November 2007 Update

In the news...

• National Fuel Proposes $700 Million Gas Pipeline (11/12/07) National Fuel Gas Co. proposes to build a 324-mile pipeline extending from southeastern Ohio to Corning, NY at a cost between $630 million and $725 million. National Fuel, currently constructing a 77-mile extension to its Empire State pipeline between Victor, NY and Corning, calls the proposed pipeline the "West to East" project. The pipeline would link the Rockies Express pipeline with the Millennium Pipeline in Corning and could carry 550 to 750 million cubic feet of gas each day. Construction of the proposed project is contingent on getting firm commitments from customers for the bulk of the pipeline's capacity. [More here]

• Work On N.B. Pipeline Likely To Start Soon (11/9/2007) Emra Brunswick Pipeline Co. will not have to wait another 60 days to begin pre-construction work on its $400 million gas pipeline project. The National Energy Board (NEB) of Canada initially turned down an application to start work because Emra failed to provide all the required information. A company spokesman stated the necessary information has now been submitted to the board. NEB spokeswoman Carole Leger-Kubeczek said work on the 145-kilometer pipeline near Saint John, New Brunswick can begin after the board reviewed the new information and found it to be satisfactory. [More here]

• Tammany Pipeline Repairs Continue (11/9/2007) ....... Repair work continues on the Tammany Oil & Gas pipeline that ruptured about four miles offshore from McFaddin Beach, Texas on November 5. Two leaks released about 2,000 gallons of crude oil into the Gulf of Mexico. Divers have removed a three-inch thick concrete covering surrounding the southern leak and will install a pipe clamp. Once finished, divers will do a similar repair on the northern leak. In the meantime, the Texas General Land Office and MSU Port Arthur are conducting helicopter over-flights to monitor discharged oil movement and direct skimming operations. [More here]

• Man Gets 30 Years In Pipeline Plot (11/6/2007) ........... Michael C. Reynolds, who claimed to be trying to root out terrorists on the Internet, was sentenced to 30 years in Federal prison for plotting to help a supposed al-Qaida operative blow up U.S. oil pipelines and refineries. He was arrested after he tried to meet a purported al-Qaida contact (actually a Conrad, MT judge working for the FBI) 25 miles from Pocatello, Idaho. Prosecutors said Reynolds wanted to work with al-Qaida to target the Williams natural gas refinery, Transcontinental Pipeline and a Standard Oil refinery that no longer exists. At the meeting in Idaho, Reynolds expected to get $40,000 to finance the plot. [More here]

• Battle Brewing Over Proposed Oil Pipeline (11/6/2007) ..... A group of First Nations leaders in Manitoba is seeking to force gas and oil distributor, Enbridge Inc., to pay them for building a pipeline through traditional territory. Enbridge's pipeline project - the Alberta Clipper - on its way from Alberta to Wisconsin would pass through a southern part of Manitoba. Roseau River Chief Terry Nelson, a First Nations leader told CBC News, "Every municipality gets a benefit from the pipeline coming through the municipality — they get it without a fight because they are recognized as beneficiaries to the pipeline — except the indigenous people". He has sought unsuccessfully to convince the Canadian federal government to refuse approving the pipeline unless First Nations are compensated. Industry Canada officials said the National Energy Board will examine all issues related to the Alberta Clipper. An Enbridge spokesperson would not comment while hearings are underway. [More here]

• TransCanada: Cost Of Keystone Pipeline Almost Double Original Estimates (11/5/2007) According to TransCanada, its proposed Keystone pipeline will now cost $5.2 billion or almost twice its original estimate of $2.8 billion. The pipeline extending 2,148 miles from Hardisty, Alberta to Cushing, OK as well as Wood River and Patoka, IL, is expected to transport 590,000 barrels of oil per day by 2010. TransCanada said design changes and inflation related to higher prices in steel and labor are the reason for the cost escalation, according to the Globe and Mail. The Canadian Energy and Paperworkers Union oppose the pipeline project claiming 18,000 Canadian jobs will be lost to the U.S. if it is completed. Operations are expected to begin in 2009, transporting 435,000 barrels per day to Illinois. [More here]

• Enbridge Energy Partners Closes Sale Of Kansas Pipeline System (11/1/2007) Enbridge Energy Partners, L.P. has sold its interstate natural gas transmission system, also known as the Kansas Pipeline System, to Quest Midstream Partners, L.P. a subsidiary of Quest Resource Corporation for $133 million. [More here]

• Explosion In Mexico Gas Pipeline (10/31/2007) .................. In the city of Huimanguillo, located in the Gulf coast state of Tabasco, Mexico, a Pemex natural gas pipeline exploded causing at least one town to be evacuated. No injuries or deaths were reported. Workers immediately shut down the 16-inch pipeline and burned off excess gas trapped in ducts. Pemex is also trying to contain oil leaking from a land pipeline that cracked on October 24. An estimated 10,000 barrels of oil have spilled into the Jaltepec and Coatzacoalcos rivers in the Gulf state of Veracruz. Despite containment efforts, oil has reached coastal areas. [More here]

• TransCanada May Take Larger Role In Mackenzie Project (10/31/2007) TransCanada Corp. is considering building and operating by itself the $7 billion main-line portion of the $16.2 billion Mackenzie Gas Project. Although the project faces many hurdles including escalating costs, long regulatory delays and aboriginal community opposition, TransCanada's CEO Hal Kvisle said the project is still viable. “I think we look forward a little more optimistically because I don’t think anyone would be more aware than us of the challenges of sustaining gas production in Alberta,” he said. Other potential stakeholders including Imperial Oil, Conoco Phillips, Exxon Mobile Corp. and Royal Dutch Shell PLC will not make any final investment decisions on the project until receiving regulatory approval from the National Energy Board of Canada expected late next year. [More here]

• Enbridge Energy Partners Proceeds With Second North Dakota Pipeline System Expansion (10/29/2007) Enbridge Energy Partners, L.P. announced it will expand the Enbridge North Dakota Pipeline System adding up to 51,000 barrels per day (bpd) for a total system capacity of 161,00 bpd, if approved by the U.S. Federal Energy Regulatory Commission. Costing an estimated $150 million, the expansion will add 40,000 bpd of capacity from the western end of the system to Minot, ND and 51,000 bpd of capacity from Minot to Clearbrook, MN. This new expansion project is expected to be in service late 2009 and is in addition to the existing 30,000 bpd expansion project under construction with a targeted completion date at the end of 2007. [More here]

• Willbros Wins Five Contracts (10/26/2007) ................ Willbros Group Inc. said it has been awarded approximately $170 million in domestic and Canadian construction contracts. The five contracts include building two sections of the natural gas pipeline looping sections for TransCanada Corp., a Pipeline Alley tie-in connection for Kinder Morgan, projects for Cheniere Energy Inc., and new pump station and modification work for Marathon Oil Company. [More here]

• Alaska Gets Tough On Big Oil (10/17/2007) .................. Governor Sarah Palin was elected by Alaskans on a simple platform - get a natural gas pipeline built on Alaska's terms. Previous governor, Frank Murkowski, negotiated a deal with North Slope producers - Exxon Mobile, BP and Conoco Phillips - to construct a pipeline from Prudhoe Bay to the continental U.S. in exchange for 5% reduction in their taxes. The new governor does not think these producers need inducements since they each stand to gross up to $1 billion a year at current prices. Furthermore, Governor Palin thinks that the threat of having to pay fees to an organization outside the group may prod one of the three to bid. However, her plan may not work. So far, none of the big oil companies have submitted a bid that is due at the end of November. Several pipeline builders could bid on the project including Enbridge, MidAmerica and TransCanada. But these companies are reluctant to build it without commitments by the oil companies to use their pipeline. If there are no bids, Governor Palin may sue the producers or have the state finance the pipeline, further adding to at least a seven-year build time. With rising natural gas prices and disruptions in the Gulf by hurricanes such as Katrina, the rest of the U.S. need the pipeline and can't afford to wait. [More here]