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December-09-2008
Alaska's TransCanada gas pipeline: complete by 2022
Alaska TransCanada and Denali pipeline group plans
EU, Egypt sign energy cooperation agreement
December-09-2008
Natural Gas Demand Slump Adds Pressure To Prices
Petrohawk 3 New Haynesville Shale Wells 73 Mmcfe/d
Schools, students plugging into hybrid repairs

Petrohawk 3 New Haynesville Shale Wells 73 Mmcfe/d
HOUSTON, Dec. 9 /PRNewswire-FirstCall/
Petrohawk Announces Three New Haynesville Shale Wells Placed on Production at a Combined Rate of 73 Mmcfe/d.
The Company expects to complete five additional Haynesville Shale wells by the end of the year.

-- Petrohawk Energy Corporation ("Petrohawk" or the "Company") (NYSE: HK) has placed three additional Haynesville Shale wells on production at a combined rate of 73 Mmcfe/d, one with the highest reported initial production rate of any well in Petrohawk's history, as follows:

        The Brown 17 #4 (69% W.I.), located in Section 17-T16N-R11W, Bossier
        Parish, Louisiana, was completed on November 18 and produced at a rate
        of 23.4 Mmcfe/d on a 26/64" choke with 7,700# flowing casing pressure.

        The Goodwin 9 #5 (97% W.I.), located in Section 9-T16N-R11W, Bossier
        Parish, Louisiana, was completed on November 25 and produced at a rate
        of 21.1 Mmcfe/d on a 26/64" choke with 6,750# flowing casing pressure.

        The Sample 9 #1 (100% W.I.) is located in Section 9-T14N-R11W, Red
        River Parish, Louisiana, approximately 12 miles south of Elm Grove
        Field. It was completed on November 27 and produced at a rate of 28.2
        Mmcfe/d on a 30/64" choke with 7,100# flowing casing pressure.

Petrohawk Energy Corporation is an independent energy company engaged in the acquisition, production, exploration and development of natural gas and oil with properties concentrated in Northwest Louisiana and East Texas (Haynesville / Bossier Shale and Cotton Valley), Arkansas (Fayetteville Shale), South Texas (Eagle Ford Shale), Oklahoma and the Permian basin.

For more information contact Joan Dunlap, Vice President - Investor Relations, at 832-204-2737 or jdunlap@petrohawk.com. For additional information about Petrohawk, please visit our website at http://www.petrohawk.com.

EU, Egypt sign energy cooperation agreement
Doris Leblond OGJ Correspondent PARIS, Dec. 6
The European Commission and Egypt's foreign affairs minister, Ahmed Aboul Gheit, signed a memorandum of understanding Dec. 2 to enhance energy cooperation between Egypt and the European Union. The pact would reinforce energy security for both.

Among five priorities are the establishment of a work program to gradually converge Egypt's energy markets with the EU's and the development of energy networks such as the Arab Gas Pipeline, which could transport Egyptian and possibly Iraqi natural gas resources to European countries.

Other areas covered include market reforms, promotion of renewable energy and energy efficiency, and technological and industry cooperation.

"Egypt is the EU's sixth largest natural gas supplier and a key transit country between the Middle East, Africa, and the EU," said EC Commissioner Benita Ferrero-Waldner. "Egypt's commitment to energy reforms is crucial for the creation of a Euro-Mediterranean energy market."

Natural Gas Demand Slump Adds Pressure To Prices
12/5/2008 NEW YORK Dow Jones

Big industrial companies are sharply cutting back their natural gas consumption as the economic slowdown erodes demand for their products, adding downward pressure to already sinking gas prices.
The front-month futures price for gas is now down about 58% from its early July peak, as a surge in domestic U.S. supplies raised fears of a glut just as demand was starting to crumble. Between April and September, monthly gas consumption by industrial users dropped 14% to 4.756 billion cubic feet, the lowest monthly figure since at least 2001, according to U.S. Department of Energy statistics. And anecdotal evidence indicates consumption is falling even further as gas-intensive industries ease back production.
According to an informal survey by the Industrial Energy Consumers of America of eight major industrial companies, gas usage is down 22%, on average, from a year ago. The Washington, D.C.-based lobbying group said its survey comprised a cross-section of major industrial companies, including fertilizer, brick, glass, and automotive businesses. Industrial companies account for about 30% of total U.S. gas demand, according to the Energy Information Administration, the statistical arm of the Department of Energy.
"We think consumption will continue to fall into 2009," said Paul Cicio, the president of the IECA. "Capital expenditures are being put on hold."

Cutting Back
Natural gas is the base ingredient for products including plastic, fertilizer, antifreeze and some fabrics. Companies also use natural gas for onsite power plants and heating systems.  The falloff in natural gas demand has been particularly noticeable in the fertilizer industry because gas is an essential raw material for nitrogen-based fertilizer production.  Agrium Inc. (AGU), a Canadian fertilizer company with extensive U.S. operations, has cut its natural gas consumption by between 5% and 10% this year, compared to last year, said Richard Downey, the company's vice president of investor relations. Agrium shut down one unit of a large fertilizer plant in Alberta indefinitely in September amid falling fertilizer demand and high natural gas prices.

But the company's gas demand could rebound in the spring as planting season begins, Downey said.  "We've seen a slight decline in our gas purchase requirements, but we do think it's a short-term phenomenon," he said.
CF Industries Holdings, Inc. (CF), a Deerfield, Ill.-based fertilizer company, hasn't reported a decline in natural gas demand or fertilizer production, but the company is "monitoring the situation closely," said spokesman Charles Nekvasil.

Expectations of lower industrial demand have led analysts to slash their natural gas-price forecasts for next year. U.K.-based energy advisory firm Wood Mackenzie said last month that it expects U.S. natural gas prices to trade in a range of $5.00 to $6.00 a million British thermal units for the next five years. Gas for January delivery was recently trading down 4.4% at $5.752 a million British thermal units on the New York Mercantile exchange.

"In coming to our conclusions, we have taken account of...the decline in demand due to a prolonged recession to (the fourth quarter) 2010," said Jen Snyder, head of Wood Mackenzie North American Gas Research, speaking at the company's Houston Energy forum in November.

Meanwhile, Morgan Stanley has cut its 2009 natural gas price expectation Tuesday to $7/MMBtu from $8/MMBtu.  "Industrial demand trends continue to weaken, as chemical demand looks to be a key area of potential weakness in '09," Morgan Stanley analysts wrote in a note to clients.
The Federal Reserve's Industrial Production Index, which includes gas-intensive industries such as petrochemicals and refining, fell 6% in September, compared with the previous year.
Dow Chemical Co. (DOW) Chief Executive Andrew Liveris on Thursday told CNBC that he expects the company to announce cost reductions in coming weeks to deal with "miserable" economic conditions.
Spokesmen from chemical giants DuPont Co. (DD) and Dow didn't return calls for comment.

Looking Beyond Winter
In the near term, sliding industrial gas demand could be offset by unusually cold winter weather in the major gas-consuming regions, which could spark significant heating demand. WSI Corp., an Andover, Mass.-based private forecaster, is predicting below-normal temperatures in the Northeast, Southeast and Midwest in December.

Beyond the winter heating season, falling industrial consumption, combined with continued production growth from natural gas-shale reservoirs and rising imports of liquefied natural gas, is likely to pressure prices lower, analysts said. Falling petroleum prices are also likely to drive the natural gas market lower, said Amy Sweeney, a statistician at the Energy Information Administration in Washington, D.C.  "A lot of industrial consumers can switch between natural gas and petroleum products to fire their plants, and petroleum prices have dropped a lot," she said.

Schools, students plugging into hybrid repairs 
Dec. 08, 2008 Las Vegas Review-Journal

When the world changes, those who teach about the world must change, too.
And there's a lot to learn. Working on a hybrid can, quite literally, kill you.  Pate lifted the battery cover on one of the hybrids, where 300 amps of electricity course through fat orange wires.  "That could reduce you to a pile of dust in a millisecond," he said.

That's why Paul Pate, the director of transportation programs at the College of Southern Nevada, needed to learn all he could about electric motors. He is in charge, after all, of teaching future mechanics how to fix cars. If he didn't know how to fix an electric car, how was he supposed to teach others?  Electric cars are here now, in the form of hybrids, and they need to be maintained.  Which is why CSN's auto technology program has four of them.  The newest is a Chevrolet Malibu hybrid that arrived a few weeks ago.
"We're trying to get enough vehicles so our students will be exposed to all the types," Pate said.

The program has a Toyota Prius, a Honda Civic and a Ford Escape, too, all hybrids. The cars have electric motors and gasoline engines.  So, in addition to learning about fixing regular cars, trucks and buses, students have to learn to fix those as well.  Student Agustin Mota, 22, one day wants to run his own shop. So he has to learn about everything.  "You have to always keep ahead of the game," Mota said. "Every five or six years, you've got a new technology coming out. It's constantly changing."

In the garage area last week sat a Ford Mustang with most of its engine missing, a couple of big semi tractors, a front loader and a humongous RV, all in different states of repair.
Diesel engines, including one that runs on compressed natural gas, sat on racks. A camshaft and a crankshaft shared a bench.

Pate said the auto technology program doesn't have a separate course of study for students to learn just about hybrids. "We try to roll the alternative fuels component into everything we teach. We want them to be prepared for every type of vehicle they'll see."

Robert Mundt, 20, said it's all part of becoming a better mechanic. He's currently working at Desert BMW.  "It's a lot different," he said of learning about hybrids. "There's a lot more safety precautions."  There's the electricity. There's also a complicated computing system, which requires its own cooling system.
Most hybrids use a different oil than regular cars, different tires and a different braking system.
Even body work is different. You can't subject a hybrid's battery to the high temperatures required for some paint jobs.
You'd want your mechanic to know all of this, especially now, when hybrids are getting popular.
"There will be, in the next three to five years, 25 models or more," Pate said. "This is the kind of car our students will see."
Eventually, there will be fully electric vehicles. There will be hydrogen powered cars. And who knows what else.

Alaska's TransCanada gas pipeline: complete by 2022
by Lori Tipton Friday, December 5, 2008 FAIRBANKS, Alaska
Gov. Sarah Palin, along with two of her commissioners, met Friday in Fairbanks to sign TransCanada's license to construct a natural gas pipeline. The signing happened Friday morning at the Morris Thompson Visitor's Center.
Friday also marked the two-year anniversary since Palin and her administration met in Fairbanks to kick off meetings with all of the parties interested in commercializing North Slope gas.

"This is a historic day for Alaska and for the North American continent when you consider the impacts this project will have on this part of our world," Palin said.
Natural Resources Commissioner Tom Irwin and Revenue Commissioner Pat Galvin signed TransCanada's license, which was approved under the Alaska Gasline Inducement Act.

TransCanada is the company that was chosen by the administration and approved by the Legislature to build a natural gas pipeline from Prudhoe Bay to Alberta, Canada.  "This is a significant step as we march forward toward Alaska's next economic lifeline," Palin said. "It's our next economic engine."  TransCanada CEO Hal Kvisle says the company has been interested in this project for 30 years.  "In our planning we've decided the size of the pipeline, the route of the pipelne, and we concluded those things that will work best," Kvisle said.

The license confirms the state's commitment to this project,  Kvisle said, though he said there is still a long road ahead and a lot of work is left to be done.  "On behalf of TransCanada, I look forward to working closely with the state of Alaska, the administration, its people, the Natives of Alaska, and potential customers for shipping on this pipeline," Kvisle said. "We think it will be a dream of a project."

There's about 10 more years of hard work ahead in order to get the pipeline online, TransCanada says. That includes the regulatory process, completing commercial negotiations with the suppliers, and getting all the necessary approvals from state and federal authorities.  After all of that is complete, it will take another three years just to build the pipeline.

TransCanada and Denali pipeline group plans
By Tim Bradner Alaska Journal of Commerce 12/8/08

TransCanada Corp. will receive its Alaska Gasline Inducement Act license to build a $30 billion-plus natural gas pipeline, which entitles the Calgary-based pipeline company to receive $500 million in state grants.  Award of the license had been expected by TransCanada and what it really means is that half of the Canadian pipeline company's costs in preparing for a 2010 open season will be reimbursed by the state. An open season is when a pipeline company solicits customers to ship gas.  Under the state's AGIA law, the state will reimburse up to $500 million of costs for a pipeline company that agrees to a set of conditions specified in the AGIA license.
TransCanada hasn't waited for the AGIA license to be official before starting its work, company vice president Tony Palmer told Alaska business leaders recently.  Because of the tight schedule in preparing for the open season, Palmer said TransCanada did aerial photography this fall along two possible pipeline routes in Alaska, one route from the North Slope to the Canada border and the other an alternative route to Valdez, where a liquefied natural gas project has been discussed.  TransCanada has also started preliminary environmental and engineering work, and costs incurred before the award of the AGIA license are carried totally by TransCanada, Palmer said.  Palmer gave a briefing on the project at the Resource Development Council's annual conference in Anchorage Nov. 19.

Meanwhile, TransCanada's rival, the Denali pipeline group being by BP and ConocoPhillips, isn't sitting still. Denali now has winter field work underway, a program of geotechnical studies and borehole drilling, as well as preliminary engineering studies, and is planning a robust 2009 field season both in Alaska and Canada, Denali president Bud Fackrell told the RDC conference. Denali also plans its open season in 2010 to solicit customers.

Palmer said TransCanada's project hasn't been affected so far by current difficulties in financial markets.
“It has had no affect on our plans, but it must be realized that we are in unique circumstances,” in the international financial situation, he said. TransCanda itself is financially strong, and raised $1 billion in new equity financing in a recent offering. “This shows that capital markets remain open to us.”  Alaskans should consider the pipeline project in the long term and not have opinions swayed “when energy prices are high or when they are low, such as in the last two months,” Palmer said.

In Alaska, TransCanada plans a 2009 field season and will let environmental contracts in 2009 and bring a major engineering contractor on board in 2010, Palmer said. In 2011 the company will begin an environmental impact statement process with a separate contractor selected for the EIS.  Under terms of its AGIA license, TransCanada is committed to continue work on the project even if the 2010 initial open season fails to attract enough gas shipping contracts. The company would hold additional open seasons as work continues toward approvals by the U.S. Federal Energy Regulatory Commission and Canada's National Energy Board.  After the 2010 the state will pick up 80 percent of the costs, although the maximum the state can reimburse TransCanada is $500 million.  TransCanada expects to spend $80 million in preparations for the 2010 open season and $600 million to the final certification by the FERC and NEB, Palmer said.

In contrast, the Denali project will spend $600 million in preparations for the open season, Fackrell told the RDC.  "It's important for us to have the highest-quality cost estimate we can do,” Fackrell said. The cost for Denali through to the FERC and NEB certifications is expected to be several billion dollars.

TransCanada will be able to do the engineering and cost estimates for the gas pipeline for less than what the Denali group will pay because the company has a substantial amount of information from previous work it has done on an Alaska pipeline, and the experience the company has in building pipelines in Canada, Palmer has said previously.

The Alaska project planned by TransCanada, a 1,715-mile pipeline from the North Slope to Alberta, is “huge, but not unprecedented for TransCanada,” Palmer told the RDC Nov. 19. If completed, the project would represent about 5 percent of the company's existing pipelines.  TransCanada has also previously completed larger, more difficult projects, he said. The company's legacy pipeline system built across Canada 50 years ago was actually larger and technically more challenging than the Alaska pipeline, Palmer told the RDC.
The company also has its Keystone project, a large new oil pipeline, now under construction in the Lower 48. This will involve a total of 4,000 miles of new pipe when completed in 2010. TransCanada's share of this project has increased from 50 percent to 80 percent following ConocoPhillips' reduction of its ownership from 50 percent to 20 percent, Palmer said.

Fackrell said the Denali group is busy with its winter and upcoming summer field programs. Denali will also be engaged in preliminary engineering on the gas treatment plant at Prudhoe Bay and the pipeline.  The group will work this year with the state Department of Transportation and Public Facilities on substantial upgrades needed for Alaska highways and bridges to enable them to carry heavy loads for pipeline construction, Fackrell told the RDC.  Fackrell said Denali has done a pre-filing of its application with the FERC, a procedural step that allows FERC engineers to work closely with Denali in preparations of the application. Palmer said TransCanada has chosen not to make a FERC pre-filing, but will do one after the 2010 open season.

Palmer said TransCanada has estimated the cost of building the pipeline at $26 billion in 2007 dollars, and that these estimates will be updated for the 2010 open season. The current estimate is for a toll, or transportation charge, of $3 per thousand cubic feet or under for moving gas from Alaska to Alberta.

TransCanada must work to keep the construction costs under control to prevent the toll charge from rising, as there are competitors in the market. For example, predictions are that gas produced from new oil shale wells could reach 5 billion cubic feet a day by 2010. “This is as much as the Alaska pipeline will deliver after 2018,” Palmer said.

Also, there are several import terminals for liquefied natural gas under construction that will soon be capable of bringing substantial quantities of imported gas into North American markets.