August 2007 Update

In the news...

• Explorer Seeks Citgo Pipelines (8/13/2007) ,,,,,,, Tulsa-based Explorer Pipeline Co., says it is in talks to buy pipelines and terminals from Citgo Petroleum Corp., the U.S. refining subsidiary of Venezuela's state owned oil company. The Eagle Pipeline system includes 10-, 9- and 3-inch lines going between Dallas and Houston with at least another 8-inch line running into Oklahoma. Houston-based Citgo owns a 6.8 percent stake in Explorer, which operates a 1,400-mile system. [More here]

• NEB Questions Crude Pipeline Capacity (8/10/2007) ......... A new report from the National Energy Board (NEB) warns that Canadian crude oil pipelines may face a transportation bottle neck as early as this fall. For the first time, last year, oil sands production exceeded traditional crude production. Because of the surge of oil being pumped from Alberta's oil sands, by the fourth quarter of 2007 western Canadian oil pipelines may require periods where pipeline space is shared or "apportioned" among shippers. The potential capacity constraints come at time when Canadian oil producers are ramping up operations. Total Canadian oil production is expected to rise nine percent to 2.9 million barrels a day in 2007. According to the NEB report, it's a different story for natural gas pipelines. There is some spare capacity, even in winter, when demand for natural gas historically jumps. [More here]

• Crews Cleaning Up Pipeline Rupture In B.C. Interior (8/10/2007) Environmental crews in northeastern British Columbia are cleaning up an oil spill from a pipeline rupture that occurred a few weeks ago. The rupture happened several hundred kilometers northeast of Fort Nelson, B.C. and was quickly contained but a reason for the leak has not been determined. The province has 43,000 kilometers of pipelines with more in the planning stages. [More here]

• The Next Energy Crisis - More Than A Quarter Of America's Oil Flows Through Southern Louisiana. Too Bad The Land Is Slowly Sinking Into The Sea (8/10/2007) Port Fourchon, 60 miles south of New Orleans, is home to pipelines through which the U.S. accesses nearly 20 percent of all the oil and natural gas it uses. Although it avoided most of the destructive forces of hurricanes Katrina and Rita, it is being ravaged by two much slower attacks - erosion and the sinking of land. Since the 1930s, each year 25 square miles of Louisiana has been collapsing into the gulf. A total of 1,900 square miles of land so far has disappeared, exposing thousands of miles of oil and gas pipelines that were originally built underground and not designed to withstand water, waves or boat impacts. In 2004, Ed Landgraf, environmental coordinator for Shell Pipeline, sounded the alarm in congressional testimony stating, "Much of [southern Louisiana's] infrastructure is at risk as the coastline continues to disappear." His conclusion, "National energy security can be maintained only if Louisiana's coast is restored and preserved." At some point, perhaps in the next 10 years Port Fourchon home to 250 tenants including BP, Chevron, ConocoPhillips, and Shell, will no longer be attached to the mainland and become an island. Although Katrina has increased awareness of land loss, little of the estimated $50 billion needed to restore the Louisiana coastline has been funded. Furthermore it will be hard to restore the coast without industry support. [More here]

• Pipeline Explosion Investigation Results Released (8/10/2007) Results from a National Transportation and Safety Board (NTSB) investigation concerning a natural gas line explosion in the West Cote Blanche bay oil field in southern Louisiana have been released. The explosion killed five people around noon on October 12th 2006. According to the NTSB's investigation, an uninspected towing vessel - Miss Meagan -- was pushing two deck barges in waters around 10 miles off Cypremont Point when a spud from a 5 ton steel shaft on one of the barges was dropped in the water. The spud struck a submerged and buried high-pressure natural gas line, releasing gas on impact and causing a massive fireball that engulfed both barges and tow boat. The NTSB concluded the probable cause of the accident was a failure to require barge crews to pin the spuds securely. [More here]

• Alaska Governor Extends Deadline For Companies To Apply To Build Natural Gas Pipeline (8/8/2007) Sarah Palin, the Governor of Alaska, has extended the deadline for applications to build a natural gas pipeline in Alaska from Oct. 1 to Nov. 30 because more companies have been inquiring about the project. The state has also received feedback requesting more time to prepare a complete application. Since July 3, applications have been made available after passage of the Alaska Gasline Inducement Act (AGIA). Alaska has struggled for decades to build a pipeline to run from the North Slope through Canada and into the Midwest. After a proposed deal between former Gov. Frank Murkowski and North Slope producers BP PLC, Exxon Mobil Corp. and ConocoPhillips fell apart last year, and passage of AGIA this year, Palin's administration has presented the project to other companies including three Chinese state-controlled energy companies and Houston-based El Paso Corp. An estimated 35 trillion cubic feet of natural gas sits untapped under the North Slope. [More here]

• Canadian Energy Company Plans Another Pipeline In U.S. (8/6/2007) TransCanada Corp. and Northwest Natural Gas Company are forming a new venture, Palomar Gas Transmission LLC, to design, construct and own the Palomar natural gas pipeline to serve residential and industrial customers in the state of Oregon. The pipeline could cost as much as $700 million. It would extend around 354 kilometers from northwestern Oregon to north-central Oregon. If approved, the pipeline will start service in late 2011. [More here]

• Attacks On Mexico Pipelines Show Extensive Knowledge of Energy Infrastructure, Officials Say (7/24/2007) U.S. officials said saboteurs who blew up natural gas pipelines on July 5 and July 10, 2007 also crippled a crude oil pipeline in one of Mexico's main industrial regions. In addition to the natural gas and oil pipelines, the bombers targeted shutoff valves along several pipelines responsible for national distribution, indicating extensive knowledge of Mexico's energy infrastructure. “These are massive steel valves,” a U.S. official familiar with the bombing investigation told McClatchy Newspapers. “These are major, very expensive shutoff valves that control the flow of all this petroleum (and natural gas). This wasn’t a round tube in the middle of nowhere.” Furthermore the bombers knew which side of the valve to attack to make sure crude oil did not flow to a nearby refinery and natural gas did not flow to foreign and Mexican manufacturers. [More here]

• Ottawa, Dene Tha' Reach Deal On Mackenzie Gas Pipeline (7/23/2007) The Canadian federal government and the Dene Tha' First Nation (DTFN) in northwestern Alberta have signed an agreement resolving concerns about the proposed Mackenzie Gas Pipeline that would run through a small portion of the Dene Tha' territory. The agreement stipulates DTFN will get C$25 million from the federal government to address possible economic and cultural impacts resulting from the construction and operation of the pipeline. In turn DTFN agreed to end any further litigation to delay or prevent development of the pipeline. [More here]

• North American Energy Partners Finalizes Contract With Kinder Morgan Canada (7/16/2007) North American Energy Partners Inc. has signed a $185 million contract to supply pipeline construction services to Kinder Morgan Canada's TMX Anchor Loop project. Phase 1 was scheduled to begin August 2007 and is expected to last 18 months. It will start near Hinton, Alberta and run 160 km through Jasper National Park and Mount Robson Provincial Park before finishing outside the Mount Robson Provincial Park. [More here]