April 2009 Update

In the news...

• Gazprom, ConocoPhillips Discuss Alaska Offshore Exploration (4/15/2009) CEOs James Mulva of ConocoPhillips and Alexei Miller of Gazprom met in Moscow to discuss Alaskan offshore exploration and liquid natural gas (LNG) projects. "Gazprom's experience could be useful in realizing new gas projects in the United States," said Miller. Last October the two companies met in Alaska to discuss a broad spectrum of business opportunities in the largest U.S. state. Gazprom also approached BP and ConocoPhillips about joining forces to work on Alaska's Denali pipeline project, said Miller. However, during the same time, Gazprom also indicated interest in working on a rival pipeline proposal backed by TransCanada. [More here]

• A Powerful Ally Against LNG Plan (4/14/2009) ............. .. Any chance for the construction of the Broadwater Project - a controversial plan to build a huge floating liquefied natural gas platform and pipeline in the Long Island Sound - may have been thwarted this week. The U.S. Commerce Department has concluded that "adverse coastal impacts outweighed [the project's] national interest." The ruling presents a tremendous obstacle to Shell Oil and TransCanada Pipeline - backers of the plan, while bolstering the efforts of those opposed to the project including a coalition of local residents, fishermen, environmentalists, state and local officials from both New York and Connecticut. If built, the natural gas platform would be around eight stories high and almost a quarter of mile long. It would also require costly Coast Guard escorts and restrict marine activity during LNG tank deliveries due to the narrow opening of the Sound into the Atlantic Ocean. [More here]

• Atlas Pipeline Raising Cash: Company Sells Ozark Gas, Joins Williams Cos. in Venture (4/9/2009) In an effort to reduce corporate debt, Atlas Pipeline Partners LP has sold Noark Gas Pipeline LP to Spectra Energy Partners LP for $300 million pending regulatory approval. The company also announced a $100 million joint venture with Williams Cos. Inc. on Atlas' existing 1,800-mile pipeline and gathering system in the Marcellus Shale region of Appalachia. Together the two deals will allow Atlas to pay off around $400 million in debt. "We continue to work on other transactions, which should generate additional cash and further de-lever our company," said Atlas CEO Gene Dubay. Atlas Pipeline Mid-Continent LLC, a Tulsa-based subsidiary of Atlas Pipeline Partners, held a majority interest in the Noark natural gas gathering and transmission system that includes Ozark Gas Transmission, a 556-mile pipeline that runs from southeastern Oklahoma through Arkansas and into southeastern Missouri. [More here]

• USW Challenges TransCanada Keystone Pipeline Permit for Safety (4/9/2009) The United Steelworkers of America (USW) is challenging a pending federal permit for the construction of TransCanada's Keystone Pipeline that will transport oil from Alberta, Canada to Houston, Texas. According to USW International Vice President Tom Conway, TransCanada's $5.4 billion 2,000-mile pipeline, is using a 36-inch thin-wall pipe that will be used at a higher maximum operational pressure than permitted under existing safety regulations. "Our members work hard to produce quality steel and large diameter crude oil transmission pipe right here in the U.S. that meets all safety requirements," said Conway. He added that USW workers "do not want to be denied the opportunity to provide that quality pipe based on a waiver of a fundamental safety regulation promulgated under the normal rulemaking procedures." USW's concerns came to light after pipe imported from India is being used to construct another TransCanada pipeline to a ConocoPhillips refinery in Wood River, Illinois. At a nearby US Steel Granite City mill 2,000 steelworkers have been laid-off since December with several thousand more workers on long-term layoffs at pipe mills across the U.S. A formal complaint was filed with the U.S. Department of Transportation on April 6. [More here]

• FPL Proposes $1.5 Billion for 300-Mile Natural Gas Pipeline (4/7/2009) Florida Power & Light Co. (FPL) has filed a proposal to build an underground pipeline with the Florida Public Service Commission. If approved the $1.5 billion project will be the company's third major natural gas pipeline. The 300-mile, 30-inch pipeline will cross the peninsula from Palm Beach County to Bradford County in north-central Florida and help fuel a new block of power plants in Riviera Beach and Cape Canaveral. According to company spokeswoman, Jackie Anderson the pipeline will be buried four feet below ground following a route, 90 percent of which FPL currently has an existing right-of-way. "Our intent is to locate the pipelines in areas with minimal or no development. These are going under transmission routes. These are grassy open fields," said Anderson. The company's two other pipelines from off-shore sources in the Gulf of Mexico. The new pipeline will deliver natural gas from on-shore areas in Texas, Louisiana and Arkansas and make Florida less dependent on sources of fuel from hurricane-vulnerable areas of the Gulf of Mexico said Anderson. The company wants to finish construction and begin operation of the pipeline by 2014. Utility regulators have yet to set a timetable for review FPL's proposal. .. .... [More here]

• Enbridge Seeks Shippers for Proposed U.S. LaCrosse Pipeline (4/1/2009) Enbridge Inc., Canada's largest energy pipeline operator, will conduct a non-binding open season from April 13 to May 15 to seek energy producers to ship natural gas through the its proposed LaCrosse pipeline. If built, the approximately 300-mile pipeline will start from Enbridge's Carthage hub in Carthage, Texas and end at an interconnection with the Sonat pipeline at Washington Parish in southeastern Louisiana. Up to 12 pipeline interconnections can be added along the route, depending on shipper interest. "We anticipate this pipeline could move at least one billion cubic feet a day of natural gas from the Carthage area and the Enbridge Carthage Hub and the Haynesville Shale producing basin to various interconnections with market-area pipelines located across Louisiana," said Pat Daniel, president and CEO of Enbridge. "The Haynesville Shale is one of the most active gas plays in the United States. Our proposed LaCrosse Pipeline provides a creative and flexible solution to relieve market constraints affecting producers in the booming region." The pipeline is expected to be built by late 2011 or early 2012. [More here]

• Obama Signs Far-Reaching Public Lands Bill (3/31/2009) President Barack H. Obama has signed into law the bipartisan supported legislation HR 146 -- a far-reaching public lands bill into law. The measure, composed of 160 smaller bills calls for the addition of 2 million acres to the federal wilderness system, involves historic sites, and removes more federal acreage from being used for oil and gas leasing and also as an alternative energy generation sites among other provisions. Lisa Murkowski (R-Alaska) said the new law also includes an amendment to the Alaska Natural Gas Pipeline Act authorizing the federal coordinator to establish fees that could be spent without further congressional appropriation for activities authorized under current law. [More here]

• Pennsylvania Seeks More Say on Shale Pipeline (3/29/2009) Because development of the Marcellus Shale formation may last 50 years, Pennsylvania state regulators are seeking to extend the Public Utility Commission's (PUC) authority over non-utility pipelines to ensure underground pipelines transporting natural gas are properly maintained and safe. The Marcellus Shale region lies beneath a large section of Northeast and Western Pennsylvania and PUC officials forecast a large increase in construction of non-utility natural gas pipelines as the area is developed. PUC Chairman James Cawley said the agency is seeking authority to inspect pipelines owned by commercial natural gas producers - normally outside its traditional jurisdiction over public utilities - and increases in fines for pipeline safety violations. "There will be a need for new (Marcellus Shale) pipelines in the future to accommodate the anticipated volume of gas," said Stephen Rhoads, president of the Pennsylvania Oil and Gas Association. Although he has not seen PUC's proposal he suggested the small "gathering" pipelines don't necessitate the type of regulation the agency is considering because the industry already has its own inspection and maintenance programs. "You don't want to lose your marketable commodity," Mr. Rhoads said. "Every leak is a dollar lost. It would be silly for us not to maintain the integrity of our pipeline system." [More here]

• Frost & Sullivan Recognizes Energy Solutions International (3/24/2009) Energy Solutions International, Inc. (ESI), a world-leading supplier of software solutions that optimize operational and commercial performance of oil and gas pipelines, has won the 2009 Excellence in Customer Value of the Year Award in the Global Pipeline Management Solutions category from Frost & Sullivan. In conferring the award, Frost & Sullivan recognized ESI for ingenuity “in addressing the challenges of pipeline management firms by managing the total life cycle and operations.” ESI markets its software solutions both as standalone deployments and as an integrated suite that optimizes the complete spectrum of pipeline operations. It is this inclusive approach, addressing the markets’ need to optimize assets while reducing costs, which earned ESI the Customer Value award. [More here]

• POET Partners Up for Proposed Dedicated Ethanol Pipeline (3/14/2009) Magellan Midstream Partners, L.P. has signed an agreement with POET, LLC to continue examining the feasibility of constructing a dedicated ethanol pipeline from the U.S. Midwest to distribution terminals in the Northeast. “POET adds valuable experience as a leader in ethanol production, marketing and logistics to this project,” said Don Wellendorf, Magellan’s president and chief executive officer. POET is the world's biggest ethanol producer and manufactures more than 1.8 billion gallons each year. “This agreement with Magellan is an important step in improving long-term transportation economics for our facilities and consumers,” said POET chief executive officer Jeff Broin. “A project of this nature would provide benefits throughout the ethanol industry, agricultural community and the economy in general. It would also represent another major step forward in the efficiency of producing and delivering ethanol to the marketplace.” If built, the proposed $3.5 billion, 1,700-mile pipeline would collect ethanol from production facilities located in Iowa, South Dakota, Minnesota, Illinois, Indiana and Ohio and efficiently transport it to terminals in major Northeastern markets. [More here]