June 2009 Update

In the news...

• Guarantees Not Offered for Mackenzie Line - Canada (6/24/2009) Concerned about competition from the proposed Alaska gas pipeline, officials from the Northwest Territories of Canada said Ottawa may need to provide loan guarantees up to C$24 billion for the Mackenzie Valley gas pipeline project. The U.S. Senate introduced a bill that would increase loan guarantees for the Alaskan natural gas pipeline to $30 billion. However, Canadian Environment Minister, Jim Prentice, said the government of Canada has not discussed giving loan guarantees or whether they might be considered in the future. Officials from the Northwest Territories are hoping the loan guarantees might jump start construction on the proposed pipeline, which would carry up to 1.9 billion cubic feet of gas per day from the Mackenzie River Delta located on the Beaufort Sea to Alberta, Canada. The project has languished for years and construction of the Alaska pipeline would likely eliminate any chance of it being built. [More here]
  

• Green Group Asks U.S. to Bar Canada Oil Sands (6/24/2009) Environmental group, ForestEthics, has asked U.S. Secretary of State Hillary Clinton to deny permits for pipelines that would transport oil extracted from Canada's oil sands (also known as tar sands) to refineries in the United States. The green group has especially targeted Enbridge Energy Partners LP's Alberta Clipper pipeline. The group says oil from the tar sands generates up to five times more greenhouse gas emissions than oil from conventional sources. Enbridge spokeswoman Denise Hamsher said the pipeline is the basis for the U.S. State Department's decision not the source of oil production, adding that 1 million barrels a day of oil from Canada's oil sands is currently exported to the United States. State Department spokesman Andrew Laine said the State Department was reviewing the Alberta Clipper pipeline project "and it is premature to comment while the review process is ongoing." [More here]
  

• Keystone Pipeline Work Bogged Down by Weather (6/23/2009) After having ideal weather conditions in May, construction efforts on TransCanada's Keystone oil pipeline have been stymied by an unusually wet June. Work on the 130-mile, 30-inch section that runs west of Seward, Nebraska to the Kansas border has been hindered by standing water in deep trenches excavated for the pipeline. Keystone spokesman Jeff Rauh said they were at least a week away, possibly longer, from laying pipe in the mud filled trench. Keystone builders expect to finish work on the Nebraska section of the $5.2 billion pipeline by the end of 2009. [More here]

• Aboriginal Group Turns to Ottawa on Pipeline (6/23/2009) The North West Territories (NWT) first nations and Inuit groups who make up the Aboriginal Pipeline Group (APG) are seeking a larger stake in the C$16.2 billion Mackenzie gas pipeline project. The move, which would require huge federal loan guarantees, could eventually give the group a majority share in the project and allow the Canadian government to impart substantial fiscal incentives to construct the long-delayed pipeline project. Currently, APG has rights to one third of the 1,220-kilometer pipeline that will be filled with natural gas produced by Imperial Oil Ltd. (of which 70 percent is owned by ExxonMobil), Royal Dutch Shell PLC, ConocoPhillips Canada (North) Ltd. and ExxonMobil Canada Properties Ltd. Environment Minister Jim Prentice, who is accountable for the pipeline project, said AGP will increase its ownership share by financing more of the project's construction costs but it is not readily apparent how AGP will pay for those costs. [More here]

• Ruby Pipeline Clears Step (6/22/2009) The U.S. Federal Energy Regulatory Commission (FERC) has issued a draft environmental impact statement (EIS) for the proposed Ruby Pipeline project, noting most adverse environmental impacts could be mitigated. According to the EIS draft, the 678-mile pipeline that would transport natural gas from the Opal hub in western Wyoming through parts of Utah, Nevada and Oregon, spans large greenfield areas that currently do not have linear infrastructure such as existing pipelines, roads or power lines. The Ruby Pipeline, an entity of El Paso Corp., is competing against proposals from other pipeline companies and still needs FERC approval on terms of service and shipping rates. If built, the pipeline will have a capacity of 1.5 billion cubic feet of gas per day and be able to serve 150,000 homes a year in West Coast markets. [More here]

• OSD Pipelines Purchases Network License for PipelineStudio Design and Simulation Software (6/17/2009) Houston-based Energy Solutions International, Inc. (ESI), which supplies software solutions to optimize operational and commercial pipeline performance will deploy itsPipelineStudio® design and off-line simulation software for the oil and gas division at OSD pipelines. OSD, a global pipeline engineering services company based in Australia, purchased a network license based onPipelineStudio's "ease of use, speed and accuracy of its results." [More here]

• New Pipeline Aims to Take a Bite Out of Oilsands Emissions (6/17/2009) Williams Co. plans to build a 260-mile, 12-inch natural gas liquids pipeline in Alberta, Canada from its extraction plant located in Fort McMurray to its processing facility in Redwater. “The pipeline will support the future removal of ethane from the oilsands off-gas, which will further decrease greenhouse gas and sulfur dioxide emissions and it provides a critical feedstock for Alberta chemical companies,” said Alan Armstrong, president of Williams’ midstream business. Currently, Williams is the only processor of oilsands off-gas. Construction of the $283 million pipeline will allow the company to reduce emissions of carbon dioxide (CO2) by 219,000 tons per year and sulphur dioxide (SO2) by 3,200 tons per year. The pipeline is expected to be completed by April 2012. [More here]

• TransCanada Pays $550 Million for Rest of Keystone Line (6/16/2009) TransCanada is purchasing all of ConocoPhillips interest in the Keystone pipeline for $550 million as well as the assumption of $200 million in short-term debt. The deal gives TransCanada complete control over the 2,148-mile, $5.2 billion crude oil pipeline that runs from Alberta, Canada to southern Illinois in the U.S. and is designed to carry 435,00 barrels of crude per day. The company also sold C$1.6 billion in stock to help finance the deal, which is expected to be completed in the third quarter. [More here]

• Demand for Arctic Gas Dries Up (6/14/2009) ................ After years of worrying about natural gas supply shortages, recent discoveries of approximately 1,200 trillion cubic feet of gas in shale deposits located in the continental U.S. and increasing imports of liquefied natural gas has led one energy executive to conclude demand for Arctic gas will be pushed back by 15 years. Steve Letwin, Enbridge Inc.’s executive vice president of gas transportation and international, says the North American natural gas industry is now "overbuilt." “The biggest issue that we now have is [insufficient] demand,” said Mr. Letwin. “And in the absence of demand, you are going to see a price for gas that is going to be kept between $5.00 and $7.00 for a long time to come.” Since the beginning of the year natural gas prices have fallen 30 percent to $3.857per million British thermal units . Although continental U.S. shale producers can make money at low gas prices, it won't be until 2025 when gas from the Arctic region will be economically viable - given the high cost of transporting the gas -- be it from Canada's Mackenzie Delta or Alaska. [More here]

• 'Big Gorilla' Exxon Joins $26 Billion Alaska Pipeline (6/11/2009) After sitting on the sidelines, Exxon Mobil Corp. has decided to help TransCanada Corp. finance and construct a $26 billion, 1,700-mile pipeline to carry natural gas from Alaska's North Slope to conduits in Alberta, Canada. In addition, the company will own a minority stake in the project. The announcement comes less than six months after Alaska state officials decided not to pursue the eviction of Exxon and its partners, including BP Plc and ConocoPhillips, from the Point Thomson field after decades of inaction. “Exxon Mobil has always been considered the ‘big gorilla’ necessary for this project to succeed, so their willingness to get involved and make a substantial financial investment is warmly welcomed,” U.S. Senator Mark Begich, an Alaska Democrat. Last year, TransCanada won state government support and $500 million subsidies for the project. The Denali pipeline, a proposal from BP and ConocoPhillips, is still competing for the business. Exxon expects to begin production at the Point Thomson field, located 50 miles east of Prudhoe Bay, in 2014. [More here]

• Energy Solutions International and ECIL Work Together on Expansion of PipelineManager® in India (6/10/2009) Energy Solutions International, Inc. (ESI), a world-leading supplier of software solutions that optimize operational and commercial performance of oil and gas pipelines, announced that ECIL had chosen PipelineManager® to expand and upgrade their client pipeline management systems. "We are very happy to continue our strong working relationship with ECIL," said Siva Rao, Vice President, Energy Solutions International (India) Pvt. Ltd. "We believe that working together we will deliver the highest quality pipeline technology to our customers, BPCL and PCCKL." [More here]

• Crosstex Energy to Sell Some Pipeline Assets for $220 Million (6/10/2009) Crosstex Energy LP, a partnership partly owned by Crosstex Energy Inc., is selling pipeline assets located in Mississippi, Alabama, and South Texas to Southcross Energy LLC for $220 million. The deal is expected to be completed on July 31. Proceeds from the sale will be used by Crosstex Energy to reduce debt. [More here]

• Key US Crude Oil Link Capline Restarted (6/9/2009) Capline, a major crude oil pipeline operated by Shell Pipeline Co. LP, was restarted after crews repaired a minor valve leak. The 632-mile pipeline travels from the U.S. Gulf Coast to the Midwest and transports up to 1.1 million barrels per day of oil. Customers were not affected by the brief shutdown because Shell had enough crude in storage. The pipeline is owned by several companies, including Marathon Oil Corp and BP PLC. [More here]

• South Dakota Sets November Hearing for Keystone Oil Pipeline (6/9/2009) The Public Utilities Commission (PUC) of South Dakota will hold a formal hearing on November 2 for TransCanada's application to build its proposed Keystone XL Pipeline through western South Dakota. The 313-mile, 36-inch section of the proposed crude oil pipeline will enter South Dakota at the Montana border in Harding County and exit to Nebraska at Tripp County. The South Dakota section is estimated to cost $920 million and is part of a project that will transport oil from the Alberta tar sands to refineries and terminals located on the Texas Gulf Coast. The company hopes to begin construction of the pipeline in 2011 with operations commencing in 2012. [More here]

• US Bill to Raise Alaska Gas Pipeline Loan Guarantee (6/8/2009) Several leading legislators in the U.S. Senate have reached an agreement to increase the loan guarantees for building a huge pipeline to transport natural gas from Alaska to the lower 48 States. Senator Jeff Bingaman (D-NM), chairman of the Senate Energy and Natural Resources Commitee and Senator Lisa Murkowski (R-AK) have agreed to a deal that calls for raising the 2004 loan guarantee from $18 billion to $30 billion. Under the new agreement the federal government will repay loans up to 80 percent of the cost for the pipeline project in the event the owners default on the financing. TransCanada Corp was awarded a state licence in December from Alaska to build the pipeline, but a competing proposal from BP Plc and ConocoPhillips is also in the works. [More here]

• Atlas Pipeline Partners Forms Joint Venture With Williams (6/2/2009) Atlas Pipeline Partners, L.P., and a subsidiary of The Williams Companies, Inc. have finalized their agreement to form a joint venture company - called Laurel Mountain Midstream, LLC. The joint venture owns, manages and operates all of Atlas Pipeline's northern Appalachian assets as well as two natural gas processing plants and associated pipelines located in southwestern Pennsylvania. In exchange for $100 million and a $25.5 million note payable to the joint venture, Williams retains 51% ownership interest while Atlas owns 49% of the joint venture. [More here]

• SemGroup's White Cliffs Pipeline Begins Commercial Operation (6/2/2009) SemGroup, L.P.'s White Cliffs Pipeline has started operations. The 12-inch, 525-mile pipeline will transport crude oil from a location near Platteville, Colorado to company owned and operated storage tanks located in Cushing, Oklahoma. The current capacity of approximately 30,000 barrels per day (bpd) can be increased up to 50,000 bpd. White Cliffs Pipeline is indirectly owned 99.17% by SemGroup, L.P., 0.415% by Anadarko Wattenberg Co., LLC, and 0.415% by Samedan Pipeline Corp. . [More here]

• DNV, Gassco Develop New Gas Pipeline Inspection Technology (5/29/2009) Norway based Det Norske Veritas (DNV) and gas pipeline operator Gassco have developed an economical way to inspect natural gas pipelines utilizing acoustic resonance. According to the companies, the technology allows measurements to be taken without reducing gas flows. Trials on Gassco's pipelines were so successful that Gassco and DNV have entered into a joint venture to commercialize the technology. "For us, this means that inspection and maintenance costs can be sharply reduced while enhancing the quality of the inspections," said Gassco's Chief Executive Brian Bjordal. [More here]

• Tulsa-Based 798 Welders Built the Alaska Pipeline (5/29/2009) In 1968, the largest oil field in North America was discovered in Prudhoe Bay, Alaska by Humble Oil and Refining Company (now Exxon) and Atlantic Richfield Company (ARCO). But it wasn't until the OPEC oil embargo in 1973 that serious consideration was given to developing the find. The only feasible way to transport the oil to market required the constructions of a 48-inch, 800-mile pipeline that needed 108,000 perfect and, at times difficult "girth" welds. Tulsa, Oklahoma-based Pipeliners Local Union 798, a team of journeymen welders, who spent years perfecting their craft were tapped to do the mammoth job. “Every weld was challenging in one way or another. The cold was always a big factor. The pipe sections had to be heated up in order to get a good weld. The lineup clamps would freeze to the inside wall of the pipe and we’d have to thaw them loose. The wind, the terrain, blizzards, everyday was a challenge,” according to Tulsa 798er, Kevin Leeper. The project culminated when the last thousand feet of pipeline required the scaling of a steep and jagged rock cliff. On June 20, 1977, oil began to flow from Prudhoe Bay helping to meet the energy demands of the lower 48 states. [More here]

May Update 2009

In the news...

• Updates to PipelineStudio® Design and Off-line Simulation Software (5/25/2009) Energy Solutions International Inc. is now offering version 3.2 of its industry-leading PipelineStudio software, which helps pipeline operators and engineering firms to design facilities and plan operations. PipelineStudio 3.2 features many new enhancements requested by customers. [More here]

• Transco Pipeline Celebrates 60 Years (5/23/2009) ....... The longest single-project construction venture ever attempted in 1949 celebrates its 60th year in operation. Construction on Transcontinental (Transco) Gas Pipeline’s Texas-to-New York gas line began on May 23, 1949 and has grown from delivering 350 million cubic feet per day (cfpd) in 1951 to a current design capacity of 8.2 cfpd over a 10,500-mile system. The pipeline was officially in operation after gas was delivered to New York City on Jan. 16, 1951. Transco celebrates the 60th anniversary with a history of the pipeline and its development. [More here]

• Gas Explosion Rocks Howard County, Fire Crews Investigate (5/21/2009) A natural gas pipeline ruptured causing a 100-foot fireball in Howard County near Fayette, Missouri. Panhandle Eastern Pipeline, operator the 24-inch pipeline, shut down an eight-mile section while crews from the company determined what caused the explosion. No one was injured and no buildings were damaged by the fire. [More here]

• Spectra May Boost Investments to $1 Billion in 2010 (5/21/2009) Greg Ebel, Chief Executive Officer of Spectra Energy Corp., said the company may increase spending on new infrastructure by about 54 percent, to $1 billion next year. The increase comes after the company cut its capital expenditures to $650 million this year, from $1.8 billion in 2008 after commodity prices and Spectra's earnings declined. In an interview at Spectra’s headquarters in Houston, Ebel said, “The need for gas infrastructure is still very strong in North America, driven by a couple of factors.” Ebel estimates that gas prices will be $4 to $6 per million British thermal units (Btus) in the coming years. He also believees there will be an increasing use of natural gas for power generation and dynamic changes in supply due to unconventional sources such as shales. Spectra is currently expanding its gathering and processing capacity to handle gas from the Horn River shale in British Columbia and also adding storage caverns in the U.S. Gulf Coast region. ..... [More here]

• TrancsCanada to Sell North Baja Pipeline to TC Pipelines, LP (5/20/2009) TransCanada Corporation has agreed to sell North Baja Pipeline, LLC to an affiliate of TransCanada - TC Pipelines. In exchange for the North Baja Pipeline TransCanada will receive around $200 million in cash and 6,371,680 common units boosting TransCanada ownership of the partnership to 42.6 percent. The total selling price estimated is to be worth $395 million and proceeds from the sale will be used to help finance TransCanada's $19 billion capital program. TransCanada, which acquired the pipeline in 2004, will continue to operate the 80-mile, 30 and 36-inch natural gas pipeline that extends from Southwestern Arizona to location on the California/Mexico border before connecting to a pipeline system in Mexico. [More here]

• PipeLine and Gas Technology Magazine to Host 2nd Annual Pipeline Leak Detection & Monitoring Conference (5/20/2009) Hart Energy Publishing's PipeLine and Gas Technology magazine will host its 2nd Annual Pipeline Leak Detection and Monitoring Conference on October 28-29, 2009 at the Omni Woodway Hotel in Houston, Texas. The event is designed to bring experts, professionals and industry personal together to discuss topics ranging from pipeline leak detection and monitoring to real-world implementation and optimization. The event will host its first Pipeline Repair Workshop. [More here]

• FERC Issues Draft EIS for Downeast LNG Project in Maine (5/18/2009) The Federal Energy Regulatory Commission (FERC) issued a draft environmental impact statement (EIS) for a project sponsored by Downeast LNG Inc. Impacts from the construction and operation of an LNG terminal and related pipelines in Maine "... reduced to less-than-significant levels with the implementation of the applicants' proposed mitigation measures and the additional measures we recommend in the draft EIS," said FERC's staff in the draft released on May 15. Ifthe project is approved Downeast will construct a terminal on the south side of Mill Cove on Passamaquoddy Bay in Robbinston, Maine and a 30-inch, 29.8-mile pipeline to a planned interconnection at an existing pipeline near Baileyville that is owned by Maritimes and Northeast Pipeline LLC. Construction on the pipeline will start next year and is expected to be completed by 2012 and begin operating in 2013. [More here]

• Pipeline Company Rebuts Picketers' Claims of Substandard Wages (5/18/2009) At least two union groups have been picketing Willbros Group in Cherokee County, Texas over work the company started in March. Willbros is constructing a 143-mile gas pipeline for Energy Transfer that will run from Maypearl to Minden, Texas. The picketers are protesting the company's hiring practices. Harry New, Willbros' project director for the Cherokee portion of the pipeline said the company has a history of hiring non-union. “All the people we hire are legal to work in the U.S. We’ve also implemented a 401(k) and offer benefits. It’s up to the employee to elect to take advantage of them,” he said. At least one city in Cherokee County has benefited from the pipeline construction. Jacksonville City Manager Mo Raissi said, “Considering the economic troubles that everyone is having, this is the perfect time for (the company to be in Cherokee County); it is really helping us through a tough time.” Weather permitting the pipeline is expected to be fully operational by September 1. [More here]

• Williams Receives FERC Approval to Provide Additional Natural Gas Service to Southeast by 2010 (5/14/2009) The Federal Energy Regulatory Commission approved a proposal by Williams to expand their Transco natural gas pipeline to better serve markets in the southeastern U.S. Once completed in the second quarter of 2010 the project will create 253,500 dekatherms of southbound capacity on their Mobile Lateral from Transco's mainline at Station 85 near Butler, Alabama. [More here]

• Pipeline Would Put 2,000 to Work in Region (5/13/2009) Enbridge is on the verge of spending another $1.5 billion and employing an estimated 2,0000 people to complete the U.S. portion of its "Alberta Clipper" project and part of its "Southern Lights" project this year. Construction will occur in the states of Minnesota and Wisconsin. However, the company still needs some federal and Wisconsin permitting. It also faces a federal court challenge from the Minnesota Center for Environmental Advocacy. Enbridge spokeswoman Denise Hamsher predicts the construction will start mid-summer despite the current obstacles. When completed, at a cost of around $1.2 billion, the Alberta Clipper 990-mile, 36-inch diameter crude oil pipeline will run from Hardisty, Alberta to Superior, Minnesota. The $300 million Southern Lights pipeline will eventually transport light hydrocarbons or diluents. [More here]

• Pipeline Pressure Fully Restored (5/13/2009) ........ Williams Pipeline Transco was given federal approval to restore normal operating pressures to its line C. This is the final of three lines to return to service. Line B ruptured near Oakville Road, Route 26 in Appomattox County, Virginia on September 14, 2008. Rupture of the 54-year old, 30-inch pipeline caused an explosion that destroyed two homes, damaged another 100 and injured five people. Line A was returned to service in November 2008. Line B returned to service in December 2008 after the company cut out old pipe and replaced it with 2,500 feet of new pipe. The pipeline system totals 10,500 miles and runs from the Gulf of Mexico to New York. [More here]

• Flying J Financing, Restructuring Update (5/13/2009) .... The U.S. Bankruptcy Court for the District of Delaware has approved $20 million in debtor-in possession (DIP) financing from Pipeline Investors Capital for Flying J Inc. and its affiliated companies. The court also approved a $1.5 million increase to $10 million of DIP financing from Merrill Lynch Commodities Inc. The refiner and truckstop retailer--along with Longhorn Partners Pipeline LP, Big West Oil LLC, Big West of California LLC, Longhorn Pipeline Inc., Big West Transportation Inc. and Longhorn Pipeline Holdings LLC--filed for Chapter 11 bankruptcy protection in late December 2008. In a restructuring update the company said "Overall, our restructuring efforts are progressing well.We are continuing separate processes to sell both the Longhorn Pipeline and the Bakersfield Refinery. We have contracted with investment bankers to assist in those processes. Interest in both assets has been good, but there is still much work to do." [More here]

• Energy Solutions International Releases Version 5.2 of PipelineOptimizer Liquids Pipeline Optimization Software; Hosts Product Forum at PSIG Conference (5/12/2009) Energy Solutions International, Inc. (ESI), a world-leading supplier of software solutions that optimize operational and commercial performance of oil and gas pipelines, introduces at the 40th Annual PSIG Conference the latest version of PipelineOptimizer® software for optimizing the financial performance of liquids pipeline assets. Version 5.2 features completely updated and validated functionality to assist pipeline operators in more efficiently operating pipelines for greater savings. ......... [More here]

• El Paso's Southern Natural Gas Works On Line in Alabama (5/11/2009) Southern Natural Gas Co., a division of El Paso Corp. has removed from service a part of its 24-inch north main line for repairs. The natural gas pipeline located in central Alabama between their Providence and Tarrant stations is expected to be out of service for several days. The company said some interruptible services - customers who pay a reduced shipping fee in exchange for possibility of volumes being curtailed during periods of peak demand or unplanned outages - may be affected at points downstream from the Providence station. [More here]

• Keystone Pipeline Breaks Ground in Yankton (5/7/2009) TransCanada Pipeline is expected to begin constructing part of its Keystone oil pipeline project in the community of Yankton, South Dakota in the next few weeks. The location will serve as one of the Midwest hubs for the pipeline that will eventually deliver 500,000 barrels of crude per day to refineries in Kansas, Illinois and Oklahoma. TransCanada expects the pipeline, which will bring oil from Canada, to be in service by the first quarter of 2010. [More here]

• Enbridge Outlines Plans for Four Pipeline Projects (5/6/2009) During Enbridge Inc.'s first quarter conference call, chief executive Pat Daniel, outlined four crude oil pipeline projects as expansion opportunities for the company after 2012. The first possibility involves linking Edmonton, Alberta with Alberta's Athabasca oil sands. Two projects, Imperial Oil Ltd.'s Kearl development and Husky Energy Inc. and BP PLC's Sunrise project, are likely to spur pipeline construction. Another possibility for more pipeline projects involves connecting Cushing, Oklahoma - a major oil oil hub - with Gulf Coast markets. Currently Enbridge and BP are working towards a solution for this opportunity. A third prospect would expand east to Toledo, Ohio and Detroit, Michigan if Enbridge can win all the business for expansion projects by Marathoon Oil Corp. and Husky. The final possibility is Enbridge's Northern Gateway Project that connects Edmonton to a new marine terminal in Kitimat, B.C., giving producers access to Asian markets and pricing power. "Probably in that order, those would be the areas of focus for us," said Daniel. [More here]

• Pipeline Explosion Sends Flames '700 Feet' into Sky (5/6/2009) A natural gas pipeline exploded around 4:30 p.m. in Parke County near Nyesville, Indiana. According to Parke County Sheriff, Mike Eslinger, the flames reached as high as 700 feet into the air and were seen from miles away. The 36-inch diameter section is part of a 6,500 mile pipeline system owned and operated by Panhandle Eastern Pipe Line Co. The company immediately dispatched workers to shutoff the pipeline. Elsinger praised the response from emergency departments throughout the region noting, "the response we had from surrounding counties was tremendous.” The fire was quickly contained and no injuries were reported. [More here]

• Subsea 7's New Pipeline Spoolbase on Target to Open This Summer (5/5/2009) .Subsea 7 is on schedule to complete by June 2009 its new pipeline fabrication spoolbase in Port Isabel, Texas. The new facility, 1.5km in length, consists of a 1.2km stalk rack and a .3km fabrication building. The spoolbase will have the ability to fabricate and store gas and oil pipelines up to 1.2km in length and 20 inches in diameter (16-inch steel plus 4-inch insulation coatings) for spooling onto reeled pipelay vessels. The site will be able weld steel line pipe material ranging from traditional carbon steel to exotic material and be able to complete fabrication of plastic-lined pipelines, pipe-in-pipe systems and steel catenary risers. Work on a 58km pipeline for Marathon's Droshky development, the facilities firsst project, will start in early June. [More here]

• Investigators Begin Probe into Martin County Pipeline Rupture (5/5/2009) Federal officials said an investigation into the cause of a natural gas pipeline rupture south of Palm City, Florida could take up to a year to complete. According to National Transportation Safety Board spokesman, Terry Williams, there is an initial report on the cause, but the investigation could take several days and the final report likely not completed for another nine to 12 months. The pipeline, operated by Florida Gas Transmission Co., is part of an approximately 5,000-mile system that runs from south Texas to the Florida Panhandle and onto Florida's east and west coasts. No fire broke out after the pipeline ruptured, but 80 people where forced from their homes,and a local high school and parts of both Interstate 95 and Florida's Turnpike south of Palm City were temporarily closed. [More here]

• Frost & Sullivan Recognizes Energy Solutions International for Excellence in Customer Value (5/4/2009) .....................................................................................
  

• Issues Opinion on Southwest Oregon LNG Pipeline (5/3/2009) A report released by the Federal Energy Regulatory Commission (FERC) has concluded there will be minimal environmental impact if a proposed liquefied natural gas terminal and pipeline are built in southwest Oregon. The 230-mile, 36-inch diameter Pacific Connector Natural Gas Pipeline would start at the proposed Jordan Cove terminal in Coos Bay and run through the Upper Rogue corridor before ending in Malian (located at the southern end of the Klamath Basin). Project applicants - Williams Pacific Gas Operator, Pacific Gas & Electric Corp. and Fort Chicago Energy Partners - will have to incorporate mitigation measures from their proposal as well as other measures recommended by FERC to limit environmental impact. The project entails crossing 30 miles of national forest, 40 miles of U.S. Bureau of Land Management property and 218 bodies of water. Numerous property owners in the region oppose the project as well as environmental groups. After reviewing the report, Lesley Adams of the Ashland, OR-based Klamath-Siskiyou Wildlands Center said, "At first glance, we have some really significant concerns about water quality and coho salmon impacts. We are also very concerned about the multiple impacts on public land. We share the concerns of affected private land owners." Others, however are in favor of the project since it will create jobs and boost the regional economy. No timetable has been set by FERC for a decision on the proposal. [More here]

• Pipeline-Expansion Talk Begins (5/2/2009) .................. St. Lawrence Gas company officials and New York State legislators have started talks concerning a proposed $20 million expansion of an existing natural gas pipeline located in northeastern New York. The company is seeking funds for a 48-mile extension of the pipeline from the Town of Stockholm in St. Lawrence County to the Village of Chateaugay in Franklin County. St. Lawrence Gas has committed $13 million of the cost to the project with another $3.452 million in local and state government funding leaving a $3.75 million shortfall. The company is seeking funds from St. Lawrence County and the new $1 billion Upstate Revitalization Fund administered by the Empire State Development agency. Construction on the project is scheduled to begin in 2010. [More here]

• Williams Plans Oilsands Pipeline (5/2/2009) ................. The Williams Co. is planning to start construction of a $283 million natural gas liquids and olefins pipeline in the oilsands region of Alberta, Canada in 2010. The more than 250-mile pipeline will run from Williams' extraction plant located in Fort McMurray to its Redwater processing facility. Once completed the pipeline will have a capacity of 43,000 barrels per day of off-gas liquids. The project has anticipated in-service date of April 2012. [More here]

• Officials Lobby for Oil Pipeline; Project Might Start in Early Summer (4/29/2009) Don Thompson, president of The Oil Sands Developers Group and Canadian consul general George Rioux met with Illinois Governor Pat Quinn to seek support for the construction of the final phase of an Enbridge pipeline. The $350 million project started three years ago and the final phase would extend a 36-inch diameter underground oil pipeline from Flanangan, northeast of Peoria to a major refinery at Patoka, near East St. Louis, Illinois. The project faces opposition from environmental groups and some landowners, who claim the pipeline encourages reliance on petroleum products and violates property rights. Rioux said the company is in the final stages of negotiating property rights for the remaining section of the Illinois pipeline. However, he added the visit to Springfield and with Gov. Quinn is intended to intercept long-term measures such as the “low-carbon” fuel rules recently approved in California and currently under consideration by Congress. “Right now, about 50 percent of the oil coming into the Midwest is coming from Canada. That’s going to go up in the next 10 years to about 75 percent,” said Rioux. Illinois Petroleum Council executive director Dave Sykuta, who accompanied Thompson and Roux during their visit, added, “We can talk about ethanol and all the alternatives, and that’s fine, but in the end, the heavy lifting for the Illinois and U.S. economies is still going to be done by oil and natural gas-based products.” Enbridge hopes would like to complete construction by early 2010. Initial capacity for the pipeline will be 400,000 barrels per day (bpd) which can be increased up to 800,000 bpd....... [More here]

• Kinder Mulls Sending Ethanol on Plantation Line (4/22/2009) ..As a result of increasing demand for alternative motor fuels, pipeline company Kinder Morgan Energy Partners is investigating the option of sending ethanol through its Plantation pipeline which runs from Louisiana to Virginia. "We are evaluating the Plantation pipeline ... as the next possible pipeline system that can handle ethanol," Jim Lelio, a renewable fuels business development director at the company, told the Alternative Fuels & Vehicles conference in Orlando, FL. Towards the end of 2008 the company began transporting batches of biofuel through its 105-mile petroleum products pipeline in Florida based on demand from customers wanting to reduce costs incurred via traditional transportation methods utilizing rail and trucks. Converting the Florida line took 18 months and cost more than $10 million to evaluate. Lelio said the company faces much greater challenges and costs in sending ethanol through a pipeline as large as the Plantation line. Problems include water absorption by the ethanol and damage to the pipeline caused by stress corrosion cracking. Later this year, Leilo said Kinder will start the engineering evaluation on Plantation "and potentially the cleaning process, which is a major factor in putting ethanol in the pipeline.", [More here]

• Pipeline Project to Deliver Jobs, Cash (4/19/2009) ..... Construction on the Nebraska portion of the 2,148-mile 30-inch diameter Keystone pipeline will start by mid-May. A 215-mile section of the $5.2 billion pipeline will cross the state north to south from Cedar County near Yankton, South Dakota to Steele City near the Kansas border and cost $490 million. The project will be a boon to the state and mean six months of full-employment for 150 members of the statewide union of heavy equipment operators of which 125 are currently idle. So great is the financial impact on communities, that the construction of the pipelines have been called a traveling stimulus packages. "You get guys staying in motels, eating out, buying groceries, not to mention going to the bars at night," said Rod Marshall, business manager of the International Union of Operating Engineers, Local 571 in Omaha. The project is not without problems. While all but a dozen or so of the 478 property owners along the pipeline have accepted a one-time payment compensating them for the use of their land, one case still blocks construction of the pipeline. A Colfax County landowner declined a $106,000 offer from TransCanada but the company expects the appraisal board to make a decision before they begin construction. In addition, there are some environmental concerns, especially in Seward, Nebraska where the pipeline passes near wells that supply the city's drinking water. "I don't want oil in my water, thank you very much,” said community activist Bonne Kruse. “Pipes break, leak and spill." TransCanada says the company has in place safety measures including anti-corrosion polymer coatings, shut-off valves, 24/7 flow monitoring and deeper burial to avoid accidental damage. Company spokesman Jeff Rauh said officials can quickly detect problems, from "ruptures to a pinhole leak." Once approved the work is expected to be completed by this fall. [More here]

• Alaska's Gas Pipeline Plans Hit by Downturn (4/17/2009) The severe economic downturn, credit squeeze and falling commodity prices have struck a blow to Alaska's efforts to promote interest in a natural gas pipeline to the continental US. A conference designed to encourage investment, by the oil and gas industry in the state's large pool of natural gas, has been shifted from April to September. “As the conference approached, it became evident that with more time we could make more of an impact,” said Harold Heinze, chief executive of the Alaska Natural Gas Development Authority. “The rapidly changing landscape has necessitated some further research and planning.” Both companies competing to build the pipeline - Denali, a company owned by BP and ConocoPhillips, and TransCanada - have said they plan to hold an open season in 2010. Before the 3,500-mile pipeline can be built by either company, commitments by other companies to buy the gas are required. Given that US natural gas prices have recently fallen below $4 per million British thermal units (Btus) from a high of $13.50 in July 2008 many of those companies are now scaling back projects and reducing staff.“It’s a challenging time to get the parties together,” said Bill Popp, chief executive of the Anchorage Economic Development Corporation and conference chairman. “We have to remember that the decisions made to invest in this project are long term in nature and they go beyond these current economic times.” [More here]

• Proposals Would Reform Gas-Pipeline Approval (4/17/2009) Legislation backed by U.S. Representatives Jim Gerlach (R-Penn.) and Joe Sestak (D-Penn.) was drafted to address their Chester County constiuents' concerns about plans to build or expand natural gas pipelines throughout the area. Currently there are three projects in various stages of the approval process. The Williams Transco's project to expand a 2,600-foot pipeline in the region has resulted in the company taking 53 property owners to court to acquire land through the use of eminent domain. The first part of the measure establishes an independent "Office of Public Advocate" with the federal Justice Department to listen to citizens' input and evaluate decisions made by the Federal Energy Regulatory Commission (FERC). The second proposal insists FERC hold at least one public meeting before approving a project on either private or public land. “They are not required to hold any public hearings, so that’s why congressman Gerlach’s been out in front on this,” Gerlach spokesman Kori Walter said. “Let’s get it in writing. Let’s not just go on the goodwill of FERC.” Pennsylvania Senators Arlen Specter (Dem.) and Bob Casey (Dem.) have also introduced matching legislation in the Senate. [More here]

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]

Online Applications Offered as Standard Products

Installing online pipeline application software has always been seen as a major project (writing specs, testing applications, generating project specific documentation etc.). Naturally, this approach is often rather costly (since you pay for the software and a fairly large amount of overhead as well). In many cases this makes sense - but in the past years many pipeline software packages have matured tremendously and are today offered as more or less standard software packages.

A good example is leak detection and location software. Today Energy Solutions offer standard leak detection software that is easy to configure and install and yet provide superior performance. The latest innovations in User Interfaces also makes it extremely easy to use, so the need for training has diminished significantly. It is therefore possible to install this software using a completely new approach:

A sale includes software license as a minimum. The configuration and interface to a SCADA system can be done by the customer or by Energy Solutions (or typically as a joint effort). With the latest graphical configuration environment and standard communication protocols like OPC, this phase is rather easy and often takes just a few weeks.

Since the software is a standard product, detailed Factory Acceptance Testing and custom documentation can be bypassed, so within a fairly short time frame the system can be installed on site. The only thing remaining is a brief Site Acceptance Test where the data interface and configuration details are tested and validated.

This approach has been taken successfully for several customers and I highly recommend it for "standard" applications like leak detection. The benefit is a much shorter time frame and associated lower cost. The problem is getting pipeline operators used to this approach - it has been done differently for many years, and I realize this approach is drastically different!

Would you like to try this on your pipeline? You will be positively surprised. No more writing huge specifications, project management, weekly meetings, having contractors in your control room for months etc. Doesn't that sound nice?

Morten Kristiansen, Product Manager

Is ROI a factor in selection of a leak detection system?

Leak detection systems seem to be viewed by some pipeline companies as a necessary evil. Companies look at how much it will cost to install and operate a leak detection system not at the longer term benefits.

Such systems come in many flavors – with a wide performance range: some systems can detect small leaks quickly while other systems cannot detect small leaks at all and even for larger leaks these systems will take a while to alarm. While most pipeline companies take leak detection performance into account when selecting a system, few companies seem to translate the additional benefits gained by installing a high performance leak detection system into financial benefits.

Recently a customer decided to purchase a very basic leak detection system. The detection capabilities of this system are likely very limited (long detection time, not very sensitive and not much in terms of leak location capabilities). The decision makers seem willing to take a higher risk on not detecting a leak for the purpose of saving money up front. However, when the next leak occurs, the added cost resulting from the relative poor performance of a weaker leak detection system will far outweigh the money saved.

It is possible to calculate the return on investment (ROI) from a leak detection system. Obviously some assumptions must be made in order to make these calculations – the most unknown being: when will I experience my next leak? Then there is the question: how much will a leak detection system actually save my company in terms of avoided lost product, avoiding/reducing fines and clean up costs, reduced damage to public image, etc.

The question is: is ROI considered when selecting a leak detection system and if not why? Is it because we all like to think that leaks won’t happen – therefore it is purely an expense with no financial return? Statistics tell us that it is not that unlikely that a randomly selected pipeline will experience a leak within the next 5 years – whether caused by internal factors (corrosion etc.) or external factors (3^rd party interference). For most pipeline companies, it is just a matter of time, and the sooner an incident happens, the higher the ROI…

Comments anyone?

Morten Kristiansen