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]

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]

Is the Natural Gas Market Ready for Hourly Nominations?

Marketers, traders, and power generators would like the natural gas market to be as fluid as the electric market. Pipeline companies trying to efficiently manage their assets want to assure that if markets pull all their gas in a few hours per day, that they keep the integrity of their pipelines safe, as well as collect money from those using their pipelines in such a manner.

The problem in moving the natural gas market towards the electric market lies in the fact that electricity literally moves at the flick of a switch, while natural gas takes a bit of time to move from the producing fields to the end use markets.

Frankly, power generators don’t necessarily care what it takes to get the gas there; they just want it available when they need it. Pipelines are often more interested in selling capacity and maintaining steady throughput and linepack.

To manage this hourly, transactions will need to be scheduled on an hourly or series of hourly basis. This would result in up to twenty-four scheduling cycles in which the pipeline would need to assign capacity and make cuts each hour. Great in theory, but not realistic from a scheduling and accounting view.

The logical step is to continue scheduling under the current cycles and utilize hourly nominations for flow profile calculations so that pipelines can manage their assets – and maybe even come up with a simple billing mechanism that does not call for massive manual spreadsheets, or re-writes of existing business systems.

Until all the camps come together and put themselves in each others shoes, a solution determined by the regulatory agencies trying to mediate the selfish concerns of the different camps will result. That could lead to disastrous results – or at least leaving no one happy.

Robert Young
Product Manager – Commercial Applications

Dashboard Web Applications

Pipeline applications are becoming more and more advanced offering more and more information to different groups of people within the pipeline companies. Todays software applications provide a wealth of information ranging from design to commercial information, with lots of operational information in between.

All this information can be overwhelming, so efficient data management and presentation is very important. Different groups of personnel needs different data and the timing requirements are quite different as well. For example, you need to know immediately if there is an integrity issue on the pipeline. Often you want to know ahead of time of any upcoming contract violations etc.

All this information can be tied together in a Dashboard application that allows each specific user to select exactly what data to show. This application can be accessed via the web and will show information from a wide range of applications. Basically only your imagination limits what information you can include here.

This dashboard is currently under development and you will soon be able to see a live demonstration of this. If you have any comments as to what type of data that should be included within the dashboard or how this should be presented, please feel free to post your comments.

Thanks,

Morten Kristiansen
Product Manager - online operational applications

October 2007 Update

In the news...

• Pipe Dream (10/11/07) Almost 600,000 miles of high-pressure steel pipelines are monitored in the U.S. by oil and natural gas pipeline operators for corrosion-induced failures that can lead to leaks or explosions. Corrosion results from a pipeline generating a naturally occurring electrical charge. Cathodic protection can protect the pipelines through the placement of an anode near the pipeline through the soil and directly on the pipeline. A current with the opposite polarity to the natural charge halts corrosion as long as it is applied. A Congressional study estimated corrosion on large-diameter high-pressure pipelines costs U.S. operators $7 billion annually. Strict U.S. governmental regulations require all newly laid oil and natural gas pipelines to have cathodic protection. Although many existing pipelines had cathodic protection installed more than 50 years ago, the technology was primitive and requires corrosion monitoring on a regular basis. Preserving new pipeline with a protective outer coating requires an anode installation every 20 miles at a cost of approximately $1,000 per mile. Older pipeline needs a continuous anode that runs parallel to the pipeline and can cost as much as $75,000 per mile. Although retrofitting older pipeline to install anodic protection can be extremely expensive, the alternative - shutting down and replacing it - is even more expensive. [More here]

• Midcontinent Express Pipeline Files for FERC Certificate (10/10/2007) Midcontinent Express Pipeline LLC (a joint 50/50 venture between Kinder Morgan Partners and Energy Transfer Partners, L.P.) filed an application requesting a certificate of public convenience and necessity with the Federal Energy Regulatory Commission (FERC). If approved Midcontinent Express Pipeline will be authorized to construct and operate about 500 miles of natural gas pipeline starting August 2008 and scheduled to be in service the first quarter of 2009. Costing approximately $1.27 billion the pipeline project will go from southeastern Oklahoma across northeastern Texas, northern Louisiana and Central Mississippi to interconnect with the Transco Pipeline near Butler, Alabama. Once completed it will consist of around 265 miles of 42-inch, 196 miles of 36-inch and 41 miles of 30-inch pipe with up to 13 receipt and/or delivery interconnections providing an initial capacity of up to 1.4 billion cubic feet per day of natural gas. [More here]

• Irving Protests Proposed LNG Pipeline Route (10/9/2007) Irving Oil has filed a formal opposition with the Canadian National Energy Board over the proposed route of the Brunswick Pipeline Project. Irving claims the pipeline route, proposed by Emera Pipeline Co., could interfere with its plans to develop a second oil refinery in the area as well as impact commercial and/or residential buildings significantly impairing economic viability and marketability of the proposed development. Irving also said a minor change in the route would minimize the impact on the area affected. The proposed pipeline will serve and start at the Canaport LNG terminal (Irving Oil is a stakeholder) before traversing 90 miles through existing industrial and utility pipeline corridors to Saint John, New Brunswick. [More here]

• Small Oil Company Makes Big Arctic Gamble (10/5/2007) Pioneer Natural Resources Co. will become the first independent operator to produce oil on the North Slope. In order to compete in a market dominated by major producers including BP PLC, Exxon Mobil Corp. and ConocoPhillips, the company had to overcome major obstacles including drilling in the open waters of the Arctic Ocean three miles off the Alaskan coastline. The company had to build a six-acre gravel island named Oooguruk, install a drilling rig and eight miles of pipeline to a processing center onshore about 150 miles southeast of Point Barrow, AK. Oooguruk, only the second man-made island in the Arctic Ocean (the first was five-acre, Northstar, built by BP in 2001), took four years to build at a cost of more than $500 million. Construction could take place only during winter months using manmade ice roads crossing the frozen ocean and required 20,000 truckloads or around 450,000 cubic yards of gravel to complete. Production on the island is expected to yield 20,000 barrels a day. [More here]

• BP Announces Start of Binding Open Season for Proposed Viridian Pipeline Project (10/4/2007) BP Pipelines will conduct Phase Two of its open season for the proposed Viridian Pipeline project. It is soliciting binding bids on long-term contracts to transport light crude from the Chicago area to Cushing, Oklahoma. BP Pipelines owns and operates the BP No. 1 Pipeline that is a 600-mile long and 20 to 22 inch diameter crude oil pipeline. The reversed pipeline targeted to be in southbound service by May 2010 has a capacity of 100,000 barrels per day with possible expansion up to 200,000 barrels per day. [More here]

• Canadian Natural Gas Facility May Brighten Bay State Energy Picture (9/24/2007) The Canadian province of New Brunswick is adding a third liquefied natural gas storage tank to the plans of an LNG facility (Canaport) now under construction in Saint John located approximately 70 miles from Calais, Maine. The province is also expanding its primary natural gas pipeline into New England. Once completed by the end of 2008, the LNG terminal will have three tanks each holding 5.65 million cubic feet of natural gas. According to Energy Minister for New Brunswick, Jack Keir, "We're ideally located to supply natural gas all over Atlantic Canada and the northeastern United States," adding "The concept is that we become an energy hub." ..... [More here]

• TransCanada Gets Pipeline Approval (9/21/2007) TransCanada Corp. received government approval from Canada's National Energy Board for their TransCanada Keystone Pipeline GP Ltd unit to convert a part of a natural gas pipeline to crude oil service. Additionally, TransCanada Corp. received approval to operate the Canadian section of the pipeline as well as build new pipeline. When finished, the 2,148 mile pipeline will connect Hardisty, Alberta to a point near Haskett, Manitobe before crossing into the U.S. onto Patoka, Illinois and then Cushing, Oklahoma. TransCanada will construct 231 miles of new pipeline as well as acquire and convert of 537 miles of existing natural gas pipeline into oil transporting pipeline. The project is estimated to cost $664 million and be operating by the fourth quarter of 2009. [More here]

• National Energy Board OKs Offshore Pipeline (9/13/2007) An application by EnCana Corporation to construct a 176-kilometer long underwater pipeline was approved by Canada's National Energy Board. The C$234 million Deep Panuke Pipeline will connect the Deep Panuke Offshore Gas Development Project near Sable Island to Goldboro, Nova Scotia. When production begins in 2010, Encana expects to ship up to 300 million cubic feet of natural gas per day and extract approximately 630 billion cubic feet of natural gas over an estimated 13-year lifespan for the project. [More here]

How Dynamic will the LNG Market Become?

LNG imports to the U.S. are set to surge over the next ten years (50+ onshore terminals being built or going through the approval process), resulting in a new set of trading points being generated.

Owners of facilities who buy LNG from the source, move it to their facility, and then sell it off - either at the tailgate or likely utilizing firm transport to sell downstream - will simply serve as additional supply to the market.

However, some facility owners may stay away from the buy/sell process and simply provide services to its customers who do the trading – acting much like pipelines or NGL plant processors who make their money as service providers – in this case LNG services. Depending on the terminal size and number of pipeline connections, these facilities could become fairly flexible and liquid market points. While it would be prudent for LNG supply owners to have set markets for their gas, if demand continues and LNG becomes a necessary and integral supply source, then the call for this gas could be very dynamic.

Will a company take the calculated risk of bringing in supply on the chance that the market will bid up for it? Envision a tanker on its way in with the marketing sharks and end use facilities starved for supply lying in wait. Assuming that pipelines will have capacity, a facility with a number of pipeline outlets could be a very active trading point. And the demand competition wouldn’t just be in the traditional U.S. markets – the rest of the world is already ingrained in the LNG process – and tankers can change directions.

This competition on a global scale could certainly become very interesting. Of course, the facilities still need to be built, rather than just approved.


Robert Young
Product Manager - Commercial Applications

September 2007 Update

In the news...

• 2007 International Pipeline Security Forum (9/2007) ..... The 2007 International Pipeline Security Forum will be held October 23 - 25, 2007 at the Fairmont Chateau Laurier Hotel in Ottawa, Ontario, Canada. The agenda is currently being developed but will cover topics ranging from NATO initiatives on pipeline security to threats to critical energy infrastructure. [More here]

• 6 Explosions Believed To Be Sabotage Rip Through Pemex Pipelines In Mexico (9/10/2007) On Monday, September 10 at 2:00 a.m. in the Gulf coast state of Veracrus, six explosions destroyed at least four natural gas pipelines belonging to Mexico's state oil monopoly - Petroleos Mexicanos (Pemex). Shortly after, the People's Revolutionary Army (PRA) claimed responsibility for the attack. The PRA claimed responsibility for similar explosions three months ago. Although no injuries or deaths were reported directly from the blasts - which were heard and felt more than 20 kilometers away, -- civil defense agencies said two women in their 70s living nearby died from heart attacks shortly after the explosions. Thousands of people were forced to evacuate local communities including Ciudad Cardel and Antigua. Pemex immediately shut done the affected lines. [More here]

• Rainbow Lake Oil Pipeline Put On Sale By Imperial Oil And Partners (9/6/2007) Key proponents of the $16-billion Mackenzie natural gas pipeline - Imperial Oil, ExxonMobil and Royal Dutch Shell -- are selling the Rainbow oil pipeline in northern Alberta. The 40-year old pipeline, which transports up to 200,000 barrels a day of crude oil from Zama, Alberta to Edmonton, Alberta, is considered by analysts to be strategically important, especially if the proposed Mackenzie pipeline is constructed. It is possible the pipeline could be converted for natural gas transport. The Rainbow pipeline can also connect Enbridge Inc.'s pipeline system to U.S. Midwest and the Trans Mountain pipeline to the Pacific Coast. No price for the pipeline has been set. [More here]

• Mackenzie Gas Project; Tapping Arctic Gas Could Save $338B, Argues Minister (9/6/2007) A study done by the Government of the Northwest Territories, Canada says North Americans could spend an additional $338 billion for natural gas starting 2014 through 2025 if fuel costs soar and reserves in the Arctic remain untapped. In addition to the increased fuel costs, Brendan Bell, Minister of Industry, Tourism and Investment, told members of an influential think tank another 280 million tons of carbon emission will be released into the atmosphere if coal is used instead of natural gas for electricity generation. Mr. Bell also said the territorial government is working with Imperial Oil and its partners to create a list of infrastructure projects, such as ports, roads and power generation facilities, that may warrant federal financial support. [More here]

• Gateway Energy Corporation Acquires All Of Gulfshore Midstream's Offshore Systems (9/6/2007) Gateway Energy Corporation acquired offshore pipeline assets from Gulfshore Midstream Pipelines, Ltd. for $3.1 million in cash, 1,550,000 shares of Gateway common stock and assumption of an estimated $300,000 in liabilities. The acquisition nearly doubles Gateway's offshore pipeline network extending it from Galveston, Texas to New Orleans, Louisiana. The pipeline assets range from 6" to 16" diameter pipelines in water depths ranging from 50 to 650 feet connected to 56 wells producing approximately 60,000 MCF per day of natural gas. [More here]

• Pipeline Operator Works On Expansion (9/5/2007) Dallas-based Crosstex Energy L.P. said it has completed the first phase of an $80 million, 29-mile natural gas pipeline expansion. Once completed approximately a year from now, it will have a capacity of 400 million cubic feet per day of natural gas. The pipeline system will include three compressor stations, tie into an existing pipeline operated by Energy Transfer Partners and provide access to long-haul transportation pipelines. [More here]

• Questar Pipeline And Enterprise Announce Plans To Construct New Rockies Natural Gas Pipeline Hub (8/27/2007) Questar Pipeline Company, a subsidiary of Questar Corp., and an affiliate of Enterprise Products Partners L.P. have entered into a Memorandum of Understanding to jointly develop a new natural gas pipeline hub in the Rockies and equally split ownership. The White River Hub would be a header system that connects Enterprise’s natural gas processing complex near Meeker, Colorado to as many as six interstate pipelines in the Piceance Basin area, including the Questar Pipeline. The initial design details a 30-inch pipeline with the capacity to transport more than 2.5 billion cubic feet per day and provide hub-related services for natural gas producers. Construction is expected to begin in the summer of 2008 and be in service by the fall of 2008. [More here]

• Company Eyes Pipeline Expansion (8/22/2007) ....... .... Kern River Gas Transmission Co. may expand its Wyoming-to-California pipeline connection. The company sees potential growth among its existing California natural gas customers and future development of natural gas-derived electrical power generation. The Kern River system carries more than 1.76 billion cubic feet of gas per day but could be expanded to carry an additional 28 percent by November 2010. Initially there were doubts about the ability of Wyoming and other Rocky Mountain states to extract natural gas, trapped in unconventional tight-sands gas but the Rockies region is now the fastest growing natural gas supply in the nation. [More here]

• New Pipeline To Raise Gas Cost (8/16/2007) ......... According to energy market expert Porter Bennett of Bentek, the Rockies Express pipeline currently under construction "just radically changes the way the market is structured.". Currently there aren't enough pipelines to transport Colorado's booming natural gas production to other parts of the country, therefore depressing local gas prices. The Express pipeline starts near Meeker, CO and goes through Wyoming and eventually to Ohio. Once completed, Bennett thinks the Rockies Express will be good for the gas industry and in the future it's possible gas from the Rockies Express pipeline will be more expensive than the national price. However, in the interim period, he expects large fluctuations in gas prices throughout the country for the next few years. [More here]

• Houston Pipeline Company Fined$2.8 Million For Dumping Oil, Gas Into Texas, Arkansas, Oklahoma Waterways (8/15/2007) Houston-based oil and gas distributors TE Products Pipeline Co. LLC and TEPPCO Crude Pipeline, LLC will pay a civil penalty close to $2.8 million for discharging approximately 6,470 barrels of jet fuel, gasoline and crude oil into multiple waterways in Texas, Arkansas, and Oklahoma between November 2001 and May 2005, the Justice Department and Environmental Protection Agency announced today. Under terms of the settlement TEPPCO agreed to make pipeline improvements to increase the safety of its operations and protect the nation's waters. [More here]

• New Hampshire University First With Landfill Gas Power (8/14/2007) The University of New Hampshire (UNH) is set to become the first university in the U.S. to get 80 to 85 percent of its energy requirements from a renewable source - landfill gas. In conjunction with Waste Management of New Hampshire, Inc., UNH launched Ecoline, a landfill gas project consisting of a new gas processing plant in Rochester, NH and a 12.7-mile underground pipeline that will transport the gas from the plant to the university's Durham campus. Once completed by the fall of 2008, the use of landfill gas will reduce the university's greenhouse gas emissions by an estimated 67 percent compared to 2005 levels and stabilize the university's fluctuating energy costs, which have doubled over the last five years. [More here]