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Alpha Natural reaches deal on reorganization plan; DOI issues final rules for Arctic drilling

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Alpha Natural reaches deal on reorganization plan; DOI issues final rules for Arctic drilling

Topnews

The California Public Utilities Commission proposeda resolution for its July 14 meeting to order San Diego Gas & Electric Co. to award renewableenergy contracts to more bidders even though they did not make a competitiveprice cut-off. The PUC said SDG&E has a 62%, or 102 MW, shortfall inmeeting the PUC's renewable auction mechanism, or RAM, targets. The subsidiary wasrequired to procure 164.7 MW over six RAM auctions, but has procured only 62.7MW, the commission said.

The federal pipeline safety regulator's major gastransmission rule would cost significantly more and yield far less benefit thanofficial projections suggest, the American Petroleum Institute said. Thesweeping rule proposal could cost the industry $33.4 billion, with benefitsranging between $306 million and $568 million, according to an ICFInternational study conducted for the American Petroleum Institute. The costestimate is about 56 times the U.S. Pipeline and Hazardous Materials SafetyAdministration's regulatory impact analysis estimates of roughly $597 millionin costs.

AlphaNatural Resources Inc. has reached a deal on its reorganizationplan that will likely carry it out of bankruptcy court protection. The planincludes deals with various federal and state agencies as well as fundscontrolled by the United Mine Workers of America and will become effective asAlpha emerges from Chapter 11 bankruptcy in late July. Alphais expected to emerge as a privately held company "positioned well tosatisfy its environmental obligations on an ongoing basis," a news releasesaid.

Power

* Southern California Edison Co. is urging the CaliforniaPublic Utilities Commission to uphold a2014 settlement thatallowed the EdisonInternational subsidiary to recover the cost of closing theSan Onofre nuclearplant from rate payers. The CPUC is re-examining the approved settlement in light ofimproper communications that occurred between the company andformer commissioner Michael Peevey.

* Some call it a strategic review, others call it away to monetize assets. Call it what you want, the marketplace for merchantpower plants tied to proposed divestitures has given private equity firms anopportunity to seizemerchant assets at a time when public markets are shying away from the sector.Over the past several months, companies including ,Dynegy Inc. andTransCanada Corp.have made clear their intention to sell off segments of their merchantportfolios, either to limit competitive market exposure or raise cash tofinance a separate acquisition, or both.

* Dominion Resources Inc. subsidiary Dominion Voltage Inc.wona jury verdict against Alstom Grid Inc. A jury trial in the U.S. District Courtfor the Eastern District of Pennsylvania found that Alstom Grid infringed aDominion-owned patent claiming an invention that improves grid efficiencythrough the use of smart meters and advanced metering infrastructure for theprocess of conservation voltage reduction.

* Two environmental groups have joined forces in acitizen lawsuitagainst the U.S. EPA in an effort to force the agency to review NationalAmbient Air Quality Standards for nitrogen and sulfur pollution. Thegroups alleged that the EPA and Administrator Gina McCarthy failed to completethorough reviews of the NAAQS for sulfur and nitrogen and the science behindthose standards, as required under the Clean Air Act.

* TerraForm Power Inc. appointedThomas Studebaker COO and David Rawden interim chief accounting officer,effective July 7. Both appointees come from AlixPartners LLP's turnaround andrestructuring practice, according to a company filing.

Naturalgas/midstream

* The U.S. Interior Department issuedfinal regulations that raise safety and environmental standards for future oiland gas exploration in the Arctic region. The rules require oil companies toensure proper internal controls and planning for oil spill prevention,containment and responses, including having access to a separate relief rig inthe event of a loss of well control.

* The EPA's rules on methane emissions are part of agreater "war against fossil fuels" and will have a devastating effecton Texas' industry, the state's top oil and gas regulator said during testimonybefore Congress. Texas Railroad Commission Chairman David Porter ripped the Obamaadministration and the EPA in particular for overstepping their boundaries inwhat he described as a quest to ruin hydrocarbon producers.

* Suncor Energy Inc. is positioning itself for a recoveryin the global oil market as evidenced by its $6 billion buying spree over thepast year, more than its competitors, to keep production costs down whilehoping that demand will outweigh supply, according to BloombergNews.

* Inflows to energy exchange-traded funds increasedfivefold in June after a slow May, reflecting more investor optimism about thelikelihood of a sustained crude price recovery, an analyst said. "Itappears that investors are getting more comfortable with the stability of oilprices and improved prospects for large-cap energy companies in terms ofincreased stock valuations," Todd Rosenbluth, S&P Global MarketIntelligence's head of ETFs and mutual funds research, said in an interview.

* Keyera Corp. has agreed to acquirean additional 35% interest in the O'Chiese Nees-Ohpawganu'ck gas plant andassociated gathering pipelines from Bellatrix Exploration Ltd. for $112.5 million, thecompany said in a statement. Upon closing, Keyera will own 70% of thefacilities while Bellatrix will continue to be an owner and the operator.

* Newfield Exploration Co. has acquiredChesapeake EnergyCorp.'s producing oil and gas properties and undeveloped acreage inthe Anadarko Basin STACK play of Oklahoma for $470 million, including escrowed funds and apost-effective date capital reimbursement of approximately $21 million,according to a SEC filing.

Coal

* ArchCoal Inc. can solicit creditors' approval for its Chapter 11reorganization plan after the U.S. Bankruptcy Court for the Eastern District ofMissouri approved the bankrupt miner's disclosure statement in connection withthe reorganization. "With the court's approval of our disclosurestatement, a consensual proposed plan of reorganization in place and a planconfirmation hearing scheduled, Arch has established a clear path for emergingfrom this restructuring process as a strong, well-positioned competitor,"Arch Chairman and CEO John Eaves said in a statement.

* Peabody Energy Corp. is asking a federal bankruptcycourt for more timeto file a plan of reorganization. Peabody noted that certaindocuments related to the case are due Aug. 11, 120 days after the companypetitioned for Chapter 11 bankruptcy. The filing said that no later than Aug.3, Peabody plans to file extension motions to extend deadlines for filing theirplan.

* Deutsche Bank AG, historically considered a staunchlender to the coal sector, is pulling back from the industry as pressure fromenvironmentalists and concerns over potential losses mount, TheNew York Times writes. The German banking giant joins andBank of America Corp.in closing its doors to the industry, validating increasing risks for lenders.

* Bluestone Coal Corp. is suing and over aclaim its borehole drilling activities caused damages totaling $80 million ormore. Bluestone alleged in a court filing that its Wyoming County,W.Va., mine was ruined by flooding due to drilling activities.

* China has threatened provincial governments withpunishment if they fail to reduce their coal output within the allotted time, BloombergNews reports. The country plans to narrow its coal output by "morethan 250 million tons" this year as part of supply-side reforms.

Commodities

* Several failed attempts by natural gas futures tobreak past keyresistance near $3/MMBtu is a factor of market perception that flies in theface of fundamentals that appear increasingly supportive, according toanalysts. Henry Hub natural gas futures broke past several key resistancepoints with strong fundamental support to near $3.00/MMBtu, but failed to breakpast the key resistance level in its most recent attempts higher.

* The U.S. Energy Information Administrationreported a net 39-Bcf injection into natural gas inventories in the Lower 48during the week ended July 1 that was below market expectations and well below historicalaverages. The injection was a downside miss against the market consensus aheadof the report's release that called for a 44-Bcf build in stocks, and was belowthe 83-Bcf injection reported for the same week in 2015 and the five-yearaverage injection of 77 Bcf.

* After ending the prior session down 0.9 cent at$2.777/MMBtu, August natural gas futures extended lower overnight ahead of the Friday, July 8,open, as traders look beyond the ongoing lackluster pace of storage-buildingimplied by the latest inventory report in favor of expectations for a robustend-of-season stock level. The contract was last seen 1.1 cents lower at$2.766/MMBtu.

* Power dailies could shed value in the week's closing session Friday,July 8, as the anticipation for softer demand across the bulk of the countrycoming off the weekend combines with ongoing losses at the natural gas futuresarena. Ending the prior session just 0.9 cent lower, front-month August naturalgas futures were down 1-cent overnight ahead of the market open Friday to$2.767/MMBtu on light profit-taking ahead of the weekend.

* Despite some signs that production of crude oilhas begun to decline amid the lower price environment, output growth of naturalgas and natural gas liquids has merely slowed or paused and shows a U.S. marketthat remains fairly well-supplied, SNL Energy .

SNL Image

Quoted

"If an airline company boasted a 99% flightsuccess rate, it would have difficulty securing customers. If an automobilebrake manufacturer had a 99% stopping rate, a recall would be enacted. Acompany, such as PG&E, that delivers natural gas, a naturally dangerous commodity,should not be held to a lower standard," the California Public UtilityCommission's safety division, appealing a judge's proposed fine against PG&E forrecord-keeping violations.

Theday ahead

*Early morning futures indicators pointed to a higher opening for the U.S.equity markets. To view more SNL equity market indexes, click here.To view more SNL Energy commodities prices, click here.