January 2008 Update

In the news...

• Energy Services plans two West Virginia acquisitions (1/24/2008) Energy Services Acquisition Corp. announced plans to acquire S.T. Pipeline Inc. and GasSearch Drilling Services Corp. The total cost for the purchases is $23.5 million paid in cash and stock. S.T. Pipeline located in Clendenin, WV, mainly installs and repairs pipelines for the oil and gas industries while GasSearch Drilling Services of Parkersburg, WV, drills and services oil and gas wells. [More here]

• Enbridge Energy Partners Completes Phase 5 Expansion Of North Dakota Crude Oil System (1/24/2008) Enbridge Energy Partners, L.P. has recently completed the Phase 5 expansion of its North Dakota crude oil system, bringing the system's capacity up to 110,000 barrels per day (bpd). The $78 million project added a 52-mile pipeline segment, 10 new or upgraded pump stations and additional tank storage. A planned project "Phase 6 Expansion" will add another 51,000 bpd of capacity by 2010. [More here]

• TransCanada Says ConocoPhillips Has Acquired 50 Percent Of Keystone Pipeline (1/22/2008) TransCanada Corp. announced that ConocoPhillips acquired a 50 percent ownership stake for a proposed oil pipeline that will be capable of delivering 590,000 barrels per day of Canadian crude to U.S. refineries. Construction on the 3,456-kilometer (2,148-mile) pipeline is scheduled to start this spring and be finished late 2009. Once the $5.2 billion project is completed it will serve markets in Patoka, IL, and Cushing, OK by crossing North Dakota, South Dakota, Nebraska, Kansas and Missouri. The Canadian government has approved the proposed route through Canada. A presidential permit authorizing construction and operation of facilities at the U.S-Canada border crossing and construction permits from the South Dakota Public Utilities Commission are needed before the project can begin..... . [More here]

• GAO: US Should Improve Oil Product Supply System (1/22/2008) The US Government Accountability Office warned in a January 18 report the US petroleum product is constrained in key states and will continue as such without future investment. "Industry and federal agency officials report a systemic lack of pipeline capacity in the supply infrastructure system in key states including Arizona, California, Colorado, and Nevada, and note the existing supply infrastructure is insufficient to carry the commensurate volume of petroleum products and crude oil needed to meet growing demand there," according to the GAO report. It went on to say many private sector plans to expand domestic oil and product supply distribution system, if implemented quickly, will significantly relieve stresses on the system. "However, a complex permitting and siting process involving as many as 11 federal agencies and numerous state and local stakeholders has slowed or impeded the expansion and construction of new pipelines," it said. The report included several recommendations to improve the situation, among them studying to determine if the oil and product distribution system is adequate and if a lead agency could be assigned to coordinate infrastructure construction permitting. [More here]

• EnCana Plans 22-mile Colorado Gas Pipeline (1/21/2008) EnCana Oil & Gas filed a right-of-way application to construct a 22-mile natural gas pipeline with the US Bureau of Land Management (BLM) in Grand Junction, CO. The proposed 32-inch line in the Colbran and Plateua Valley area will transport up to 650 million cubic feet of field-grade gas, according to BLM. Around 93% of the proposed route will be at the edge of existing pipeline or road corridors, starting on Hayes Mesa approximately 5 miles west of Colbran and ending at EnCana's Orchard Unit compressor 6 miles northeast of De Beque, Colorado BLM said. [More here]

• Pipeline Executives To Review Billions In New Construction Plans At P&GJ's Pipeline Opportunities Conference (1/21/2008) Over 20 leading energy executives from North and South America will attend the 4th Annual Pipeline Opportunities Conference on March 25 in Houston to provide and discuss the latest information on planned oil and gas pipeline construction valued at billions of dollars. Conference chairman Jeff Share, Editor of Pipeline & Gas Journal, said "Pipeliners are unanimous about the business opportunities in North America as petroleum supplies seek to keep up with demand. Yet with a teetering economy that threatens to dry up badly needed investment capital, workforce and equipment shortages, increased regulatory mandates and traditional public opposition to new infrastructure projects or expansions, the challenges are also equal to the opportunities." Guest speakers at the conference include Norm Szydlowski, president and CEO of Colonial Pipeline Co., Mike Mears, Senior VP of Magellan, consultant Brad Kamph, pipeline contractor David Sheehan, Bechtel executive Jerry Fee and numerous other executives from Petrobras, Enbridge Pipelines, El Paso Corp., Spectra Energy, Energy Transfer Partners, Kern River, Kinder Morgan, Southern Union Co and possibly Alaska Gov. Sarah Palin. [More here]

• Rockies Express Pipeline Begins Full Interim Service On REX-West (1/14/2008) Rockies Express Pipeline LLC announced interim service on 500 miles of its Rockies Express-West (REX-West) pipeline with a natural gas capacity of about 1.4 billion cubic feet (Bcf) per day starting January 12 from Weld County, CO to the delivery point in Brown County, KS. The 42-inch diameter section also includes delivery points to Kinder Morgan Interstate Gas Transmission, Northern Natural Gas Company and Natural Gas Pipeline Company of America. Another 213-mile section of REX-West continues eastward to Audrain County, Mo., and is expected to be in service by February. Upon completion capacity will increase to about 1.5 Bcf per day. [More here]

• Carl T. Johnson Begins Role As New Pipeline and Hazardous Materials Safety Administration Administrator (1/8/2008) Carl T. Johnson was sworn in as the Administrator of the Pipeline and Hazardous Materials Safety Administration (PHMSA). Nominated for the post by President Bush on October 30 and confirmed by the U.S. Senate on December 19 Mr. Johnson is the second person to hold the position. U.S. Transportation Secretary Mary E. Peters said, "Carl will use his vast experience to make sure that the movement of energy and hazardous materials remains safe, efficient and reliable." Johnson previously served as president of the Compressed Gas Association and as special assistant to Representative Amory Houghton of New York. [More here]

• Farmers, Energy Interests Clash Over Pipeline Plan (1/6/2008) A group of farmers and landowners in Merna, Illinois want to stop construction of Enbridge Inc.'s approximately 170-mile section of pipeline from just outside Pontiac in Livingston County to Patoka in Marion County. The $353 million piece of the company's $2.45 billion pipeline expansion would get oil to a Downstate terminal. Illinois is a key oil pipeline hub that funnels oil from Oklahoma and Canada to refineries in the Chicago and St. Louis areas with more than 2,100 miles of crude oil pipelines crisscrossing the state. Landowners expressed safety concerns, citing oil spills along Enbridge pipelines in Wisconsin and an explosion that killed two welders working on a pipeline in northern Minnesota in November. Both sides seek to capitalize on high oil prices with Enbridge contending Illinois consumers will save $406 million over the next two decades by hedging them against price hikes in overseas oil. Farmers counter that the corn produced on their land for the ethanol market is already fighting foreign energy dependence. If landowners reject Enbridge's offer of $6,000 per affected acre, the company wants, only as a last resort, the power of eminent domain to seize the land for public good. [More here]

• Only One Applicant, TransCanada Corp., Meets All of Alaska's Requirements For Gas Line (1/4/2008) TransCanada Alaska Co., LLC/Foothills Pipelines, Ltd., a subsidiary of Calgary-based TransCanada Corp., was the only applicant out of five that met Alaska's state requirements under the Alaska Gasline Inducement Act (AGIA) for the exclusive right to build a pipeline to transport North Slope gas to market. "We have long stated that it only takes one good application. We're thrilled to have a project sponsor willing to build a pipeline on terms that benefit all Alaskans," Alaskan Gov. Sarah Palin said during a press conference in Anchorage. If built, the pipeline would deliver 4.5 billion cubic feet of natural gas a day from a proved gas reserve in the North Slope estimated to be at least 35 trillion cubic feet. [More here]