Magellan Energy Announces Production Update in Morgan County, Tennessee
September 03 2009 - 11:38AM
Marketwired
Magellan Energy Ltd. (PINKSHEETS: MGLG) ("Magellan" or "the
Company") is today announcing an update on its gas production in
Morgan County, Tennessee.
The solution, originally put in place to resolve the high BTU
situation in Anderson, Morgan, Fentress and Scott Counties, has so
far been unable to resolve the problem on a consistent enough basis
to allow for continuous natural gas production. This affects all
producers in the area and includes Magellan's Anderson, Martin and
Lankford leases. Revenues from the oil produced from the Anderson
and Martin leases will continue without disruption.
To recap, in late 2008, the federal government, through the
agency FERC, mandated that any gas with a BTU count higher than
1100 was unsafe and should not be transported in interstate
pipelines or sold to consumers. Gas originating from oil wells
usually has a high BTU count, and this is especially true in the
Burville area where the Anderson and Martin wells are located. As a
result, Magellan, as well as many other area producers, had their
wells shut in by Citizens Gas for a protracted period of time.
To resolve the issue, Citizens Gas placed a large compressor in
its Burville collection and distribution system. This facility is
where Citizens Gas receives its gas supply from the east Tennessee
gas pipeline and from various local gas producing wells in Scott,
Morgan, Fentress and Anderson counties.
This system, unfortunately, has not been able to completely
stabilize the high BTU issue in order to consistently meet the FERC
requirements. It is a gathering and distribution system
collectively, which means that after the gas has been gathered and
blended, it is immediately distributed for sale to residential and
commercial properties. The inconsistent BTU count has meant that
this system cannot be safely utilized and an alternative method had
to be found. Limited natural gas production was actually realized
because of the inability of the initial system to keep the BTUs to
an acceptable level.
Area producers are in the process of disconnecting their lines
and reconnecting them to an alternate system which is strictly a
collection line. The gas will then be carried to a separate
Citizens Gas high pressure line where it will be blended. This will
avoid having the gas distributed to residential and commercial
properties prior to the collective BTU count being absolutely
stabilized and maintained to acceptable levels.
It was only through the implementation and sustained operation
of the initial solution that its inconsistencies were revealed.
Magellan believes that the possibility of further disruptions have
been addressed with this new solution. Our partner and operator of
the projects, TMD Energy Inc., is continuing to work with Citizens
Gas to rework the lines as quickly as possible.
A potentially huge consumer of natural gas in Tennesee has come
to the forefront with TVA's announcement that a natural gas-fired
electric plant in Rogersville is scheduled to come online in late
2011 and will require up to 160 million cubic feet of natural gas
daily. Tennessee is now producing about 16 million cubic feet of
gas, but has immense potential to produce a great deal more, with
the most potential coming from the Chattanooga Shale. Magellan and
other area producers stand to benefit greatly from this enormous
new demand source. The Lankford Lease wells have been drilled to
the shale formation and the Company is confident that a significant
amount of gas from the formation exists on their lease. The Company
intends to frac at least two of the wells at the earliest
opportunity to increase natural gas production and is considering
additional horizontal drilling to maximize long-term gas production
from the Chattanooga Shale.
"While this has admittedly been a setback for Magellan and the
other producers in the area, a solution has been found and is being
implemented," stated Apolinar Carcasona, President of Magellan
Energy. "Our wells have realized significant natural gas production
in the past, we believe that we have the resources for significant
production to come, especially with the huge market opportunity
that the Rogersville electric plant brings to area producers. In
time we foresee a steady flow of gas and a lucrative future for
Magellan and its shareholders. We will make every attempt to keep
our shareholders apprised of progress as it is made."
The company website, www.Magellan-Energy.com, will be updated
shortly to reflect current projects including the Lankford
lease.
About Magellan Energy: Magellan Energy is a publicly traded
independent oil and gas company (PINKSHEETS: MGLG). The company is
actively acquiring oil and gas leases, producing properties,
mineral rights, and surface interests in Tennessee and Oklahoma.
Once acquired, the company intends to develop each property to
maximize the income from each property byre-establishing
production, refurbishing and improving the existing production and
operations.
Forward-Looking Statements: The statements which are not
historical facts contained in this release are forward-looking
statements that involve risks and uncertainties, including but not
limited to, the effect of economic conditions, the impact of
competition, the results of financing efforts, changes in
consumers' preferences and trends. The words "estimate," "possible,
"and "seeking" and similar expressions identify forward-looking
statements, which speak only to the date the statement was made.
The Company undertakes no obligation to publicly update or revise
any forward-looking statements, because of new information, future
events, or otherwise. Future events and actual results may differ
materially from those set forth herein, contemplated by, or
underlying the forward-looking statements.
Contact: MAGELLAN ENERGY LTD. Member of the Tennessee Oil and
Gas Association Website: http://www.magellan-energy.com Phone:
1-866-365-4724
Magellan Energy (CE) (USOTC:MGLG)
Historical Stock Chart
From Jul 2024 to Aug 2024
Magellan Energy (CE) (USOTC:MGLG)
Historical Stock Chart
From Aug 2023 to Aug 2024