Forest City basin gas lines due reactivation

By OGJ editors
HOUSTON, May 27 –
Sefton Resources PLC has acquired two gas pipelines in the Forest City basin in northeast Kansas and plans to restore them to service.

Sefton’s TEG Mid-Continent Inc. subsidiary owns pipelines, coalbed methane leases, and gas processing facilities in Anderson, Franklin, and Leavenworth counties, Kan.

In East Kansas, Sefton has approximately 45,000 acres in the Forest City basin. The company operates its leasehold with 100% working interest. The 28-mile Vanguard pipeline, acquired in 2009, was seen as providing a gathering system for the company’s future drilling and also would establish a basis for potential joint ventures in both exploration and gas gathering and transportation.

By December 2010, the company gained control of a second pipeline consisting of 25 miles of various diameter pipe in Leavenworth County 2 miles east and north of the Vanguard pipeline. Once connected and activated, the two lines will provide 8-10 MMcfd of capacity and access to an interstate pipeline for Sefton-produced and third-party gas.

By January 2011, all the valve systems were installed on the Vanguard pipeline. Sefton signed a letter of intent for a gas transportation and marketing agreement and a capacity and transportation agreement with a potential partner on the Vanguard system.

Sefton was working to establish an interconnection with Southern Star Pipeline’s interstate pipeline system and is looking at other interconnect options.

Sefton acquired leases, wellbores, equipment, and technical data close to the LAGGS pipeline. A $200,000 agreement was signed in March 2011 for 18 wellbores and associated technical data along the LAGGS pipeline. Assets valued at $108,861 have been cleared, and the rest need further due diligence.

In a separate deal, a computerized data base of proprietary well data and shallow gas prospects in the Leavenworth area, print maps, cross-sections, and a proprietary report detailing all prospects, geology and engineering in the LAGGS pipeline area has been acquired. By early April 2011, evaluation of segments of the LAGGS pipeline system were completed and tested.

Strategically, the LAGGS pipeline, the most critical segment of the system, will see the first gas volumes in 2011 and provide initial revenue to the company, Sefton said.



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