January 2009 Update

In the news...

• EnCana Offers Up to $500,000 for Info on B.C. Pipeline Bombings (1/14/2009) A week after the fourth attack on a pipeline near Dawson Creek, British Columbia, the Royal Canadian Mounted Police (RCMP) have identified "persons of interest". RCMP Sgt. Tim Shields said although those people are not co-operating with the ongoing investigation, "We are asking that they do the right thing." The comments were made during a news conference at which EnCana Corp. - one of Canada's largest energy companies and operator of the bombed pipeline - offered a $500,000 reward for information leading to the arrest and prosecution of those responsible for the attacks. EnCana executive Mike Graham said the company is grateful no one has been seriously hurt up to now. "But if the attacks continue there is a serious risk of injuries or even death," Graham said. He went on to say, "After consulting with the RCMP and the Crown assigned to the prosecution, EnCana will determine the monetary value, if any, of the information provided to the investigation." [More here]

• Iroquois Announces 08/09 Expansion Phase 2 In-Service (1/14/2009) Iroquois Gas Transmission System, L.P. has constructed Phase 2 of its 08/09 Expansion Project - two new 10,300 horsepower (hp) compressor units at its Milford, CT compressor station. Phase 1, a 1.6-mile pipeline in Newtown, CT, was completed on November 14, 2008. After completing the third phase of the project, a second 10,300 hp compressor at their Brookfield, CT compressor station, Iroquois will be able to receive and additional 200 million cubic feet per day of natural gas at its interconnect with the Algonquin Pipeline in Brookfield, CT. [More here]

• Inter Pipeline Slashes 2009 Capital Spending (1/13/2009) After almost completing its Corridor pipeline expansion project, Inter Pipeline Fund is cutting its 2009 capital budget to C$209 million from C$628 million a year ago. The $1.8 billion Corridor expansion consists of an approximately 470-kilometer, 42-inch diluted bitumen pipeline and related facilities between the Muskeg River mine and Scotford up-grader in Canada's oilsands region near Edmonton, Alberta. When completed and in-service by 2010, the pipeline will boost bitumen capacity to 465,000 barrels per day from 300,000 bpd. The expansion project is a joint venture between Shell Canada (60 percent stakeholder), Chevron Canada and Marathon Oil Canada Corp. (each with 20 percent). After acquiring the Corridor system almost two years ago for C$760 million from Kinder Morgan, Inter Pipeline became the largest bitumen transporter in the Alberta oilsands region moving half of all production. [More here]

• Oil Market Manipulation Alleged (1/10/2009)........... . Several weeks after Flying J filed for Chapter 11 protection, a memo written by a union official at the company's Big West refinery located in Bakersfield, CA, has led to accusations that Shell Oil is trying to manipulate California's gasoline market. The memo states "the refinery is out of crude oil" and blames Shell for closing a pipeline that brings crude into the plant, thus depriving it of raw material. In 2004, Shell owned the refinery and threatened to close it, claiming it wasn't profitable. At the time California politicians suspected Shell was seeking to raise gas prices by reducing gasoline supplies and the company was pressured to sell the plant instead. Sen. Barbara Boxer has asked Attorney General Jerry Brown to investigate the memo's accusations. "The Big West Refinery supplies our state with 2 percent of its gasoline and 6 percent of its diesel fuel, and in these tough economic times, Californians can't afford high gas prices stemming from refinery closures," Boxer, D-Calif., wrote in a letter to Brown, who said he'd "take a hard look at the situation." Shell spokeswoman Alison Chassin responded that Flying J owes Shell "tens of millions" of dollars for crude already delivered to the plant and, although Shell is no longer shipping oil, other suppliers are free to use the pipeline. She also said the refinery has another pipeline not owned by Shell that supplies crude. [More here]

• TransCanada Completes $2-Billion Debt Issue (1/10/2009) Pipeline and power company TransCanada Corp. has completed a $2-billion debt financing. The offering done in the U.S. through TransCanada Pipelines Ltd., consisting of $1.25 billion in 30-year notes and $750 million in 10-year notes that will be used to partially fund capital projects and retire maturing debt. [More here]

• Alaskan Gas Pipeline Tops P&GJ's Pipeline Opportunities Conference (1/8/2009) The fifth annual Pipeline Opportunities Conference, slated for March 11, 2009 at the George R. Brown Convention Center in Houston, TX will highlight the most recent developments in the Alaskan natural gas pipeline project. Jeff Share editor of Pipeline & Gas Jouranal and conference chairman, said the conference provides a rare opportunity to bring together for the first time executives from TransCanada Pipelines and the Alaskan Natural Gas Development Authority (ANGDA) with officials from Gov, Sarah Palin's administration and the Office of Federal Coordinator - who are all involved in the project. “On one issue Gov. Palin and President-elect Obama agree: they want that pipeline built," Share said. "Alaska needs that revenue and the lower 48 needs that gas and the jobs it will create.” [More here]

• Pipeline Build-Out Helped State Avoid Economic Disaster in 2008, but Future Is Uncertain (1/7/2009) Wyoming managed to avoid economic disaster in 2008, in large part due to a six-year, $9 billion natural gas pipeline build-out. The state's natural gas production has grown from 4 billion cubic feet per day (cfd) in 2002 to 6.5 billion cfd this year, resulting in an increasing reliance on natural gas revenues. However, the future outlook is perplexing. "I've been through three downturns, but this has just been an unbelievably rapid change from $150 per barrel in July to $50 per barrel," said Don Likwartz, outgoing supervisor of the Wyoming Oil and Gas Conservation Commission. Spot price for Wyoming gas has proven to be just as volatile. Even though the Rockies Express substantially increased export capacity, natural gas production continues to outpace export capacity. When the Rockies Express was taken off-line last September for hydrostatic testing, 800 million cubic feet of daily capacity was lost, causing Wyoming's wholesale price to plunge to $1.78 per thousand feet while the price on the NYMEX was $8.39. Even though there are nine new pipeline projects planned to expand the regions natural gas export capacity, none are on schedule. If construction is not accelerated, Wyoming may face another regional price collapse in the 2009-2010 time frame....... [More here]

• Fourth Pipeline Blast - EnCana Targeted with Another Explosion Near Tomslake, B.C. (1/6/2009) The fourth in a series of bombings striking EnCana Corp.'s pipeline and facilities partially destroyed a metering shed at a wellhead near Tomslake in northeastern British Columbia. The most recent attack occurred 20 kilometers southeast of Dawson Creek and approximately 5 kilometers from the site of the third explosion in October. Royal Canadian Mounted Police (RCMP) Sgt. Tim Shields considers the latest attack directly linked to the previous ones. “The explosive sites have been successively closer and closer to nearby residents ... the previous explosion occurred about 800 meters away from the nearest house. This explosion took place 250 meters away from the nearest house ... This poses a very real risk to the public,” said Shields. No motive for the attacks has been determined. “We don’t know if this is some type of message that the suspect or suspects is trying to send to the public, but what it does solidify in the mind of our investigators is that we need help from the public. There must be someone out there who knows exactly who it is that’s setting off these explosions,” said Shields. EnCana community advisor, Brian Lieverse, said he had no idea why the company was being targeted. Although no sour gas leaks have resulted from the attacks Lieverse said there are safety protocols in place at all of EnCana's facilities in the event a leak does occur. [More here]

• Show Us Mackenzie Pipeline Decision in March: Agencies to Panel (1/5/2009) Two of the three agencies responsible for creating a panel to review the proposed Mackenzie Valley natural gas pipeline in the Northwest Territories have called on the panel to release a "decision document" by March 31, 2009. The report on potential impacts along the route of the proposed pipeline on people and the environment along its route was scheduled to be released in December 2009. However, a letter to panel chairman Robert Hornal from chairmen of the Mackenzie Valley Environmental Review Board and the Unuvialuit Game Council (Rick Edjericon and Frank Pokiak) demanded the Joint Review Panel release its decision on the pipeline by March with a final published report by the end of June 2009. After concluding public hearings in November 2007, the panel has been silent on the subject, only saying the report would be released sometime in 2009. A consortium of companies led by Imperial Oil wants to build a 1,200-kilometer natural gas pipeline through the Northwest Territories to the Alberta connecting to existing pipelines serving southern markets. [More here]

• Oil Company Flying J Files for Bankruptcy (12/22/2008) Pipeline operator, oil producer and refiner, Flying J, has filed for Chapter 11 bankruptcy protection. The privately held company cited weak oil prices and financial turmoil in the credit markets has the reason for the filing. "With this sudden and unanticipated inability to meet our liquidity needs, we regret that we had no other choice than a Chapter 11 filing to enable us to stabilize our financial base," J. Phillip Adams, president and chief executive, said in a statement. The company has around 200 oil and gas wells in the Rocky Mountain region, a 70,000-barrels-per-day refinery in Bakersfield, California, a 35,000-bpd refinery in Utah, a 700-mile refined products pipeline owned by its Longhorn Pipeline Holdings unit and 250 retail outlets. Last year the company had sales of more than $16 billion. The company does not expect to layoff any employees as a result of the bankruptcy filing. [More here]