 subsidiary EnerDel, aimed to promote renewable energy storage battery technology for electrical grid use.

But despite generous federal support for the company, Ener1 was racked by problems last year. In October, NASDAQ delisted the company due to non-compliance with Securities and Exchange Commission filing requirements. A month later, the company’s president, chief executive, and top financial officer were fired.

On Thursday, Ener1 announced it will initiate a pre-packaged Chapter 11 bankruptcy plan as part of an agreement to restructure the company’s debt obligations.

Ener1, Inc. (OTC: HEVV) (the “Company”) today announced that it has reached agreement with its primary investors and lenders on a restructuring plan that will significantly reduce its debt and provide up to $81 million to recapitalize the Company to support its long-term business objectives and strategic plan.

To implement this restructuring plan, the Company has voluntarily initiated a “pre-packaged” Chapter 11 case in U.S. Bankruptcy Court in the Southern District of New York, in which it is requesting that the Court confirm a pre-packaged Plan of Reorganization to implement the restructuring.  The Company filed a proposed Disclosure Statement and Plan of Reorganization with the Court and anticipates completing the restructuring process in approximately 45 days…

The pre-packaged restructuring plan, which has been unanimously accepted by all of Ener1′s impaired creditors, provides for a restructuring of the Company’s long-term debt and the infusion of up to $81 million of equity funding, which will support the continued operation of Ener1′s subsidiaries and help ensure that the restructuring will not adversely impact their employees, customers and suppliers.  Of this amount, a new debtor-in-possession (DIP) credit facility of up to $20 million will be available upon Court approval to support working capital needs during the restructuring.  The balance, for a total of up to $81 million, will be available over the four years following Court approval of the restructuring plan and subject to the satisfaction of certain terms and conditions.

Ener1 is not the first energy storage technology company to file for Chapter 11 after receiving significant stimulus support. Beacon Power, which manufactures flywheel energy storage technology, received a $43 million loan guarantee from the same stimulus program that funded Solyndra. Despite having used $3 million marked for loan repayment to continue funding its daily operations, Beacon filed for Chapter 11 in November.

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USA (Sabine Pass): BG Ups Sabine Pass LNG Volumes to 5.5 MTPA

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Cheniere Energy Partners, L.P. announced today that its subsidiary, Sabine Pass Liquefaction, LLC , has entered into an amended and restated LNG sale and purchase agreement with BG Gulf Coast LNG, LLC, a subsidiary of BG Group plc, under which BG has agreed to purchase an additional 2.0 million tonnes per annum (mtpa) of LNG, bringing BG’s total annual contract quantity to 5.5 mtpa of LNG.

BG will purchase 3.5 mtpa of LNG with the commencement of train one operations and will purchase a portion of the additional 2.0 mtpa of LNG as each of trains two, three and four commence operations.

Under the SPA, the purchase terms essentially remain the same, whereby BG will pay Sabine Liquefaction a fixed sales charge for the contracted quantity and will pay a contract sales price for LNG purchases based on the applicable Henry Hub index traded on the New York Mercantile Exchange, with the exception that the fixed sales charge will increase ratably in order to account for the increased fixed sales charge on the additional volumes.

In assessing the optimal contracting strategy for the Sabine Liquefaction Project, we have decided to sell part of the additional volumes on a long-term basis to BG, our first foundation customer,” said Charif Souki, Chairman and CEO.  “There’s a trade-off in whether we sell the additional volumes on a long-term basis or in the open market.  Contracting a portion of the additional volumes adds further certainty to the long-term cash flows of the project and preserves the opportunity for additional upside.

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Ichthys: The Largest Subsea Gig for McDermott (Australia)

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McDermott International, Inc. announced today that its Australian subsidiary has received and signed a letter of award for the Ichthys Gas-condensate Field Development subsea umbilical, riser, flowline (“SURF”) project by INPEX. The contract value is in the order of magnitude of US$2 billion and is the largest subsea contract McDermott has been awarded to date.

This project includes engineering, procurement, construction, installation (“EPCI”) and pre-commissioning of production flowline systems, a MEG injection system, plus start-up condensate transfer and fuel gas transfer flowline systems, control systems as well as other associated SURF elements in water depths up to 275 meters. McDermott will also install mooring systems for the Floating Production, Storage and Offtake vessel and Central Processing Facility as well as installation engineering for future flowlines, risers and umbilicals.

McDermott has already begun engineering and procurement work and is expected to start fabrication of more than 16,000 tonnes of subsea equipment, including a subsea Riser Support Structure and installation aids, at its Batam Island, Indonesia fabrication facility beginning in 2013. The complex offshore installation campaign will see McDermott undertake the installation of subsea hardware, moorings, risers, umbilicals and flowlines utilizing its specialty subsea vessels Emerald Sea and North Ocean 102. McDermott is working with Heerema Marine Contractors (“Heerema”) for transportation and installation of a portion of the offshore scope, utilizing the heavy lift, J-Lay and Reel-Lay capability of Heerema’s new-build vessel Aegir.

Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer, McDermott said, “McDermott has a long track record working on EPCI projects offshore Australia. This major SURF award firmly endorses McDermott’s core EPCI competencies and our competitive subsea construction vessels, combined with Heerema’s installation strength and the team’s alignment with INPEX. This is a large scale and complex development, and we are firmly behind promoting the success of this LNG project.”

The Ichthys LNG Project is a Joint Venture between INPEX (76%, the Operator) and Total (24%). Gas from the Ichthys Field, in the Browse Basin approximately 200 kilometers offshore Western Australia, will undergo preliminary processing offshore to remove water and extract condensate. The gas will then be exported to onshore processing facilities in Darwin via an 889-kilometer subsea pipeline. The Ichthys LNG Project is expected to produce 8.4 million tonnes of LNG and 1.6 million tonnes of LPG per annum, along with approximately 100,000 barrels of condensate per day at peak.

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USA: Drilling at Eugene Island Starts Next Week, Says Leni

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Leni Gas & Oil plc today announces the imminent arrival of the Ocean Columbia jack-up rig at the Eugene Island Field in the US Gulf of Mexico.

As previously announced in December 2011 the Company has approved additional drilling at the Eugene Island-184 leases operated by Marlin Energy LLC (“Marlin”) where LGO holds a 7.25% working interest.

Marlin has informed LGO that the rig is now being released by the previous operator and it is expected to be mobilized to the Eugene Island platform shortly. The rig move is weather dependent; however, the operator anticipates commencing drilling operations next week.

The first planned operation is the A-2ST01 well, a sidetrack of the existing A-2 well, which targets reserves in the Tex X2 sandstones. A total of 16 days have been budgeted for the drilling and evaluation. Further drilling and recompletions work at EI-184 is expected to follow the A-2ST01 well.

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USA: Discovery to Expand Pipeline System in Deepwater Gulf of Mexico

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Williams Partners L.P. and DCP Midstream Partners, LP announced a planned expansion of the Discovery natural gas gathering pipeline system in the deepwater Gulf of Mexico.

Discovery intends to construct the Keathley Canyon Connector, a 20-inch diameter, 215-mile subsea natural gas gathering pipeline for production from the Keathley Canyon, Walker Ridge and Green Canyon areas in the central deepwater Gulf of Mexico.

Discovery has signed long-term agreements with the Lucius and Hadrian South owners for natural gas gathering and processing services for production from those fields.

The Keathley Canyon Connector will originate in the southeast portion of the Keathley Canyon area and terminate into Discovery’s 30-inch diameter mainline near South Timbalier Block 283. The pipeline will be capable of gathering more than 400 million cubic feet per day (MMcf/d) of natural gas.

“With the newly signed anchor customers, the Keathley Canyon Connector will provide us with significant growth opportunities for fee-based deepwater gathering volumes on the Discovery system,” said Rory Miller, president of Williams Partners’ midstream business.

“There is also opportunity for future growth, as it will run in close proximity to several known discoveries and numerous planned-to-be-drilled prospects. It will provide the industry with highly reliable and cost-effective deepwater gathering services and deliver those volumes to our onshore Larose gas processing plant and Paradis fractionator,” Miller said.

“This expansion project, supported by long-term agreements with experienced deepwater producers, facilitates the Discovery system’s ability to attract additional gathering and processing volumes in the future,” said Mark Borer, president and chief executive officer of DCP Midstream Partners, LP.

Construction on the project is expected to begin in 2013, with a mid-2014 expected in-service date. Total capital expenditures for the Keathley Canyon Connector are estimated to be approximately $600 million. Williams Partners’ portion of capital expenditures on this project was included in its 2012 forecast issued on Nov. 1, 2011.

In addition to the offshore gathering system, the Discovery system includes the Larose natural gas processing plant and Paradis fractionation facility. Williams Partners owns 60 percent of the Discovery system and operates it. DCP Midstream Partners, LP owns the other 40 percent of the Discovery system.

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Australia: Technip Wins Wheatstone Platform Design Contract from DSME

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Technip Oceania (TPO), a Technip Group ) operating centre in Perth, Australia, has been awarded a contract, worth approximately AUD110 million (€90 million), by South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME) for the detailed design of Chevron’s Wheatstone offshore gas processing platform, located 200 kilometers off Western Australia’s coast.

The upstream (offshore) part of the project is comprised of the development of gas fields in the WA-17-R and WA-253-P petroleum titles located on the Northwest Shelf offshore Western Australia at water depths of 70 to 200 meters. Subsea gas-gathering systems will transport production to the processing platform where the gas and condensate will be treated. It will then be exported to the onshore gas plant located at Ashburton North, 12 kilometers west of Onslow, on the Pilbara coast of mainland Western Australia.

This award follows on from TPO’s successful completion of the front-end engineering design of the project, a contract awarded by Chevron in 2009. The contract represents a breakthrough for TPO, who are leading the work and performing over 40% locally in Australia. Frans Roozendaal, TPO’s Managing Director, says “the Wheatstone Platform is one of the largest offshore platforms ever built, and I am proud that we have been able to deliver the design for DSME from our Australian operation. We have had to expand locally to perform the work, with over 200 people in Perth working on the project.”

DSME’s Project Manager, KH Lee says “it has been good to be able to use Technip’s Australian office to lead this work. The continuation from FEED, the knowledge of Australian requirements, and the proximity to Chevron gives us a great advantage.”

Technip’s operating centers in Perth, Australia and Kuala Lumpur, Malaysia will execute the contract, which is scheduled to be completed in the second half of 2012.

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Hercules sees more rigs in GOM

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Hercules Offshore expects to end the year with more rigs in the Gulf of Mexico, as the top shallow-water driller in the region looks to cash in on higher day rates, a report said.

News wires  26 January 2012 05:42 GMT

Day rates could rise further as oil majors ramp up spending in the Gulf of Mexico after the government eased up restrictions on drilling permits that were imposed following the Macondo oil spill, chief executive John Rynd told Reuters in an interview.

“As we exit 2012, we may be running 19 or 20 rigs versus the current 18 (in the Gulf of Mexico),” said Rynd, who joined Hercules in 2005 after working with peers like Rowan Co and the drilling unit of Noble Corp.

A total of about 40 shallow-water rigs are active in the region and all of them are contracted, he added.

Houston-based Hercules has been commanding day rates of about $55,000 on average. The cost of renting a rig by the day has risen about $20,000 in the last one year.

“The rates are stable… we have a positive outlook for 2012,” Rynd said.

Activity in Gulf of Mexico is picking up after the 2010 oil spill brought drilling there to a standstill and higher oil prices are boosting exploration work in the region.

Oilfield services leader Schlumberger expects rig count in the Gulf of Mexico to top the level seen prior to the BP disaster, later in the year.

Rynd said Hercules is still in talks with Petroleos Mexicanos regarding its jack-up rigs. The Mexican state oil company did not renew contracts for two Hercules rigs following an accident in 2008.

The company, which is valued at about $618 million, caters to Chevron and Apache in the US Gulf and Oil and Natural Gas Corporation Limited (ONGC) in India.

Hercules shares were trading up 2% at $4.57 on Wednesday afternoon on the Nasdaq.

The stock has gained nearly two-thirds of its value in the October-December quarter, outperforming the broader S&P Oil & Gas Drilling Sub-Industry Index, which has grown 21% during the period.

Published: 26 January 2012 05:42 GMT  | Last updated: 26 January 2012 05:45 GMT

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