November 2008 Update

In the news...

• Study Shows Alaska Holds Another Source of Energy (11/16/2008) The U.S. Geological Survey has determined hydrates found 2,000 feet below Alaska's North Slope contain as much as 85.4 trillion cubic feet of recoverable natural gas. The Department of Energy describes hydrates as "ice-like solids that result from the trapping of methane molecules within a lattice-like cage of water molecules." Advances in techniques used to access more conventional fuel sources may open up the possibility of recovering this potential energy source. Government research shows depressurizing deposits through drilling and other techniques is enough to release natural gas found in the hydrates. Globally "hydrates have more potential for energy than all other fossil fuels combined," according to Interior Secretary Dirk Kempthorne. Large hydrate deposits also exist in the Gulf of Mexico. Along with the estimated 35 trillion cubic feet of proven natural gas reserves, the hydrates could add to the utility and lifespan of the planned natural gas pipeline from Alaska's North Slope. [More here]

• Alberta Ranchers Want Moratorium on Proposed Pipeline (11/12/2008) Concerned about a proposed Petro-Canada pipeline running through Kananaskis County, Alberta, local ranchers are seeking a moratorium on oil and gas development. Petro-Canada is applying to build a 56-kilometer (35-mile) pipeline and drill 11 sour gas wells on the Southeastern slopes of the Canadian Rockies. "The potential impact of this pipeline goes far beyond the miles of trenches. Everywhere a pipeline has been built, it's been followed by weeds, motorbikes, ATVs, trespass, clearcuts, more wells, more roads, and more industrialization," said Mac Blades, president of the Pekisko Group (a group of local families who view themselves as stewards of the land). Currently the area is inaccessible to vehicles. The group is also concerned about possible damage to the 72 water courses in the Willow Creek and Pekisko Creek drainage areas which are home to Alberta's provincial fish, the Bull Trout - considered a "species at risk" by the Alberat Ministry of Sustainable Resources and Development. Hearings on Petro-Canada's application began on November 12 in High River. [More here]

• $40 Million Going into Ethanol Project (11/11/2008).. Kinder Morgan Energy Partners (KMEP) will begin shipping ethanol through a 106-mile Florida pipeline running from Tampa to Orlando starting mid-November. As many as 40 fuel trucks a day will be eliminated from area highways and transportation savings will be approximately 3 cents per gallon. So far the company has spent $30 million on improvements to facilities and equipment located in Tampa and Orlando. KMEP also spent another $10 million on fortifying the existing gasoline pipeline to enable it to transport the more corrosive ethanol. “This sets the precedence for pipeline ethanol distribution,” said Bradley Krohn, president of U.S. EnviroFuels LLC in Riverview. “I don’t know of it being shipped through pipeline distribution anywhere else in the U.S. now.” [More here]

• Enbridge Expansions to Go Ahead Despite Falling Oil Prices, Credit Crunch (11/5/2008) Pat Daniel, Enbridge Inc. CEO, said plans for $12 billion in pipeline projects will not be derailed by distressed financial markets and declining oil prices. The company had a 90-percent increase in third quarter earnings thanks to some major projects entering service earlier this year. "This increase in earnings is primarily due to the progress that we've made on our first wave of liquids pipeline projects," said Danial, adding, "Wave 1 projects are commercially secured and under construction and this drop in crude prices will in no way affect their in-service dates or their earnings profiles once they're placed into service." He went on to caution it was too early to know if Enbridge's Wave 2 projects, worth $15 billion, will be affected by current market conditions. However, Daniel remains optimistic the expansions will begin construction in 2012 and beyond. "Just as producers didn't use $150 a barrel as a planning benchmark during the price run up earlier this year, we're probably not going to be using $65 per barrel crude oil long term... In a lot of ways these longer-term projects make even more sense," Daniel said. [More here]

• Flint Announces Oilsands Pipeline Maintenance Contract Award (11/3/2008) FT Services, a 50 percent-owned Flint Energy Services Ltd. joint venture, has been awarded a C$12 million, 2-year contract to provide pipeline maintenance services for Canadian Natural Resources Ltd's Horizon Project near Fort McMurray, Alberta. "This new contract builds upon our current maintenance capabilities with Canadian Natural and excellent performance to-date," said Andy Mackintosh, President and CEO, FT Services. "The addition of the pipeline maintenance work demonstrates our capabilities and growing relationships with our customers in the Fort McMurray oil sands region." Between 50 and 60 personnel will be employed by FT Services to do pipeline maintenance services starting in mid-December. [More here]

• B.C. Pipeline Bombings May Not Be Eco-terrorism: Says Expert (11/3/2008) According to University of Alberta sociology researcher, Paul Joosse, extreme frustration over property rights and sovereignty - and not environmental radicalism - is likely the reason behind three recent attacks on a natural gas facility in northeast British Columbia. "This person, I would say, is ensconced in their own local struggle and probably started to use these tactics after being frustrated for years in their community with a lack of success at getting results." The first two attacks targeted a natural gas pipeline running south of Dawson Creek, B.C. on the Alberta border. The most recent bombing occurred at a natural gas wellhead operated by Encana Corp. in the same area. Joosse a PhD student whose research focuses on radical environmental groups including EarthFirst! and the Earth Liberation Front (ELF), said the Dawson Creek bomber profile doesn't fit that of the typical "eco-terrorist." Groups like ELF tend to focus their efforts on more expansive issues like clearcut logging, are quick to broadcast their affiliation and even offer manuals on how to place incendiary devices to achieve maximum damage said Joosse. Except for an unsigned handwritten letter warning Encana to close its operations and to leave the area no public attention has been sought. Furthermore, Sgt. Tim Shields of The Royal Canadian Mounted Police said police believe they are dealing with a local person, or group of people, "because of their familiarity with the community as well as a knowledge of oil and gas." So far, the blasts have done minimal damage and no one has been injured. Encana released a statement saying crews had sealed "a small leak" by injecting cement into the damaged wellhead. [More here]

• Alliance Pipeline Receives FERC Waiver Approval (10/30/2008) The Federal Energy Regulatory Commission (FERC) approved a revision to Alliance Pipeline LP's tariff allowing the company to waive a gas quality specification on "a first come, first served basis". Consequently, EOG Resources, Inc. subsidiary, Pecan Pipeline Inc., can now flow dense phase rich gas outside the liquefiable hydrocarbon specifications currently found in Alliance's FERC Gas Tariff. "The FERC's decision shows a strong commitment to swiftly and effectively develop North Dakota's natural gas resources by utilizing existing infrastructure," said Murray Birch, president and chief executive officer, Alliance Pipeline. "We are very pleased, and appreciative of, the support we received for this application." [More here]

• TransCanada Boosts Keystone Stake, Profit Rises (10/28/2008) TransCanada Corp has increased by almost 30 percent its stake in the $12 billion Keystone pipeline project and despite the global credit crisis expects to have financing in place by the end of the year. The other stakeholder in the project - ConocoPhillips - now holds only 20.1 percent. However, TransCanada said it will give other shippers an opportunity to acquire up to a 15 percent stake in the project. The $5.2 billion first phase of the of pipeline running to Illinois and Oklahoma is expected to be in service next year and will carry 590,000 barrels per day (bpd) of oil. Keystone's $7 billion second phase is will carry another 500,000 bpd of oil to refineries based on the Gulf Coast and is expected to be completed by 2012 or 2013 at the latest. TransCanada's also reported profits increased by 20 percent in the third quarter. [More here]

• Engineer Pitches Denali Pipeline (10/24/2008) ................. Since announcing their intention in April to build a private natural gas pipeline from the North Slope to the continental U.S., BP and ConocoPhillips have have spent $40 million on summer field work. Speaking at an Anchor Point, Alaska Chamber of Commerce luncheon, John White, an engineer with BP said, "We've got a team mobilized and it's growing every day. I'd say we have the critical mass to actually get the project started." He went on to say that the proposed Denali gas line will follow the Trans Alaska oil pipeline to the Delta Junction, at which point it will then follow the Alaska Highway crossing the Alberta border into Canada and connecting with existing infrastructure in Alberta. In total, the pipeline will travel around 2,000 miles and require 2 million to 3 million tons of steel. Most of the steel will have to be produced overseas as the U.S. currently does not have the manufacturing capacity to make the pipe. The project may also add another 1,500 miles of pipeline traveling from Alberta to the U.S. The pipeline will transport 4 billion cubic feet per day (cfpd) of natural gas or approximately 7 percent of U.S. daily consumption. The project consists of four phases - the first phase will be an open season targeted for 2010, with filing of applications for permits by year end, followed by development of detailed designs during the permit approval process. The third phase involves equipment and material contracts. The fourth and final phase will need five years - a year for material procurement, a year for mobilization, and three years for construction. "That sounds like a long time, but that is a tight timeline," White said adding "It's all about regulatory process and how fast that goes." Although Denali is competing with TransCanada Corp.'s pipeline proposal, White said he thinks the two projects will combine. "Ultimately, there can only be one pipeline," White said. [More here]

• Enbridge Mulls Pipeline Stake for Native Groups (10/24/2008) In order to gain support for its proposed Northern Gateway oil sands export pipeline, Enbridge Inc. may offer aboriginal groups an equity stake in its 525,000 barrels-per-day pipeline. Details have yet to be decided on the size of the stake to be offered to native communities residing along the pipeline's route from Edmonton, Alberta to Kitimat, British Columbia, as well as how to finance the stakes have yet to be decided. Another project - the C$16.2 billion Mackenzie Valley natural gas pipeline - by Imperial Oil has included native groups as a partner (the Aboriginal Pipeline Group) since 2000. However, the Mackenzie project still has not been constructed due to regulatory delays and cost overruns. The Northern Gateway pipeline is estimated to cost more than C$4.5 billion and is expected to be completed by early 2015. [More here]

• Plateau Mineral Development, Inc. Announce Building of a Pipeline to Produce Significant Revenues (10/21/2008) Plateau Mineral Development, Inc, (PMD) and its partner Plateau Mineral Development LLC. has completed a 6.16-mile long pipeline with a six-inch and four-inch main trunk line which in turn are fed by an additional four miles of two-inch pipeline. The pipeline system, located in Morgan County, Tennessee, is capable of gathering and delivering 300,000 cubic feet of natural gas per day from twelve gas wells to a PMD Compressor Station that feeds gas into the 24-inch east-west SPECTRA high-pressure main pipeline Further expansion of the pipeline will allow production from fields that have been shut in for more than 20 years. Robert Matthews, President of Plateau Mineral Development, said, "This pipeline is a major step towards increased revenue for our company. We look forward to reaping its benefits." [More here]