Is the Natural Gas Market Ready for Hourly Nominations?

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

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

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

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

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

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

Robert Young
Product Manager – Commercial Applications

Dashboard Web Applications

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

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

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

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

Thanks,

Morten Kristiansen
Product Manager - online operational applications

October 2007 Update

In the news...

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

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

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

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

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

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

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

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

How Dynamic will the LNG Market Become?

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

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

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

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

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


Robert Young
Product Manager - Commercial Applications

September 2007 Update

In the news...

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

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

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

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

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

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

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

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

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

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

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

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]
  

July 2007 Update

In the news...

• Pipeline Sabotage Fuels Anxiety In Mexican Business Politics (7/13/2007) Mexico is one of the world's largest oil producers and despite a history of leftist extremism, it has never seen disruptions in production from attacks by radical groups like those at other oil-exporting nations such as Nigeria, Columbia and Iraq. Until now. A guerrilla group calling themselves the Popular Revolutionary Army or EPR have claimed responsibility for recent attacks on natural gas, oil and other pipelines feeding industrial facilities in western Mexico. The explosions one early July 10 and at least another two the first week of July forced Honda Motor Co., Nissan Motor Co. and Vitro SA (a glass manufacturer) to stop some production. The rebel group's statement claimed the contested election of the Calderón government as "illegitimate" thus leading to speculation that the anger from last years election was a motive for the sabotage. Repairs to the pipelines by state energy company Petróleos Mexicanos are expected to be completed today. [More here]

• Tidelands Oil & Gas Corporation Subsidiary Sonora Pipeline LLC Receives FERC Permits (7/12/2007) Sonora Pipeline LLC, a wholly owned subsidiary of Tidelands Oil & Gas Corporation, received a Federal Energy Regulatory Commission (FERC) Presidential Permit and authorization to site, construct, maintain and operate two bi-directional natural gas facilities across the U.S. and Mexican border. In addition, a Certificate of public convenience and necessity to site, construct, maintain and operate 29 miles of a 30-inch pipeline system on the U.S. side of the border. The natural gas pipeline systems, known as the Burgos Hub Export/Import Project, will be located in Hidalgo County, Texas, and extend into Mexico via two border crossings. The pipelines systems will supply natural gas into Mexico for power generation and industrial customer needs. The area is expected have a dramatic increase in demand for natural gas beginning in the year 2010. [More here]

• Deal Would Boost Capacity of Oil Pipeline Through S.D. (7/4/2007) TransCanada Corp. announced it has new contracts with a Cushing, OK--based refinery that will increase the amount of oil from 435,000 to 495,000 barrels per day flowing through its proposed Keystone Pipeline. Regulatory approval is expected this year with construction to begin in 2008-09. When completed, the Keystone pipeline will be the first crude oil pipeline in South Dakota. The 30-inch diameter pipeline will originate in Hardisty, Alberta, entering the U.S. at the North Dakota border before continuing down through South Dakota and onto refineries in Oklahoma, Missouri and Illinois. Alberta has 174 billion barrels of proven reserves or around 15 percent of the world's total. Only Saudi Arabia has more according to an Alberta government report. Oil production in Alberta is expected to grow from 466,000 barrels a day in 2005 to as much as 5 million barrels a day by the year 2030. [More here]

• Revoked Leases in Alaska Prompt Oil Major's Protests (7/3/2007) Several oil companies including Exxon Mobil Corp. and BP have asked an Alaskan judge to overturn a decision by the Alaska Department of Natural Resources that revoked leases on oil and gas fields located on the state's North Slope last November. They have held leases since 1970 on a field located at Point Thompson, 50 miles east of Prudhoe Bay. The area is thought to hold 300 million barrels of oil and 8 trillion cubic feet of natural gas. The state's justification for the revocation was that the companies involved had taken too long to develop the field. In the suit, Exxon-Mobil and the others involved claim the state is trying to force them to put a field into production before it is economically viable. Although more than $800 million has been invested in the field so far, according to Exxon-Mobil, but because it is mostly a gas field the lack of a gas pipeline for the area makes it uneconomical to develop at this time. Although recent legislation was passed to encourage development, Alaska has not been successful yet in getting producers or independent pipeline companies to construct a pipeline needed for the North Slope and the Point Thompson Field. [More here]

• Pine Prairie Energy Center Announces Open Season for Phase II Capacity (7/3/2007) Pine Prairie Energy Center, LLC (PPEC), an indirect subsidiary of PAA/Vulcan Gas Storage LLC and with 50% owned by Plains All American Pipeline, L.P., is conducting a non-binding open season for 16 billion cubic foot (BCF) of natural gas storage capacity in addition to the 24 BCF first phase of its salt cavern natural gas storage capacity currently under construction. Phase I of the facility, located approximately 50 miles from the Henry Hub in Louisiana with three storage caverns each with a volume of eight BCF and an extensive pipeline header system, is expected to begin service in early 2008. Targeted completion for phase II is beginning of 2010. [More here]

• Kinder Morgan Selling Pipeline in the Midwest (7/2/2007) Oneok Partners has agreed to buy from Kinder Morgan Energy Partners a 1,600 mile pipeline system located in the Midwest for $300 million. The pipeline can deliver up to 125,000 barrels per day of petroleum and natural gas derived-liquid from hubs in Kansas to Chicago. [More here]

• Will Environmental Lobby Curb Interest in Gas Line? (7/1/2007) Although Governor Sarah Palin's signing of the Alaska Gasline Inducement Act in May is supposed to spur development of Prudhoe Bay, environmental groups may block those efforts. Professional environmental organizations such as the Sierra Club, Alaska Coalition and Wilderness Society have made a business out of opposing development of any kind in Alaska. Environmental groups operating in Alaska have become much better organized and financed over the years, spawning a whole new industry composed of lobbyists, lawyers and consultants. In 1970, environmental groups stopped construction of the then--future trans-Alaska pipeline. After more than three years, only when VP Spiro Agnew voted to break a 49-49 tie in the Senate was construction of pipeline allowed. More recently these groups have blocked construction of the Kensington Mine near Juneau with a court order. Now the Alaska Wilderness League, whose honorary chairman is former President Jimmy Carter, has stated goals to stop oil exploration and development on the coastal plain of ANWR, the National Petroleum Reserve-Alaska as well offshore oil and gas. Given this grass roots resistance transformed into an industry juggernaut, Gov. Palin will have an uphill battle to get the gas and pipeline industries interested in bidding on Alaskan exploration and development contracts. [More here]

• Enbridge Files Commercial Terms for Alberta Clipper Mainline Expansion Project (6/28/2007) Enbridge Pipelines Inc. a wholly owned subsidiary of Enbridge Inc., has filed a commercial supplement to its National Energy Board (NEB) application to construct the Canadian section of the Alberta Clipper Mainline Expansion Project for CDN $2.0 billion. The project will construct a new 36-inch diameter, 1,000-mile long crude oil pipeline from Hardisty, Alberta to Superior, Wisconsin. Initial capacity for the pipeline will be 450,000 barrels per day with allowances up to 800,000 barrels per day. Subject to regulatory approval, Enbridge anticipates the Alberta Clipper project will be in service by mid-2010. [More here]