October 2008 Update

In the news...

• Legislators Take Aim at Interior Alaska Gas Bullet Line (10/13/2008) A proposal to build an Alaskan in-state natural gas pipeline has gained new support from Alaskan legislators. Increasing energy costs and air quality concerns have spurred the renewed interest. Possible routes for the "Bullet Line" include a line from the North Slope, which already is producing gas, or the foothills, where Andarko Petroleum Corporation is exploring new reserves, to Fairbanks, AK. Between September 30 and October 1, Alaskan Legislators joined Endstar Natural Gas Company executives in examining possible routes on a trip to northern Alaska. "I'm even more convinced that the Bullet Line gives us an opportunity to jump-start first gas for Alaskans," said Rep. Mike Kelly, a Fairbanks Republican. "We'll have gas sooner, we'll be ready for the big line and we'll have a trained Alaskan work force, I saw nothing but positives. Enstar company spokesman, Curtis Thayer said Enstar has committed $15 to $20 million for preliminary work on a route next year. He added Enstar is interested in working with the state but wants an "independent analysis" of the two suggested routes. Earlier this year, Gov. Sarah Palin announced the Alaska Natural Gas Development Authority, the state and Enstar would work together on developing an in-state line. [More here]

• Natural Gas Pipeline Approved (10/10/2008) ............ ...... On September 18, the Federal Energy Regulatory Commission (FERC) voted 4 - 1 in favor of plans by NorthernStar Energy LLC to build a liquefied natural gas terminal at the Bradwood site on the Columbia River and a 36-mile pipeline connecting Bradwood with an existing natural gas system owned by Northwest Pipeline Corp., near Kelso, Washington. The plan was opposed by Oregon's Governor Ted Kulongoski, local tribes and environmental groups, who are concerned about the facility increasing river temperatures. Legal counsel for the Columbia Riverkeeper, Brett VandenHeuvel, said “Salmon are already struggling because of the heat increase in the Columbia River,” he said. “We are spending millions of dollars every year restoring salmon habitat in the estuary, and this project would degrade it.” The group is currently working with other industries along the river to minimize their impact on the salmon runs. The four FERC commissioners voting in favor of the project did so based on the findings of the environmental impact statement and the increased demand for natural gas in the region. In 2009, NorthernStar Energy plans to start construction and be operating by 2012. [More here]

• Northwest Gas Line to Run South of Idaho's Southern Border (10/8/2008) El Paso Corp. executives Richard Wheatley and Daniel Gredvig said plans to build a 680-mile natural gas pipeline from Opal Hub, Wyoming to Malin, Oregon are on the "fast track". The 370 miles of the $3 billion pipeline will travel through Nevada on its route from Wyoming to Oregon and is the first pipeline to transport gas west from the Rocky Mountain gas fields located in Wyoming, Colorado, Utah and New Mexico. Currently, all other existing or planned pipelines travel in an eastward direction. "This provides benefits for Rocky Mountain gas producers as well as western end users," said Wheatley. The company hopes to have FERC and other permitting completed by 2009 with an operational date starting March 2011. [More here]

• Billion Here and a Billion There - Gas Pipeline Total Escalates In Political Debate (10/4/2008) Six years ago the proposed natural gas pipeline running from Alaska's North Slope to the lower continental U.S. was expected to cost $20 billion. As recently as around a year ago, ConocoPhillips estimated the cost to between $25 billion and $42 billion. While in January TransCanada, the company partnered with the state to build the pipeline, said it will cost $26 billion to get the pipeline to Alberta. However, by this summer, consultants for the state pegged the price at $31 billion. Now Gov. Sarah Palin has raised the price to nearly $40 billion. During the Vice-Presidential debates, Gov. Palin said, “We’re building a nearly $40 billion natural gas pipeline, which is North America’s largest and most expensive infrastructure project ever to flow those sources of energy into hungry markets.” Factors causing the large discrepancies in price include uncertain material costs and major tax and regulatory issues which have yet to be worked out. Only after the entire pipeline is completed will the true cost be known. [More here]

• Grand Prairie Sued Over Gas Line Ordinance (10/2/2008) ... In the first lawsuit of its kind, Chesapeake's subsidiary, Texas Midstream, is suing Grand Prairie over an ordinance passed by the city to oversee the placement of equipment used to push natural gas through pipelines. This is the first time the company has taken a city to court over pipeline regulation. Grand Prairie's city council says it wants to protect its citizens and has the right to decide what a natural gas pipeline operator does in its city. Texas Midstream says pipeline safety is controlled by federal and state authorities, not cities. Attorney Jim Bradbury and Forth Worth's Natural Gas Drilling Task Force member said, "You might believe that the city could and should protect you, but it may in fact be true that they can't. We can do this our way whether you want us to or not." But Bradbury added, he hopes to find a legal solution that protects the rights of citizens and industry. [More here]

• Exxon Quits 2nd-biggest U.S. Gas Area Amid Price Drop (10/2/2008) Exxon Mobile Corp. has sold its stakes in gas fields and an 80-mile pipeline located in the second-largest U.S. natural gas region, Texas' Barnett Shale, to Dallas-based Harding Energy Partners LLC which had formed a joint venture with Exxon in 2006. Harding then sold the gas fields and pipelines to Chesapeake Energy Corp. Exxon cited a supply glut slashing the value of natural gas in half over the past three months as the reason for the sale. Exxon spokesman Patrick McGinn said the company "has a long-standing practice of continually reviewing all assets for their contribution to the company's operating needs and financial objectives, as well as their potential value to others." Details on the terms of the transaction were not disclosed. [More here]

• Another Pipeline Wouldn't Help, Officials Say (10/1/2008) Pipeline officials said a third pipeline running from Louisiana to Cobb County would not have prevented hurricane-induced gas shortages like Ike and Gustav did in the Atlanta, GA area. Last year, Colonial attempted to get approval from Georgia's legislature for the fast-track construction of 460-mile $2 billion pipeline, stating a third line will remove a bottle-neck between Houston and New York. The bill, which would have eased the permitting process was defeated on grounds it would erode property rights and evade environmental scrutiny. “Right now, the third line would not matter; we’re pumping everything we can get,” said Sam Whitehead, a spokesman for Colonial, headquartered in Alpharetta, GA. “This is a refining problem, not a pipeline capacity problem. On the gasoline line, we’re at pre-hurricane rates.” Currently, Colonial has two 36-inch pipelines that can deliver 100 million gallons of fuel a day to the Eastern coast but are operating at less than 85 percent capacity. One pipeline only transports gas and the other aviation fuels, diesel, heating oil and other products. The proposed third pipeline which Colonial still hopes to get approved and operating by 2012, will increase Colonial's capacity to 135 million gallons a day. [More here]

• Global Industries, Ltd. Awarded $75 Million Pipeline Project in PEMEX's Bay of Campeche Ixtal Field (9/29/2008) Global Industries, Ltd. has been awarded a $75 million project from Pertroeos Mexicanos (Pemex) for over 12 km of 24" pipeline. The project consists of several pipeline crossings, riser and expansion curves in Pemex;s Ixtal Field in teh Bay of Campeche. B.K. Chin, Global's Chairman and Chief Executive Officer, stated, "We have a close working relationship with PEMEX, and have been active in the Ixtal Field for well over a year. The award of this project demonstrates PEMEX's confidence in Global as a reliable contractor and solutions provider."[More here]

• Southern California Company Fined for Offshore Gas Shipment (9/29/2008) Pacific Operators Offshore LLC of Carpinteria, CA was fined $450,000 and placed on five years' probation after pleading guilty for transporting natural gas through a pipeline deemed unfit for service off the Southern California. In 2002, U.S. Department of the Interior officials said inspectors discovered the company was transporting natural gas through the pipeine even though Pacific Operators were notified in February 2000 that the line was unfit for service. Charles Cappel, the company's legal counsel, said two of its employees "on limited occasions" sent low and medium pressure natural gas through the pipeline engineered to handled higher pressures. He said, "The action was totally against company policy. They didn't tell anyone what they were doing." After the company learned what happend officials agreed to pay the fine. The pipeline goes to offshore platforms that are no longer operated by the company. [More here]

• Energy Solutions Completes the Oil & Gas Supply Chain with Its PipelineTransporter Gas (PLTG) Solution Certified for Integration with SAP® Solutions (9/24/2008)Energy Solutions International, Inc. a world-leading supplier software for the gas and oil pipeline industries has received SAP® Certified Integration status for the interface between its PipelineTransporter® Gas (PLTG) software, version 4.0 and the SAP® ERP application. "EnergySolutions' customers include many of the world's leading oil and gas transportation companies," said Dr. Jo Webber, chief executive officer, Energy Solutions International. "Increasingly, over the last few years we have seen many of our customers select and implement SAP solutions for their full ERP requirements. In order to provide a full end-to-end integrated solution, from product flow to final invoicing, we are pleased to announce the SAP certified interface between PLTG 4.0 and SAP ERP." PipelineTransporter is an intuitive, nomination, scheduling, allocation and invoicing system that integrates shipper information with critical pipeline and business data to manage the commercial aspects of a pipeline. [More here]

• Shell Hopes to Reroute Auger Pipeline in US Gulf (9/22/2008) In an effort to restart its Central Gulf gathering system, Shell Oil said it hopes to reroute natural gas and oil flows through its Auger pipeline in the Gulf of Mexico around the Eugene Island platform damaged by Hurricane Ike. "Plans are in development to reroute the Auger pipeline system around the damaged Eugene Island 331 Platform," Shell said in a press release. "Work is progressing to restart the Central Gulf gathering system." The Auger pipeline system can transport 415 million cubic feet of gas per day (cfd) and more than 100,000 barrels per day (bpd) of oil. Almost 80 percent of the Gulf of Mexico's 1.3 million bpd of crude and 65 percent of its 7.4 billion cfd of natural gas production remains shutdown. The company said its Boxer, Cougar and Eugene pipeline systems remained down until repairs can be completed. [More here]

• Hurricane Ike: The Aftermath (9/19/2008) ..... ............ ... ... After shutdowns caused by hurricanes Gustav and Ike offshore oil and gas operators are re-staffing their installations. According to the federal government, almost 90 percent of oil and over 75 percent of natural gas production was off-line as of September 19, 2008. Start up had been delayed by required inspections and testing subsea pipelines. Interior Department's Minerals Management Service (MMS) spokeswoman, Eileen Angelico, said oil pipelines need some production running to induce the pressure required for testing while natural gas pipelines are able to keep pressure when shut down. Despite the shutdowns, the Southeast Texas gasoline suppy was sufficient to avoid releasing emergency stockpiles. "Producing platforms in the Gulf now seem generally to have fared well, as did other infrastructure," said Paris-based International Energy Agency. Hurricane Ike has destroyed 49 platforms in the Gulf of Mexico that are responsible for producing approximately 13,000 barrels of oil and 83 million cubic feet of gas per day. The normal daily output for the region is 7.4 billion cubic feet of gas and 1.3 million barrels of oil. [More here]

September 2008 Update

In the news...

• Ike Destroys Oil Facilities, Damages Pipelines (9/14/2008) According to federal officials, Hurricane Ike seems to have destroyed at least 10 out of approximately 3,800 production platforms and damaged numerous pipelines in the Gulf of Mexico. “It’s too early to say if it’s close to Katrina- and Rita-type damage,” said Lars Herbst, regional director for the U.S. Minerals Management Service. Based on initial assessments it appears the damage is much worse than that done by Hurricane Gustav. Areal inspections revealed several large pipelines were damaged but at this time it is unknown how badly they are damaged. For more than two weeks now, almost 100% (about 1.3 million barrels per day) of Gulf Coast crude production has been stopped while 98% of all natural gas production is on hold after the passage of Hurricanes Gustave and Ike. With more than half of Texas' refineries being shut down by Ike, some areas of the country have seen the cost of a gallon of regular gas rise past $5 per gallon. [More here]
  

• Colonial Says Oil Product Pipelines Shut Due to Ike (9/12/2008) Colonial Pipeline - the nation's largest operator of pipelines for refined petroleum products - has shut down their main gasoline line between Houston and New York. The action was taken after supplies from Gulf Coast refineries have slowed or stopped ahead of Hurricane Ike. In addition, the company's distillate pipeline has also been shut down. Up to 2.3 million barrels of refined products flow through Colonial's pipelines each day. [More here]

• Congressmen Show Pipeline Support (9/12/2008) Senators Tom Harkin - (D-Iowa), and Richard Lugar - (R-Indiana) have introduced legislation that may spur the feasibility of ethanol pipelines. If passed, the Biofuels Pipeline Act of 2008 will give pipeline owners who transport ethanol the same tax benefits as those received by operators who move petroleum based products. Current tax law for publicly traded partnerships (PTPs) requires they earn 90% of their income from the exploration, transportation, storage or marketing of oil, gas and coal. Renewable fuels are currently excluded from the law. Congressmen Leonard Boswell - (D-Iowa), and Lee Terry - (R-Nebraska) are also seeking to amend the Energy Policy Act of 2005 with the introduction of the Renewable Fuel Pipeline Act - that provides loan guarantees on the construction of renewable pipelines. [More here]

• DCP Midstream Partners to Buy Michigan Pipeline & Processing for $145 Million (9/11/2008) Oil and gas pipeline company DCP Midstream Partners, LP has finalized a deal for the 100% buyout of Michigan Pipeline & Processing, LLC (MPP) for $145 million. MPP's holdings include MPP Antrim Gas, MPP Bay Area Pipeline, MPP Grands Lacs Holding, MPP Jackson Pipeline, and MPP Litchfield Pipeline. "This acquisition allows us to further diversify our operations in a new geographic area while adding 100% fee-based revenues to our contract mix," said Mark Borer president and CEO of DCP Midstream........ [More here]

• TransCanada (NGTL) and Canadian Utilities Limited (ATCO Pipelines) Subsidiaries Reach Proposed Agreement to Provide Alberta Natural Gas Transmission Service (9/8/2008) Canadian Utilities Ltd's indirectly wholly owned subsidiary, ATCO Pipelines, and TransCanada Corporation's wholly owned subsidiary, NOVA Gas Transmission Ltd. (NGTL), have agreed to a proposal that will provide uniform natural gas transmission service to customers across Alberta. The seamless pipeline transmission model has been promoted by regulators and, if approved, will combine the two companies' physical assets into a single rates and services structure. Customers will deal with a single commercial interface, but each company will manage their assets within distinct operating territories in the province. More efficient regulatory processes are expected through the elimination of duplicate operational activities and tolling. [More here]

• Range Resources Pipeline Progresses Ahead of Schedule (9/8/2008) Range Resources Corp.'s Marcellus Shale pipeline and processing build-out is ahead of schedule by a full quarter. Originally targeted for completion in the first quarter of 2009, year-end production for 2008 is expected to reach 30 million cubic feet equivalent per day (MMcfe/d). Eventually pipeline capacity is expected to increase to more than 300 (MMcfe/d). “Our solid drilling results coupled with the faster than expected Marcellus Shale ramp up and the pipeline constraint resolution in the Barnett Shale give us significant momentum for the remainder of 2008 and into 2009,” said Range Resources' CEO John H. Pinkerton. [More here]

• North Dakota Oil Pipeline Capacity Limited as Production Imports Climb (9/4/2008) According to Federal Energy Regulatory Commission (FERC) Chairman Joseph H. Kelliher, North Dakota crude oil production and imports from Canada exceed current pipeline capacity in the region. "Both domestic and Canadian crude oil production are increasing, exacerbating the competition for limited pipeline capacity. There have been additions to pipeline takeaway capacity in the region, not enough to limit constraints or accommodate future increases," he told a U.S. Senate subcommittee. Although FERC supports the development of energy infrastructure, Kelliher said. "The parties themselves must resolve who will commit to support the development of new infrastructure and who is willing to pay for it." Oil production in the state rose from 125,000 barrels per day (b/d) to 147,000 b/d in March 2008. In addition Canadian oil imports increased 3% last year to 1.86 million b/d and are projected to 3.4 million b/d by 2017. Oil imported from Canada accounts for 20% of all U.S. crude supplies and is the largest foreign source. [More here]

• Enbridge Commences Construction of Alberta Clipper Expansion Project (8/27/2008) Enbridge Inc. has begun mainline construction on the Canadian portion of the Alberta Clipper Expansion Project near Hardisty and Provost, Alberta. It has also started construction on facilities located in Hardisty, Milden Saskatchewan and Cromer, Manitoba. "The Alberta Clipper pipeline is the largest expansion project in Enbridge's history and demonstrates our commitment to accelerating energy delivery throughout North America. Together with our Southern Access project, Alberta Clipper will ultimately deliver an incremental 1.2 million barrels-per-day from Alberta to Eastern Canadian markets and U.S. refineries throughout the Midwest, the mid-continent and the U.S. Gulf Coast", said Al Monaco, Executive Vice President, Major Projects, Enbridge Inc. When completed, the 1,000-mile 36-inch diameter pipeline running from Hardisty to Superior, Wisconsin in the U.S.will have an initial capacity of 450,000 barrels-per-day (bpd) with the ability to expand capacity to 800,000 bpd. It is scheduled to be in service by mid-2010. [More here]

• Canada's Harper Still Optimistic on Mackenzie Gas (8/27/2008) Canadian Prime Minister Stephen Harper said he is optimistic the proposed $15.4 billion Mackenzie gas project in the Arctic will happen despite years of delays. "I'm optimistic that in the not-too-distant future this project will come to fruition," Harper said in Tutohaktuk a small Arctic village near the Mackenzie River and Beaufort Sea. "It is ultimately about opening up a region of the country in a way that it has not been opened up before and of establishing our economic reach and sovereignty in a way it has never been done before." If completed, the Mackenzie pipeline will transport up to 1.9 billion cubic feet per day of natural gas traveling 750 miles from the Mackenzie River valley in the Northwest Territories to the Alberta border. The pipeline is estimated to be in operation at the earliest around 2015. [More here]

• A Map Of U.S. Crude Oil Pipelines and Infrastructure Is Now Available: Including Over 150 Crude Oil Pipeline Systems (8/27/2008) Marketing research company -- Research and Markets Ltd. -- has added the "U. S. Crude Oil Pipelines and Infrastructure Wall Map" to its product offerings. The full color map includes information on over 150 crude pipeline systems, oil producing field locations, crude refinery locations, oil seaport locations, petroleum power plants, offshore lease blocks, oil & gas basins and Petroleum Administration For Defense Districts (PADD). The 60" x 42" map sells for 168 Euros. [More here]

• Microorganisms that Convert Hydrocarbons to Natural Gas Isolated (8/20/2008) University of Oklahoma researchers have isolated a community of microorganisms that can convert hydrocarbons into natural gas through a groundbreaking process known as anaerobic hydrocarbon metabolism. Researchers believe the microorganisms may be involved in problems ranging from the deterioration of fuels to the corrosion of pipelines. These microorganisms can grow inside pipelines because of the presence of water, that often accompanies hydrocarbons pumped from the ground, resulting in biocorrosion and biodeterioration. “We think cells grow in communities that adhere to the inner surface of pipelines and form three-dimensional biofilms that can sometimes cause pitting. Once we understand what these microorganisms are doing, we can interrupt their processes or diagnose them more effectively. The science is rudimentary at this stage. The modern tools of molecular microbiology have not been applied yet, but a National Science Foundation grant, support from the DOE’s Joint Genome Institute and the cooperation of the energy industry, allowed us to study pipeline biocorrosion on the North Slope,” said Joseph Suflita, Director of the Institute for Energy and Environment within the Mewbourne College of Earth and Energy. Conversely, the microorganisms have an upside as well. They can be used to stimulate methane gas production from more mature oil reservoirs like those found in Oklahoma. [More here]

• Pipeline Threat Covers Tri-State (8/17/2008) A 5,000-barrel oil spill from Marathon Oil Company's 20-inch interstate transit line on a remote farm field in Wayne County, Illinois appears to have had minimal impact on the environment. Oil erupted from a pipeline buried 4 feet underground covering a three-acre area. Illinois EPA spokeswoman, Maggie Carson said, "It was more or less an explosion because it was under pressure, so it covered a large area. It went into farm fields and some areas where it was not immediately accessible. Considering the geographic area covered, this appears fairly minimal, but the agencies involved will conduct a formal damage process." Although the spill was located in a remote location this time, it is probable a leak in will eventually occur in a more populous area as developers increasingly build next to pipelines. A network of oil and gas pipelines crisscrosses the U.S. with high densities in the central and eastern states. According to federal records, there have been 5,894 spills since 1988 releasing nearly 3 million barrels of petroleum products and resulting in more than $3.8 billion in property damage. [More here]

August 2008 Update

In the news...

• TransCanada's Alaskan Pipeline Proposal Wins License to Build (8/13/2008) Alaskan lawmakers awarded TransCanada a license to begin building the $25 billion Alaska Pipeline Project. The Alaskan Legislature also approved House Bill 3001 that authorizes the state government to provide TransCanada with up to $500 million in funding from the Alaska Gasline Inducement Act (AGIA) to be spent on pre-construction costs. Governor Sarah Palin a key proponent of the license and bill, proclaimed, “This is an historic day in Alaska. Today, with the affirmative vote of both chambers of the Alaska State Legislature, we now begin a lifelong partnership with a company that has shown its true commitment to Alaska’s future.” The license authorizes TransCanada to develop and construct a 48-inch diameter 2,700 km (1,680 mile) natural gas pipeline from Prudhoe Bay in northern Alaska to link with another pipeline grid in northwest Alberta. “The Legislature’s decision represents a significant milestone in advancing this major natural gas pipeline project to connect stranded U.S. natural gas reserves to Alaskan and Lower 48 consumers,” said Hal Kvisle, TransCanada’s president and CEO. Lawmakers who voted against the license expressed more confidence in the competing Denali Pipeline project spearheaded by BP and ConocoPhilips. TransCanada hopes to have the pipeline in service by September 2018. [More here]

• U.S. Refinery Operations Status: Marathon Shuts Down Pipeline to Kentucky (8/12/2008) Marathon spokesman Robert Calmus said a 20-inch oil pipeline that runs from an oil hub based in Patoka, Illinois to Owensboro, Kentucky had to be shutdown because of a leak detected early Sunday morning. Operations at the company's Catlettsburg, Kentucky refinery had to be cut as a result. Approximately 4,000 barrels of oil spilled onto a farm located in Illinois. Calmus went on to say the company is analyzing and replacing the failed hardware but did not know when repairs will be completed. [More here]

• U.S. Green Groups Target Keystone Oil Pipeline (8/8/2008) Environmental groups - the National Resources Defense Council, the Dakota Resources Council and Dakota Rural Action - filed suit in the U.S. District Court in Washington D.C., against Secretary of State Condoleezza Rice, the Department of State and Reuben Jeffery undersecretary of state for economic, energy and agricultural affairs over TransCanada's and ConocoPhillips' planned $5.2 billion Keystone oil pipeline system. The groups state in the suit the defendants did not comply with the U.S. National Environmental Policy Act (NEPA) prior to receiving a presidential permit that allows the pipeline to cross the U.S.-Canadian border into the U.S. The act requires an assessment of all reasonable foreseeable environmental impacts from the pipeline before being granted the permit. The groups claim the project will promote refinery expansions, causing increased greenhouse gas emissions as well as more air and water pollution in the Midwest and surrounding states. The environmental groups are requesting the court force the State Department to rescind the presidential permit. The 2,148-mile pipeline is expected to be completed in 2009 and will transport up to 590,000 barrels of oil a day from Canadian oil sands to the U.S. Midwest. [More here]

• Man Gets 13-Year Term for Plotting Pipeline Blast (8/8/2008) Canadian Alfred Heinz Reumayr was sentenced to 13 years in prison for planning a series of explosions along the Trans-Alaska oil pipeline to disrupt the oil supply. "His motivation in doing it was to play the futures market so that after the pipeline blew up and the price of oil increased he could make whatever profit on it," Assistant U.S. Attorney Steve Yarbrough said. "That shows, at least in his mind, that it was going to be a significant enough impact to affect the financial markets in a way that he would enrich himself." Reumayr, 58, who has been in U.S. custody since August 1999 pleaded guilty in March to one count of terrorism transcending national boundaries. [More here]

• New 'Voyager' Company to Explore Natural Gas Midstream Opportunities (8/7/2008) Tenaska Capital Management, LLC (TCM) has formed a Houston-based company - Voyager Midstream LLC - focused on acquiring, developing and managing midstream natural gas industry assets including gathering systems, processing plants, pipeline transportation and gas storage facilities. Dr. Tom Shaw, who has a Ph.D. in geology and 15 years experience in oil and gas exploration and production as well as 6 years developing natural gas facilities will head the new company. [More here]

• Lease Dispute May Cloud Exxon Role in Alaska Pipeline (8/7/2008) Although ExxonMobil Corp. has an unresolved dispute over revoked Point Thompson drilling leases. It is ready to work with the Alaskan government and three other companies competing to build a natural gas pipeline to bring natural gas from Alaska's North Slope. "We are ready to work with the state, TransCanada, ConocoPhillips and BP to move forward one of the largest and most complex projects ever undertaken in the United States," Exxon spokeswoman Margaret Ross said. The state revoked Exxon's Point Thompson leases in 2006 because, after decades of control, Exxon on its partners failed to put them into production as required by the lease. Exxon believes Point Thompson could produce 1 billion cubic feet per day (cfpd) of natural gas by 2014 if a $1.3 billion plan for drilling moves ahead next year. Two competing natural gas pipeline projects -- BP and ConocoPhillips' Denali Alaska Gas Pipeline and TransCanada's state-backed Alaska Pipeline project -- are vying for Exxon's support. Without Exxon's support, the pipeline project is unlikely to succeed since they have the most gas leases on Alaska's North Slope. "The fact that Exxon has yet to commit to one project or the other is perfectly reasonable and not at all unexpected from them at this early stage, but we want to see them make tangible commitments sometime in the near future," said Kurt Gibson, deputy director of the Alaska Division of Oil and Gas. He added that Exxon's litigation with the state over the leases is likely a factor in the company's delay in taking a position on the pipeline but the state treats them as separate issues. Exxon, after suing the state in December 2006, said gas supply from Point Thompson would be critical to a natural gas pipeline and the outcome from the litigation could affect an agreement for the pipeline. [More here]

• Pipeline Project Proposed to Push Shale Gas (8/7/2008) Denver-based DCP Midstream Partners LP and Houston-based M2 Midstream LLC, have agreed to pursue the development of a natural gas pipeline from Haynesville Shale in Louisiana. The pipeline - diameter to be determined by customer demand - will start at the western side of DeSoto Parish and go 150 miles to a hub located in Delhi. If built, the pipeline could start deliveries as early as the third quarter of 2009 with a capacity of 1.5 billion cubic feet per day by the beginning of 2010. [More here]

• Expansion of Pipeline Stirs Concerns Over Safety (8/4/2008) A record 4,400 miles of new pipeline will be constructed in the U.S. this year, carrying 47 billion cubic feet per day of natural gas, a lot of it crossing very populous and environmentally sensitive areas. Much of the boom is driven by the need to distribute a growing domestic supply of natural gas and an increasing reliance on electricity generated from gas (20% of all U.S. electricity in 2006 versus 13% a decade ago). However, construction of highly pressurized pipelines near residential areas and farms has raised fears about safety and the environment. While facing relatively little opposition in rural areas, companies that build pipeline are seeing more lawsuits, eminent-domain battles and jurisdictional disputes between local, state and federal authorities overseeing the projects. "The greatest need is in the most densely populated areas, which in turn are the most challenging places to site infrastructure," said Robert Cupina, principal deputy director of the Federal Energy Regulatory Commission. Several projects have been blocked due to concerns about accidents, like the rupture of a natural gas pipeline near Carlsbad, N.M. in August 2000 that killed 12 campers, and environmental issues such as potential groundwater contamination and disruption of plant and animal life on the surface. Projects in the Northeast typically have the most difficulty getting approval. Local authorities in northeastern Massachusetts thwarted efforts by El Paso Corp. to build a 7.8-mile pipeline and Connecticut rejected on environmental grounds the Islander East plan to build a 50-mile pipeline across Long Island Sound. While companies seek to avoid conflict by building in existing rights-of-way (e.g. along old railroads), invariably projects encounter problems associated with suburban sprawl. [More here]

• Willbros Announces New Project Awards (7/29/2008) Willbros Group, Inc. has been awarded contracts to build an expansion to Enbridge Pipelines Inc.'s Canadian Mainline Pipeline Project and part of the Alberta Clipper pipeline. The Enbridge project, for Contract A Line 4 Expansion, will be 135-kilometer, 36-inch pipelines in three loops from Sherwood Park to Hardisty, Alberta. The Alberta Clipper project involves the construction of a 99-kilometer, 36-inch pipeline segment from Hardisty to the Alberta/Saskatchewan border near Kerrobert, Saskatchewan. Work is scheduled to be completed by March 2009. The Alberta Clipper project is a new 1,607-kilometer crude oil pipeline that will connect Enbridge's Hardisty, Alberta terminal to Superior, Wisconsin. [More here]

• Virgin Islands Weighs Gas Pipeline to Puerto Rico (7/24/2008) The U.S. Virgin Islands is considering the construction of a natural gas pipeline from Puerto Rico to replace diesel used to generate power. Hugo Hodge Jr., chief of the U.S. Virgin Islands Water and Power Authority (WAPA) told an annual meeting of the utility's board that its customers would save a significant amount of money if they recalibrated oil-dependent generators to use natural gas. If a deal is reached in the coming months, an undersea pipeline would transfer natural gas to St. Thomas from the Puerto Rican island of Culebra. [More here]

• Work Begins on Second Local Off-Shore LNG Site (7/17/2008) Action Energy has started staging for the construction of a $6 million liquefied natural gas terminal - named Neptune - ten miles off the coast of Gloucester, MA. When completed, it will be the second local intake terminal for the New England market according to Elliot Jacobson, director of Action Energy in Gloucester. The local fishing community had challenged Neptune and another LNG terminal further south on the Massachusetts coastline, but both were approved by then-governor Mitt Romney in December 2006. Action Energy made mitigation payments of $23.5 million, including $6.3 million to the Gloucester Fishing Community Preservation Fund, upon the start of Neptune’s construction. Excelerate Energy, which built the first terminal to the south, also paid $23.5 million in mitigation fees. When completed, natural gas from Neptune will be transported via a 13-mile pipeline to existing pipeline in Salem, MA and accommodate up to 400 million cubic feet of natural gas a day. [More here]

• Keystone Pipeline to Expand to Serve the U.S. Gulf Coast (7/16/2008) TransCanada has announced plans to expand its Keystone crude oil pipeline system by 2012, providing an additional capacity of 500,000 barrels per day (bpd) to the U.S. Gulf from Western Canada. The plans are based on binding open season commitments of 300,000 bpd from several prospective shippers to the U.S. Gulf for an average duration of 18 years. "The Keystone expansion will be the first direct pipeline to connect a growing and reliable supply of Canadian crude oil with the largest refining market in North America," says Hal Kvisle, TransCanada president and CEO. The Keystone Pipeline - a joint venture of TransCanada and ConocoPhillips -- currently transports 590,000 barrels per day to the U.S. Gulf. The expansion will increase this amount to approximately 1.1 million bpd and includes around a 1,980-mile, 36-inch crude oil pipeline that starts at Hardisty, Alberta and terminates near Port Arthur, Texas. Further expansion up to 1.5 million bpd is possible with the addition of incremental pumping facilities. [More here]

July 2008 Update

In the news...

• House Speaker Votes to Have TransCanada License Vote by July 16 (7/13/2008) Alaskan legislators returned to Juneau, Alaska on July 9 to complete work on a natural gas pipeline license proposal for TransCanada. House Speaker John Harris said he hopes a vote on the license will be taken by July 16. However three key issues must be addressed - first, how much gas is available for the pipeline company, second, if the license could trigger financial penalties against the state thus impeding the rival Denali pipeline being pursued by BP and ConocoPhillips and third, whether penalties would be enacted if the Legislature wants to help an industrial operator in southern Alaska needing more than 500 million cubic per day of gas (cfd) moved through a spur pipeline. The 500 million cfd through a spur pipeline is the threshold at which TransCandada can seek treble-damages under a provision in the TransCanada agreement. The proposed 48-inch pipeline by TransCanada is expected to move 4 to 4.5 billion cfd. [More here]

• Enbridge Delays Plans for Major Pipeline to Ship Crude to the U.S. Gulf Coast (7/9/2008) Because of a worse outlook for oilsands production in northern Alberta, Enbridge is delaying for about two years its plans for completing construction of a major oil pipeline. The project is now expected to be complete in 2013 or 2014. Instead the company plans to ship Canadian crude to the U.S. Gulf coast. "The best market possible for Canadian heavy crude at the moment is the U.S. Gulf Coast (where much of that country´s refineries are located). What this project really does is provide a nifty interim solution to get volumes to the Gulf without waiting for a large diameter pipeline proposal that would take much more volume than is currently envisioned to be generated in the near term," said Enbridge vice-president Al Monaco in an interview. Enbridge's $350 million "Tailbreaker" project will use oil tankers to move 200,000 barrels of oil per day (bpd) to the U.S. Gulf. "When the volumes of Canadian heavy crude seeking access to the U.S. Gulf Coast exceed the capacity of Trailbreaker, we´ll be ready to meet that requirement with our Texas Access joint venture at a lower toll," Monaco said. The $2.6 billion Texas Access pipeline will connect Enbridge's mainline in Patoka, Illinois with hubs in the Houston, Texas area and transport up to 400,000 bpd. [More here]

• TransCanada Pipeline Expansion May Cost C$7 Billion (7/9/2008) Construction of the next phase of TransCanada's Keystone oil pipeline from Hardisty, Alberta to refineries in Port Arthur and Houston, Texas is expected to cost C$7 billion. The 3,200 km expansion will transport 700,000 barrels of oil per day and has a target in-service date of late 2011. It adds to the C$5.2 billion Keystone project which will transport 590,000 bpd from Alberta to Cushing, Oklahoma starting late next year. The Keystone project is a 50-50 partnership with ConocoPhillips. [More here]

• Alaska Governor Announces In-State Pipeline Plan (7/7/2008) Gov. Sarah Palin announced the Alaska Natural Gas Development Authority (ANGDA) and Enstar have proposed to build an in-state natural gas pipeline. The 450-mile pipeline will run from the Cook Inlet basin in southern Alaska going north to Fairbank, Anchorage and other Alaskan markets. The governor told a news conference the project would seek to "deliver our natural gas to our homes and to our businesses as quickly as possible to finally unlock the energy potential throughout Alaska." Gene Dubay senior vice president at Continental Energy, Enstar's parent company, said a partnership with Alaska and ANGDA would make the gas pipeline cheaper and easier to build. The Cook Inlet is thought to have a 50-year supply of gas. The pipeline construction, which is expected to be completed by 2013 will deliver 460 million cubic feet a day of natural gas. [More here]

• Pipelines Continue to Be Safe However National Energy Board Concerned With Increase in Worker Injuries (7/3/2008) In a new report by Canada's National Energy Board (NEB) Canadian oil and gas pipelines are operating safely but there has been a spike in workplace injuries. According to the NEB's annual report "Focus on Safety and Environment: A Comparative Analysis of Pipeline Performance 2000-2006" between 1991 and 2002 an average of 2.5 pipelines regulated by the NEB ruptured each year. However, between 2002 and 2006 there were no ruptures. On the other hand the injury rate for pipeline workers more than doubled in 2006 versus the previous year, going from 0.7 injuries to 1.5 injuries for every 100 full time equivalent workers. It is the highest injury rate since 2001. In 2006 the 45,000 kilometers of NEB-regulated pipeline had 37 incidents related to safety, pipeline integrity and the environment. [More here]

• Exxon-Alaska Relationship Tenses Up Over Pipeline (6/27/2008) After the U.S. Supreme Court's decision to reduce the amount of punitive damages Exxon Mobil is required to pay for the 1989 Exxon Valdez oil spill, many Alaskans are bitter about the ruling. But the relationship between the state of Alaska and the oil-producing giant may get worse. Gov. Sarah Palin has made building a natural gas pipeline from the Alaska's North Slope to the lower 48 states a priority for her administration. But first she needs Exxon Mobil to commit its portion of the gas in Prudhoe Bay to the project. So far the company has refused to commit to shipping gas through the proposed pipeline and, under a 1977 agreement among Prudhoe Bay producers, Exxon can stop its partners from committing their gas production to any pipeline. "In terms of the parties that have to be out on the field, so to speak, and playing for this to go forward, we have four out of the five: the state, BP, TransCanada and Conoco," said Joe Balash, special assistant to Ms. Palin. However, Balash said the relationship between the governor and Exxon wasn't close adding, "We don't think this is impossible to overcome, but it is going to require a certain amount of accommodation by Exxon, which is not their first choice in dealing with governments or commercial parties." Margaret Ross, an Exxon spokeswoman said, "We look forward to working with the state, the legislature and the people of Alaska to develop the state's resources in the future. We want to work with the state. Everyone believes it's important for a pipleline project to move forward." [More here]

• Rocky Mountain Pipeline System LLC Announces Reversal of Wamsutter Pipeline (6/27/2008) After getting a long-term customer commitment Rocky Mountain Pipeline System LLC (RMPS), an indirect subsidiary of Plains All American Pipeline, L.P. plans to reverse its Wamsutter pipeline in the first quarter of 2009. Currently the pipeline transports Southwest Wyoming Sweet (crude oil) from RMPS's facilities in Wamsutter, Wyoming to Ft. Laramie, Wyoming. [More here]

• ShawCor Completes Acquisition of Flexpipe Systems (6/27/2008) ShawCor Ltd. has completed its acquisition of all outstanding shares of Flexpipe Systems, Inc. for a total consideration of around $130 million. Flexpipe Systems manufactures spoolable, composite pipe used by oil and gas producers. ShawCor Ltd. is an energy service company that specializes in products and services for the pipeline and pipe services utilized by the oil and gas industries. [More here]

• FERC OKs Review for BP-Conoco Alaska Natural Gas Pipeline (6/26/2008) The Federal Energy Regulatory Commission (FERC) has agreed to an early review of ConocoPhillips and BP's plan for a $30 billion natural gas pipeline from Alaska's North Slope to the lower 48 states. Due to the complexity of the project, an early review was advised by FERC. The "Denali Pipeline" plan proposes constructing a 48-inch or 52-inch diameter pipeline from Prudhoe Bay through western Canada. By "pre-filing," BP and Conoco can work with FERC in drafting economic, engineering and environmental studies before their final application is submitted for approval. A similar project was rejected by Gov. Sarah Palin in January when Conoco insisted on having tax deal talks before the prelimary work was started. The governor has express preference for a plan proposed by TransCanada over one owned by the North Slope oil producers, arguing an independent pipeline would allow greater access to new participants in the oil and gas fields. [More here]

• Canadian Oil Pipeline Capacity Remains Tight (6/26/2008) Although there is some spare capacity in certain Canadian oil pipeline systems, additional capacity will soon be needed according to the Canadian Pipeline Transportation System Assessment from the National Energy Board. "Capacity constraints on oil pipelines in Canada were evident in 2007," said NEB Vice Chair, Sheila Leggett. "While there was some spare capacity, periods of apportionment meant that some pipelines were at times not able to fully meet shipper demand." Growth in oil-sands production and strong demand in the U.S. has resulted in high capacity utilization of Canadian oil pipelines. However, even during the peak winter season, there is adequate capacity on existing natural gas pipelines and, in some cases, excess capacity. The annual report examines more than 45,000 km of oil, gas and petroleum product pipelines to determine their adequacy and economic efficiency. [More here]

• Magellan Midstream Assets Remain Fully Operational Despite Midwest Flooding (6/23/2008) Despite flooding in parts of the Midwest, Magellan Midstream Partners, L.P. has confirmed that its pipeline assets and petroleum products terminal remain fully operational. [More here]

• Alberta Ceding Control of Gas Distribution Web to Federal Agency (6/20/2008) Ten years ago, TransCanada acquired Nova and its natural gas pipeline network based in Alberta. The Nova grid transports more than 10 billion cubic feet of gas per day. Last year it moved more than four trillion cubic feet of gas - more than two-thirds of western Canadian production or around 16 percent of the total North American gas output. Jurisdiction of the grid, currently under the control of the Alberta government, will be transferred to the Canadian National Energy Board. Alberta Energy spokesman Jason Chance said the reason for an independent transportation web is gone and its future lies in extensions beyond Alberta's boundaries, developing into a "hub" for continent-wide traffic in gas and byproducts. "Integrated" provincial, national and international service under federal supervision will make Nova the route to markets for new gas production from B.C., the Northwest Territories and Alaska, TransCanada predicted. [More here]

June 2008 Update

In the news...

• Oil and Gas Industry Veteran Fackrell to Lead Producers' Alaska Gas Line Project (6/12/2008) ConocoPhillips and BP PLC selected oil and gas industry veteran Bud E. Fackrell to be the first president of Denali-The Alaska Gas Pipeline LLC. In April, the two companies announced the project to compete with TransCanada Corp. proposal currently under review by the Alaskan Legislature. "This is a real project for us," Fackrell said. "We are moving forward. We have made a $600 million commitment. The Alaska market is an important piece for us." He added Denali will continue to build its executive team in addition to the 50 field workers collecting data in Tok. By year's end, the goal is to have a 150 employees made up of workers from BP, ConocoPhillips and outside contractors. [More here]

• Some Alaska Lawmakers Seek Quick Vote on Pipeline (6/11/2008) After completing a first round of hearings on a natural gas pipeline project, some lawmakers want to vote now on Gov. Sarah Palin's recommendation to give TransCanada a license for the pipeline and up to $500 million in subsidies. Although the Legislature has until August 1 to back or reject the governor's proposal, State Sen. Con Bunde said money could be wasted if lawmakers take the full 60 days granted by the Alaska Gasline Inducement Act. He added the Legislature's consultants hired to analyze the proposal concluded no harm could come from the license. However, Sen. Charlie Huggins said there is still too much to learn and a vote now implied the Legislature is only rubber-stamping Gov. Palin's proposal. House Minority Leader Beth Kerttula said each argument has merit, but added, "Let's hear all of it out." "Would I like to get a vote on this now and save all the time, energy and money? Absolutely," she said. "But am I willing to go through the slides, the presenters and all the information. That's probably the wisest." [More here]

• U.S. EPA Rejects ConocoPhillips Refinery Expansion (6/10/2008) The U.S. EPA upheld a challenge to air permits granted by the Illinois EPA and required by ConocoPhillips to expand its largest U.S. refinery - Wood River Refinery - in Roxana, Illinois. The legal challenge by environmental groups and led by the Natural Resources Defense Council (NRDC) argued that harmful air pollution from the refinery was not being adequately controlled. NRDC senior attorney, Ann Alexander said "Excessive emissions from this expanded refinery would have harmed the health of everyone in the region." She added "We are not asking for hugely complicated or costly measures... Holding flare emissions down just requires sound engineering and responsible operating practices." The Wood River Refinery expansion is tied to the proposed 1,840-mile pipeline from Hadisty, Alberta. The pipeline, to be jointly developed with TransCanada, will be used to transport crude oil from Canadian tar sands. Without the proposed expansion, Wood River refines around 306,000 barrels of oil per day. [More here]

• TransCanada Bewildered by Gazprom's Alaska Offer (6/10/2008) TransCanada is surprised about reports claiming OAO Gazprom, Russia's natural gas exporter and operator of the world's largest gas pipeline network, wants to talk about TransCanada's proposed $26 billion Alaska pipeline. "All I've seen are the press articles. TransCanada has not been approached by Gazprom," said Tony Palmer, TransCanada's vice-president of Alaska development. "TransCanada has offered parties that commit gas in the initial open season that we're prepared to offer equity to and, to this point, we don't know if producers will take us up on that offer. But those are the parties we would be approaching first to become potential partners in the project," he added "(Gazprom) is not a producer in Alaska today." According to Bloomberg, Gazprom is in talks with ConocoPhillips and BP PLC about partnering on a competing pipeline proposal. Bloomberg also reported Alexander Medvedev, Gazprom's deputy chief executive, says they are in talks with BP and ConocoPhillips and his company will "soon" begin talks with TransCanada. He went on to say "We don't just want to participate; we want to bring value," adding either project will cost "dozens of billions of dollars". Edward Jones energy analyst Lanny Pendill thinks Gazprom is using any means to get access to the United States gas market. He said a partnership would allow the company to "get its foot in the door". Last month Gazprom struck a deal with Enbridge Inc., Gas Metro and Gaz de France to supply a 500 million cubic feet per day of gas to the proposed $800 million Rabaska liquefied natural terminal east of Quebec City in exchange for an equity stake in the project. [More here]

• Oil Will Peak at $150-200 - Barron's Interview (6/8/2008) Barron's magazine interviewed Goldman oil strategist Arjun Murti, who among other things, in 2004 predicted the current oil "super spike." He now sees oil peaking somewhere between $150 and $200 a barrel or, in other words, $5.75 a gallon. Murti says pipeline companies such as Oneok and El Paso stand to benefit from the United States' need to expand its pipeline infrastructure. Ultimately he does not believe $150-200 is sustainable and expects prices to fall back to $75 a barrel after people have changed their energy consumption behavior (e.g. driving less) - some time in the next 20 years. How long prices stay high is anyone's guess. [More here]

• Pipeline Will Be Finished on Time, Brunswick Vows (6/8/2008) Emera-owned Brunswick Pipeline says its controversial natural gas pipeline will be completed on time. The 145-kilometer pipeline that runs through southwest New Brunswick (NB) to connect with the Maritimes and Northeast Pipeline at the U.S.-Canada border near St. Stephen, NB will deliver natural gas from the Canaport LNG facility near Saint John. The proposed route caused a public outcry from Saint John area residents because it is due to run through parts of Saint John, including Rockwood Park and across the St. John River. Company spokeswoman Susan Harris said crews are restoring the park and preparing for the pipeline's crossing of the St. John River. She said the company hopes to have gas flowing through the pipeline for its November in-service date. [More here]

• Temple University Study of Pulsed Electromagnetic Fuel Treatment Yields Dramatic Results in Reducing Oil Viscosity (6/5/2008) Save the World Air, Inc. (STWA) has concluded tests conducted by Temple University's Department of Physics and sponsored by a major international engineering and oil refinery construction company. The results confirmed earlier tests showing substantial reductions in the viscosity of heavy crude oil, when treated with a patent-pending pulsed electromagnetic device. Crude oil densities are measured using American Petroleum Institute (API) gravity. The higher the number the less dense or the "lighter" the crude oil is. Oil API gravities of less than 21.5 are considered to be "heavy crude" while Brent crude's API of 38 is considered to be "light crude." Researchers using pulsed electromagnetic technology, without the heat factor, were able to reduce viscosities by 16% for API 11 and 19% for API 21. The results indicate heavy crude oil can be moved faster and more efficiently through pipelines from the wellhead as well as other applications in the transportation and refining process. Temple Physicist Dr. Rongjia Tao stated in his report, "We are very confident that STWA's licensed technology will be able to reduce the viscosity of crude oils, similar to API 21 by 30% with the electromagnetic treatment technology." The technology can be very beneficial to the oil industry, given the quantity of heavy crude available throughout the world, which up to now has been prohibitively expensive to extract. [More here]

• Enterprise's Repair of Independence Pipeline May Cut Gas Prices (6/4/2008) A leak in the 134-mile 24-inch diameter Independence Trails pipeline has been fixed after 55 days of repairs. The $286 million natural gas pipeline owned by Enterprise Products Partners LP moves gas from the Independence Hub, located under 8,000 feet of water in the Gulf of Mexico. The Hub when fully operational produces 1 billion cubic feet a day or 2 percent of U.S. gas supplies and represents 10 percent of all deliveries from the Gulf. The leak originated in an O-ring gasket on a pipeline flex joint under 85 feet of water causing the shutdown of the pipeline on April 9. Natural gas futures have risen 26% to $12.221 per million Btu on the NY Mercantile Exchange since the shutdown. After Enterprise announced resumption of service, natural gas futures fell by as much as 1.6 percent to $12.06. Enterprise has more than 35,000 miles of pipelines. [More here]

• TransCanada Says It May Seek to Build Peruvian Gas Pipeline (6/3/2008) As part of its strategy to satisfy increasing North American demand, TransCanada confirmed it may pursue building a natural gas pipeline in Peru. "It's purely an exploratory activity at this point,'' said company spokeswoman Shela Shapiro. "The idea has some inherent possibilities.'' The company may team up with Brazil's state controlled oil company, Petroleo Brasileiro SA, to become the third group to bid on the approximately $1.2 billion pipeline. TransCanada owns Canada's largest natural gas pipeline system with more than 36,669 miles of pipeline in the U.S., Canada and Mexico. "It's a logical fit for Peruvian gas to get into the North American market," said Shapiro, adding the Peruvian project suits the company's strategy of linking producing regions with North American consuming markets. Peru is South America's fifth largest natural gas producer and is expected to double gas output over the next four years. [More here]

• Alaska Governor Proposes $500 Million in Subsidies for a Gas Pipeline (5/23/2008) Alaska Gov. Sarah Palin is suggesting $500 million in matching funds to subsidize the construction of a natural gas pipeline proposed by Canadian company TransCanada. The 1,715-mile pipeline would cost between $30 billion and $60 billion and transport gas from Alaska's North Slope to markets in the lower U.S. and Alaska. It could eventually supply up to 7 percent of the United State's current natural gas use. “A domestic supply of clean energy, you can’t go wrong with this,” Ms. Palin said. “We’re ready to tap it.” However, Bert Stedman, State Senator and vice chairman of a special Senate committee reviewing the proposal, said Gov. Palin's plan appears to take a great risk by granting so many incentives to TransCanada when the company has no commitment to use the pipeline from producers that own gas rights on the North Slope. A rival pipeline plan from two of the three major North Slope producers - BP and ConocoPhillips - was announced in April and the companies say they have committed to spending $600 million on early development of the pipeline. Gov. Palin countered her plan is superior because it included "enforceable commitments" from TransCanada and gas producers wanting to use the pipeline with an option to allow new companies to use it at reasonable rates. [More here]

• Canada's Oil and Gas Front Man Calls It Quits (5/22/2008) Canada's top oil and gas sector advocate, Pierre Alvarez, president of the Canadian Association of Petroleum Producers (CAPP), resigned Wednesday May 21st but said he will stay with the powerful lobby group until a successor is found. The announcement precedes another announcement, made on May 22nd, that David MacInnis, president of the Canadian Energy Pipeline Association (CEPA) is to become VP of policy, government and public affairs at Chevron Canada Ltd. CEPA, which lobbies on behalf of Canada's pipeline industry, has promoted current VP, Brenda Kenny, to the position vacated by MacInnis. [More here]

• Planned Pipeline to Carry North Dakota, Montana Natural Gas (5/20/2008) Williston Basin Interstate Pipeline Co., a unit of MDU Resources Group Inc. is planning on building a 100-mile 16-inch natural gas pipeline from Bakken shale formation in Montana and North Dakota to an existing pipeline that transports gas to Chicago, Illinois. The pipeline, estimated cost to be between $50 million and $75 million, will initially carry 100 million cubic feet of gas per day and ultimately up 200 million daily, according to company spokesman Tim Rasmussen. The company hopes to have the pipeline completed by mid-2010. [More here]

• REX-West Fully Operational (5/20/2008) Rockies Express Pipeline LLC, a joint venture of Kinder Morgan Energy Partners, LP, Sempra Pipelines and Storage and ConocoPhillips, announced the final 210 miles of the Rockies Express West pipeline (REX-West) are now in service. Approximately 500 miles of the 713-mile 42-inch diameter pipeline that travels from the Cheyenne Hub in Weld County, Colorado to Audrain County, Missouri started service January 12. REX-West pipeline now has a natural gas capacity of 1.5 billion cubic feet per day (Bcf/d). Pending regulatory approval, the company will begin construction of REX-East, a 638-mile pipeline extending east from Missouri to Clarington, Ohio. The entire REX project is expected to operating by June 2009. [More here]

• Canadian Superior Plans Gas Line for U.S. Northeast (5/20/2008) Canadian Superior Energy Inc. and Global LNG Inc. will collaborate through their joint venture - New Jersey-based Excalibur Energy Inc. - on a $550 million liquefied natural gas project. The Liberty Natural Gas Transmission Project includes a deepwater pipeline system 15 miles off the coast of Asbury Park, New Jersey and an import buoy used to process as much 2.4 billion cubic feet of gas from drilling sites off Trinidad and Tobago. Last year, the Caribbean country was the leading supplier of natural gas to the U.S., accounting for 3.4 percent of the U.S. gas supply, according to Energy Department data. Previous U.S. Northeastern projects have been delayed or stopped by citizens and state governments concerned about security and the environment. Excalibur CEO Roger Whelan said the liquefied natural gas will be delivered "without compromising safety or the clean waters off the Jersey shore.'' The company hopes to have the pipeline operational by late 2011. [More here]

• FOCUS: Florida Readies for First US Ethanol Pipeline (5/19/2008) Kinder Morgan, the largest U.S. independent energy pipeline operator, is converting its 104-mile 16-inch gasoline pipeline running from Tampa to Orlando to transport both gasoline and ethanol later this year. "We're doing lab tests with different metals for the pipeline now and will have our first experimental ethanol run through the line in September," said Jim Lelio, Kinder's business development director. "If early runs are successful, commercial operations will start later this year. Gasoline will move through the line, followed by ethanol, and a small amount of intermingling will occur where the two meet, in what's called a transmix." Ethanol attracts water and when mixed with oxygen can cause pipes to crack; both problems must be solved by Kinder engineers before the pipeline can operate. Ethanol is derived domestically from Midwest corn and abroad from sugar cane in Brazil, the Caribbean and Central America. It enters Tampa by boat and train and will be stored in well sealed tanks before being piped to Orlando and sold by central Florida gas stations in a 10% ethanol blend E-10. [More here]