April 2008 Update

In the news...

• Pipeline Setback Gives Oil A Lift (4/14/2008) ... . . Disruption in a major U.S. oil pipeline was a factor in causing the May-date West Texas Intermediate crude contract price to briefly trade above $111. Royal Dutch Shell's Capline pipeline shut down on April 11 after a leak was discovered by a Tennessee worker. The pipeline transports 1.1 million barrels of oil per day from Louisiana to Illinois, feeding BP's Whiting, Indiana refinery and Marathon Oil's refinery in Catlettsburg, Kentucky. A Shell representative was not sure when the pipeline will be back online. [More here]

• Denali Pipeline To Surpass Alaskan Pipe In Cost, Regs (4/11/2008) In addition to higher steel costs, the proposed Denali natural gas pipeline faces strict environmental laws and a mountain of regulatory challenges seldom seen in the 150-year history of the global oil industry. The pipeline project, which takes its name from North America’s tallest peak – Denali, also known as Mt. McKinley – is currently awaiting a critical $600 million open season process and will have to obtain approximately 1,000 permit approvals from the U.S., Alaska and Canada. The pipeline will follow the existing Trans Alaska pipeline thus avoiding the environmentally sensitive Arctic National Wildlife Refuge. Cost for metal to construct the pipeline could reach $6 billion alone and it could take 10 years to complete vs. the nine years needed for the Trans Alaska pipeline. The total cost is expected to be $30 billion, which, ironically is the same as the inflation-adjusted cost of the Trans-Alaska pipeline. When completed, the Denali pipeline could transport 8% of the current U.S. natural gas supply. [More here]

• Gas Plant in L.I. Sound Is Rejected (4/11/2008) . ........ . . New York Gov. David A. Patterson blocked a proposal to build the nation's first floating liquefied natural gas plant in the Long Island Sound. “One of my goals as governor is to protect Long Island Sound,” Mr. Paterson said at Sunken Meadow State Park, on Long Island. “Shame on us if we can’t develop a responsible energy policy without sacrificing one of our greatest natural and economic resources.” Gov. Patterson added the region can find other more responsible ways to obtain energy. The Broadwater Energy plan called for construction of a $700 million natural gas terminal as well as a 22-mile underwater pipeline that connects to the existing Iroquois pipeline that serves New York and Connecticut. John Hritcko, senior vice president and regional project director for Broadwater, an energy consortium consisting of Shell Oil and TransCanada Pipelines, said the rejection represents a “missed opportunity” to lower energy prices for consumers and businesses. Broadwater opponents argued the terminal would be vulnerable to a terrorist attack and jeopardize traditional industries like fishing and oyster harvesting. [More here]

• Exxon Mobil May Join BP, ConocoPhillips Pipeline (4/8/2008) Spokeswoman Margaret Ross confirmed Exxon Mobil was invited to participate in the new ConocoPhillips and BP PLC Denali natural gas pipeline project in Alaska. "ExxonMobil was only made aware of the ConocoPhillips-BP plan a few days prior to the announcement," she said. "We need to better understand their approach to ensure that it will lead to a commercially viable development on a cost and schedule basis that will deliver maximum benefits to the State of Alaska, the producers and consumers in the United States and Canada." [More here]

• JayHawk Energy Inc. Announces The Acquisition Of A 16-Mile Pipeline (4/1/2008) JayHawk Energy Inc. has purchased assets from Galaxy Energy Inc., a private company in Crawford and Bourbon counties of Kansas. The assets include a sixteen (16) mile gas pipeline and gas production within 6,500 acres of land bordering the pipeline for $2 million. [More here]

• Company Seeks Gas Pipeline (3/29/2008) . ....................... ConocoPhillips plans to develop a pipeline to transport natural gas from Alaska's North Slope to the lower 48 states and Canada. The company estimates the entire project will cost between $25 billion and $42 billion and move about 4 billion cubic feet of natural gas per day. The company also said it is "prepared to make significant investments, without state matching funds, to advance this project." In a prepared statement ConocoPhillips Chairman and CEO Jim Mulva said the company hopes to work directly with the state of Alaska to expedite the project, as well as partner with other companies including Exxon Mobil Corp., BP PLC and possibly a pipeline company. BP spokesman Steve Rinehart could not speculate on the offer and Exxon Mobil had no comment. ConocoPhillips is in the process of gathering data to support its pipeline permit application. A proposed deal between North Slope producers BP, Exxon Mobil and ConocoPhillips and former Alaskan Gov. Frank Murkowski fell through last year. [More here]

• More Than A Pipe Dream (3/28/2008) ............................ .... It seems like America is getting high on natural gas. With around 25 pipeline projects and 11 storage projects, natural gas pipeline builders are in the midst of a building boom. One of the longest pipelines ever built - the 1,678-mile Rockies Express - is near completion and the industry has not been this busy since the 1950s, according to consulting group Bentek Energy. However, many uncertainties lie ahead. Supply depends on drillers' ability to ramp up production and some pipeline builders face a labor shortage. Competition is fierce since pipeline builders need to get right-of-way before anybody else does while keeping costs under control for their customers. Although the need to construct pipelines is driven largely by the demand from energy consumers, it is also driven by the discovery of new supplies. Shallow natural gas fields in the Gulf of Mexico are almost exhausted but new drilling technology now enables access to the deepest fields. As a result, new construction is now based on speculation about future production instead of on current production. Government regulation of everything from utilities to right-of-way and greenhouses gases affects pipeline builders. The ongoing construction boom may lead to overcapacity, depending on the outcome of many of these factors. It will take years before that unknown will be resolved. [More here]

• Pipeline Would Take Rockies Gas To Markets In U.S. And Canada (3/26/2008) Two pipeline companies - Alliance Pipeline Inc. and Questar Overthrust Pipeline Company - plan to build a 42-inch, 800-mile Rockies Alliance Pipeline from Wyoming to Canada, U.S Midwest and Northeast. The estimated $3.5 billion project will transport natural gas from Wamsutter, Wyoming, traversing Wyoming, Montana and North Dakota, on its way to the Emerson trading hub located on the Minnesota-Canada border. Brian Jeffries, executive director of the Wyoming Pipeline Authority, said the Rockies Alliance project can provide new markets for the state's natural gas and is one of five pending pipeline proposals. A sixth, the Rockies Express, is already under construction. Questar and Alliance will start taking bids from customers interested in using the pipeline on May 1st. Subject to financing and regulatory approval, the companies plan to have the whole pipeline operating by fall of 2011. [More here]

• Alaska Senator Stresses Gas Line (3/19/2008) ................ U.S. Alaskan Senator Lisa Murkowski told members of the Alaskan Legislature that time is running short for Alaska to get a natural gas pipeline project started on its North Slope. During her annual speech she said, "We are slipping and cannot afford to slip any further. Our competitors are moving ahead. Our oil production is dropping. Steel and construction prices just climb higher every year." Although Sen. Murkowski didn't criticize Gov. Sarah Palin's Alaska Gasline Inducement Act (AGIA) she placed the onus to get things moving equally on pipeline companies, the federal government and North Slope lease holders - ConocoPhillips, Exxon Mobil Corp. and BP PLC. TransCanada was the only applicant to comply with regulations established in AGIA. However, ConocoPhillips is promoting a competing plan outside the state's bid requirements but it is seeking what it calls fiscal certainty - long-term tax and royalty terms for the North Slope lease holders before a pipeline license is awarded. Sen. Murkowski commented "I recognize the value of the AGIA process. But, clearly Conoco is on its own track. Is it wrong to have a duel track? In my opinion, anything that will get us a gas line sooner is worthwhile." [More here]

• New Pipelines Will Even Out Gas Prices (3/15/2008) . ....... . Last fall in the Rocky Mountain region of the U.S., due to excess production and limited pipeline capacity, spot prices for natural gas producers dropped to a low of only 5 cents per 1,000 cubic feet. For consumers in the region the surplus has been a boon. However, after years of low prices, things are about to change. A new pipeline - 1,678-mile Rockies Express from Meeker, Colorado to Clarington, Ohio - is almost finished and is now partly operational. The pipeline, with a capacity of 1.6 billion cubic feet per day, will allow gas suppliers to sell to other markets including California, Phoenix, Arizona and Midwest area. In addition to gas suppliers making more money, analysts predict the new pipeline will even out national supplies reducing price spikes elsewhere, especially in the East. This change could be at the expense of those consumers located the Rocky Mountain states. Producers counter as long as production continues to ramp up, local prices should stay under control. Although Texas is currently the country's biggest producer of gas, the Rockies region most likely contains more than 200 trillion cubic feet of natural gas reserves - enough to supply the U.S. for 10 years. [More here]

• TransCanada Ready To Start Building U.S. Oil Line (3/14/2008) TransCanada Corp. plans to start construction on its 2,148-mile, $5.2 billion Keystone oil pipeline the second quarter of this year. A key factor in the decision to start building was a presidential permit issued by the U.S. State Department for the construction of a 590,000 barrel per day pipeline at the Canada-United States border. "The U.S. Department of State has determined that this is in the national interest, so after a culmination of years of hard work we're certainly pleased to have the permit," said TransCanada spokeswoman Shela Shapiro. The pipeline, co-owned by ConocoPhillips, will extend from Alberta to Oklahoma and southern Illinois. Part of the Canadian side of the pipeline will use an existing natural gas pipeline converted for transporting oil. The pipeline is targeted to be in service in late 2009. [More here]

• Canadian Pleads Guilty In Oil Pipeline Bomb Plot (3/13/2008) Canadian Alfred Reumayr of British Columbia pleaded guilty to charges of plotting to blow up the Trans-Alaskan oil pipeline on January 1st, 2000, at the U.S. District Court in Santa Fe, New Mexico. After being arrested in August 1999 by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosive and the Royal Canadian Mounted Police, Mr. Reumayr was accused of soliciting the help of a U.S. citizen to bomb the Trans-Alaska Pipeline System. Prosecutors said Mr. Reumayr acquired explosives, which he planned to locate at three points along the pipeline in order to disrupt energy supplies. They said Mr. Reumayr also hoped to profit from the attacks by purchasing energy securities at low prices and then selling them after the attack during the market turmoil resulting from the attacks. [More here]

September 2007 Update

In the news...

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

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

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

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

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

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

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

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

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

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

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

August 2007 Update

In the news...

• Explorer Seeks Citgo Pipelines (8/13/2007) ,,,,,,, Tulsa-based Explorer Pipeline Co., says it is in talks to buy pipelines and terminals from Citgo Petroleum Corp., the U.S. refining subsidiary of Venezuela's state owned oil company. The Eagle Pipeline system includes 10-, 9- and 3-inch lines going between Dallas and Houston with at least another 8-inch line running into Oklahoma. Houston-based Citgo owns a 6.8 percent stake in Explorer, which operates a 1,400-mile system. [More here]

• NEB Questions Crude Pipeline Capacity (8/10/2007) ......... A new report from the National Energy Board (NEB) warns that Canadian crude oil pipelines may face a transportation bottle neck as early as this fall. For the first time, last year, oil sands production exceeded traditional crude production. Because of the surge of oil being pumped from Alberta's oil sands, by the fourth quarter of 2007 western Canadian oil pipelines may require periods where pipeline space is shared or "apportioned" among shippers. The potential capacity constraints come at time when Canadian oil producers are ramping up operations. Total Canadian oil production is expected to rise nine percent to 2.9 million barrels a day in 2007. According to the NEB report, it's a different story for natural gas pipelines. There is some spare capacity, even in winter, when demand for natural gas historically jumps. [More here]

• Crews Cleaning Up Pipeline Rupture In B.C. Interior (8/10/2007) Environmental crews in northeastern British Columbia are cleaning up an oil spill from a pipeline rupture that occurred a few weeks ago. The rupture happened several hundred kilometers northeast of Fort Nelson, B.C. and was quickly contained but a reason for the leak has not been determined. The province has 43,000 kilometers of pipelines with more in the planning stages. [More here]

• The Next Energy Crisis - More Than A Quarter Of America's Oil Flows Through Southern Louisiana. Too Bad The Land Is Slowly Sinking Into The Sea (8/10/2007) Port Fourchon, 60 miles south of New Orleans, is home to pipelines through which the U.S. accesses nearly 20 percent of all the oil and natural gas it uses. Although it avoided most of the destructive forces of hurricanes Katrina and Rita, it is being ravaged by two much slower attacks - erosion and the sinking of land. Since the 1930s, each year 25 square miles of Louisiana has been collapsing into the gulf. A total of 1,900 square miles of land so far has disappeared, exposing thousands of miles of oil and gas pipelines that were originally built underground and not designed to withstand water, waves or boat impacts. In 2004, Ed Landgraf, environmental coordinator for Shell Pipeline, sounded the alarm in congressional testimony stating, "Much of [southern Louisiana's] infrastructure is at risk as the coastline continues to disappear." His conclusion, "National energy security can be maintained only if Louisiana's coast is restored and preserved." At some point, perhaps in the next 10 years Port Fourchon home to 250 tenants including BP, Chevron, ConocoPhillips, and Shell, will no longer be attached to the mainland and become an island. Although Katrina has increased awareness of land loss, little of the estimated $50 billion needed to restore the Louisiana coastline has been funded. Furthermore it will be hard to restore the coast without industry support. [More here]

• Pipeline Explosion Investigation Results Released (8/10/2007) Results from a National Transportation and Safety Board (NTSB) investigation concerning a natural gas line explosion in the West Cote Blanche bay oil field in southern Louisiana have been released. The explosion killed five people around noon on October 12th 2006. According to the NTSB's investigation, an uninspected towing vessel - Miss Meagan -- was pushing two deck barges in waters around 10 miles off Cypremont Point when a spud from a 5 ton steel shaft on one of the barges was dropped in the water. The spud struck a submerged and buried high-pressure natural gas line, releasing gas on impact and causing a massive fireball that engulfed both barges and tow boat. The NTSB concluded the probable cause of the accident was a failure to require barge crews to pin the spuds securely. [More here]

• Alaska Governor Extends Deadline For Companies To Apply To Build Natural Gas Pipeline (8/8/2007) Sarah Palin, the Governor of Alaska, has extended the deadline for applications to build a natural gas pipeline in Alaska from Oct. 1 to Nov. 30 because more companies have been inquiring about the project. The state has also received feedback requesting more time to prepare a complete application. Since July 3, applications have been made available after passage of the Alaska Gasline Inducement Act (AGIA). Alaska has struggled for decades to build a pipeline to run from the North Slope through Canada and into the Midwest. After a proposed deal between former Gov. Frank Murkowski and North Slope producers BP PLC, Exxon Mobil Corp. and ConocoPhillips fell apart last year, and passage of AGIA this year, Palin's administration has presented the project to other companies including three Chinese state-controlled energy companies and Houston-based El Paso Corp. An estimated 35 trillion cubic feet of natural gas sits untapped under the North Slope. [More here]

• Canadian Energy Company Plans Another Pipeline In U.S. (8/6/2007) TransCanada Corp. and Northwest Natural Gas Company are forming a new venture, Palomar Gas Transmission LLC, to design, construct and own the Palomar natural gas pipeline to serve residential and industrial customers in the state of Oregon. The pipeline could cost as much as $700 million. It would extend around 354 kilometers from northwestern Oregon to north-central Oregon. If approved, the pipeline will start service in late 2011. [More here]

• Attacks On Mexico Pipelines Show Extensive Knowledge of Energy Infrastructure, Officials Say (7/24/2007) U.S. officials said saboteurs who blew up natural gas pipelines on July 5 and July 10, 2007 also crippled a crude oil pipeline in one of Mexico's main industrial regions. In addition to the natural gas and oil pipelines, the bombers targeted shutoff valves along several pipelines responsible for national distribution, indicating extensive knowledge of Mexico's energy infrastructure. “These are massive steel valves,” a U.S. official familiar with the bombing investigation told McClatchy Newspapers. “These are major, very expensive shutoff valves that control the flow of all this petroleum (and natural gas). This wasn’t a round tube in the middle of nowhere.” Furthermore the bombers knew which side of the valve to attack to make sure crude oil did not flow to a nearby refinery and natural gas did not flow to foreign and Mexican manufacturers. [More here]

• Ottawa, Dene Tha' Reach Deal On Mackenzie Gas Pipeline (7/23/2007) The Canadian federal government and the Dene Tha' First Nation (DTFN) in northwestern Alberta have signed an agreement resolving concerns about the proposed Mackenzie Gas Pipeline that would run through a small portion of the Dene Tha' territory. The agreement stipulates DTFN will get C$25 million from the federal government to address possible economic and cultural impacts resulting from the construction and operation of the pipeline. In turn DTFN agreed to end any further litigation to delay or prevent development of the pipeline. [More here]

• North American Energy Partners Finalizes Contract With Kinder Morgan Canada (7/16/2007) North American Energy Partners Inc. has signed a $185 million contract to supply pipeline construction services to Kinder Morgan Canada's TMX Anchor Loop project. Phase 1 was scheduled to begin August 2007 and is expected to last 18 months. It will start near Hinton, Alberta and run 160 km through Jasper National Park and Mount Robson Provincial Park before finishing outside the Mount Robson Provincial Park. [More here]
  

May 2007 Update

In the news...

• Alaska Gasline Inducement Act bill passes (5/11/2007) - Governor Sarah Palin's Alaska Gasline Inducement Act or AGIA has been passed by both houses of the Alaskan legislature. The bill will be finalized by the Senate Finance Committee to reconcile slight differences in versions passed by the Senate and House. AGIA establishes guidelines and inducements for companies desiring to compete for the rights to build a gas line in Alaska. On July 1st a request for applications to a competitive bidding process for the right to build a North Slope gas line will be issued. The winning bidder will have the right to construct a natural gas pipeline to the North Slope, which has an estimated 35 trillion cubic feet of gas. The line may eventually transport 4.5 billion cubic feet of natural gas a day, which is approximately 7 percent of the current U.S. demand. [More here]

• Ethanol: Boom or Bust? (5/8/2007) - As the market grows for U.S. produced ethanol products, skeptics wonder if the demand will be there in the future. In 2006 American farmers harvested its third largest corn crop ever of 10.5 billion bushels of which an estimate 3.2 billion bushels will go into ethanol production. Although this amount allocated to ethanol is 49% more than the previous year, skeptics worry about ethanol's efficiency (worse than petrol), economic benefits and effect on the environment and food prices. [More here]

• Gas line project could establish new standards for financing (5/8/2007) - Up to now most gas line projects required funding of well under $10 billion, according Frederic Rich of the New York law firm Sullivan and Cromwell. However the projected cost for a new Alaska gas pipeline could reach $30 billion. This unprecedented amount presents numerous challenges to obtaining necessary financing. Funding will have to be customized to the risk profile of the project before construction can begin. Risk will need to be allocated between numerous stakeholders including lenders, the project builder, and the owner each, with funds at risk as well as federal loan guarantees to have a successful project completion. [More here]
  

• Official pushes joint gas line with Alaska (5/3/2007) - As cost estimates to construct gas pipelines southward from the Arctic continue to escalate, a Canadian official called again for a single line serving both North Slope Alaska and northern Canada. The proposal recommends first building a line to Mackenzie River delta reserves on the Arctic seacoast of Canada, then adding another leg westward linking up Alaska, instead of building a separate Alaska-U.S. line. While not new, the proposal has renewed urgency because estimates to build the Mackenzie pipeline have risen from $7.5-billion three years ago to $16-billion today, said Brendan Bell, Northwest Territories industry minister. [More here]
  

• National Energy Board participates in Operation NARWHAL 07 in Norman Wells, NWT (4/24/2007) - The National Energy Board (NEB) of Canada participated in Operation NARWHAL 07 in Norman Wells, Northwest Territories. The NEB regulates gas and oil operations in the North and since 2005 has been responsible for the security of pipeline infrastructure. The training exercise involved military troops, aircraft assisting the Royal Canadian Mounted Police (RCMP) and other northern civilian agencies in response to a simulated threat to Canadian oil production and transportation infrastructure in the Northwest Territories. [More here]

• Transportation Safety Administration (TSA) Joins Private Firms in Securing 2.4 Million Miles of Energy Pipelines (4/2007) - In 2004 the TSA's Pipeline Security Division began its assessment of a 3,300 mile cross-border pipeline system responsible for carrying 2 million barrels of oil a day between the U.S. and Canada. From that assessment came two reports – one classified, one unclassified – on vulnerabilities, risk-based strategies for addressing them, and options as threat levels change. Critical information was shared with the Canadian government as well as the pipeline company. Cross-border assessments represent just one of the division’s initiatives. Others are domestic corporate reviews, monthly conference calls with company officials, a weekly suspicious incidents update shared with the companies, an annual pipeline security forum, and security training assistance. [More here]
  

The debate on disclosure continues

The debate on how much information pipeline companies should be expected to make public regarding their equipment and location of pipelines continues. The latest story is on seattlepi.com.

What's at issue in the public-records dispute is information such as the operating pressure, thickness of pipeline walls and the locations of features such as pressure regulators and the spots where pipes are tested for strength.

There are numerous articles on this topic lately. I've just listed a few here. Are there any other opinions that haven't already been stated?

From the Olympian.

How Much Security does Pipeline Software need?

Well, this is my first post on this blog. In the interest of full disclosure, I will introduce myself: my name is Richard Wagner, and I am a Product Manager working for Energy Solutions, the sponsor of this blog site. I am working with the development team on PipelineTransporter for liquids scheduling, PipelineOptimizer for pump and energy optimization on liquids pipelines, and GasLoadForecaster, which predicts natural gas demand based on historical data and available weather forecast data.

I joined Energy Solutions about two months ago, having spent many years working for software companies serving the pharmaceutical industry. I must admit, I wasn't quite sure what to expect when I joined, since the pharmaceutical industry is quite different from the petroleum and gas industry. Interestingly enough, the challenges we face as a software provider are quite similar across the two industries. Our biggest challenge, like most software companies, is to listen to the industry to determine what their biggest challenges are, and deliver really helpful applications without getting too caught up in the technology.

That being said, one interesting difference I have noticed between pharma and oil & gas is in the area of software security. Due to the incredibly tight scrutiny from the FDA, pharma companies have very demanding audit trail and security requirements for virtually all their software systems. On the other hand, I have noticed that many applications in oil and gas have little or no built-in security measures; many of them depend simply on the network administration team to determine who can or cannot use them. In many ways, this can simplify the management of the applications. But I am hearing and reading about increasing concerns concerning the vulnerability of the energy industry in America to radical groups who might want to attack energy assets, including pipelines.

The question is, what should be done to mitigate this potential threat? Dealing with the threat of physical attack on the pipelines is the most obvious place to start. This could include increased security patrols and surveillance, as well as more sophisticated sensors and leak detection software and emergency response teams. But is there anything we need to do to protect pipelines against cyber-attack? With a central control room able to control valves, pumps, compressors and more for hundreds, or even thousands of miles, and millions of barrels at stake, what measures are appropriate to record and protect the software systems that manage this complex interaction?

The physical security that controls access to the control room is part of the answer. The other part will need to be an assessment of the required system security built into the software. SCADA security has already been recognized as an area where improved controls are required, and vendors and independent industry organizations are both working on this. The question I have, and which I need to explore as a product manager, is whether we need to tighten security and auditing controls in our software. Does scheduling software require the same level of user control and auditing as SCADA or other systems?

This is my question to the readers of this blog: what security measures (if any!) do you require, or might you require in the next five years, from the software systems that interact with SCADA, like pipeline scheduling, leak detection, load forecasting, etc. Any and all feedback is welcomed!

Richard Wagner