May 2013, Vol. 240, No. 5

Air Liquide's Large Industries U.S. LP announced two new projects in Freeport, TX, for its Gulf Coast Pipeline (GCPL) and Hydrogen/Syngas businesses.

Advertisers from the print edition of Pipeline & Gas Journal, May 2013, Vol. 240, No. 5.

API’s annual liquids pipeline conference last month in sunny San Diego was instead a scene of uneasiness for many of those in attendance. Chided by federal regulators for a recent uptick in pipeline incidents, the conference really culminated with the terse announcement that there were no winners among large operators for API’s prestigious Pipeline Distinguished Safety and Environmental Performance Award.

Benjamin Franklin once wrote that in this world the only certainties in life are death and taxes. Had the often prophetic statesman been born decades later and found himself working in the pipeline business, he most assuredly would have added a third area of guaranteed distress – corrosion.

It isn’t hard to find companies that traditionally would not be involved in pipelines taking an active role in the industry. When an executive who is arms-deep in software technologies finds a special liking for the energy business, and is located about as far away from pipelines as one can be in the United States, he, too, must be a special individual.

The Sichuan-Shanghai Natural Gas Transmission Pipeline Project is the most significant gas pipeline built in China since the West East Pipeline was completed in 2005. The Sichuan-Shanghai pipeline is somewhat shorter than the West East Pipeline; however, its degree of difficulty in both design and construction makes it equivalent in stature.

Without question, the growing abundance of natural gas and the hydraulic fracturing process that has made it available have been a “game changer” for the energy industry - and have generated increased ire from the environmental community.

Natural gas has long been recognized as a preferred fuel for residential or commercial heating, industrial processes, and power generation, as well as a valuable chemical feedstock. However, despite its myriad advantages and uses, it has had difficulty reaching a market share reflective of its technical potential. The key question is if the resource base unlocked by the shale gas revolution will result in reduced prices and volatility. Infrastructure growth is at the heart of this question.

The Eagle Ford Shale, stretching from the mid-south of Texas just shy of Corpus Christi north nearly to San Antonio and west to the Mexican border, continues to attract massive investments from energy companies. It’s not hard to see why. The play contains economically recoverable light crude oil and natural gas liquids in high proportion to currently low-priced gas.

The facts and figures bear out that natural gas is THE product of the decade and with the Shale Gas Revolution barely underway, it’s just getting started. For the industry in the United States, which is leading the development, production and transportation of this valuable and environmentally friendly fuel, there has never been a more exciting time to be in the business.

Michels Corporation has further bolstered its already sterling reputation for both technical and personnel innovation over the past five decades with its ongoing development of a broad and diverse network of suppliers and subcontractors, which began in 2005.

With 297 registered attendees, the INGAA Foundation’s spring meeting had a record turnout. Normally held in Texas, the conference was moved to Amelia Island, FL to dovetail with an INGAA analysts’ event.

A panel discussion was recently waged by a Canadian, an American and a Mexican talking about North America’s energy future as the new Middle East for the rest of the world. Hyperbole was cheap, but chances of the provocative scenario becoming a reality ride squarely on the shoulders of Mexico. And everyone was OK with this.

ONEOK Partners, L.P. has completed three projects that are part of its previously announced $4.7-5.3 billion growth program through 2015, including:

Even a company that has successfully been building pipelines and other infrastructure for more than 100 years knows when it’s time to modernize to meet the fast-paced challenges of the 21st century energy business.

A TransCanada executive said opponents of the Alberta-to-Texas Keystone XL pipeline should consider one consequence of delays in building the oil pipeline - an increase in dirtier and more dangerous rail transport. Alex Pourbaix, president of energy and oil pipelines at the Calgary-based pipeline company, said although rail has an important role to play in moving oil sands crude to market, there are downsides to consider.

U.S. natural gas exports to Mexico grew by 24% to 1.69 Bcf/d in 2012, the highest level since the data collection began in 1973. With imports now accounting for over 30% of its total supply, Mexico's natural gas use is also at its highest level ever.

The United States closed out 2012 with a technically recoverable natural gas resource potential of 2,384 Tcf - the nation’s highest level during the 48 year history of the nonprofit Potential Gas Committee’s (PGC) biennial report.

Russian firm United Metallurgical Company (OMK) held a grand opening ceremony for its new Houston tube pipe plant on Feb. 26 with more than 150 people, representing construction companies, suppliers of equipment, managers and plant employees on hand.

Three federal agencies that virtually control the energy industry are getting new leadership as President Obama completes his Cabinet selections for the start of his second term.

Concern in Congress about insufficient interstate pipeline infrastructure is prompting imminent introduction of a bill to speed up construction applications at the Federal Energy Regulatory Commission (FERC).

CenterPoint Energy Inc., OGE Energy Corp. and ArcLight Capital Partners LLC have entered into an agreement to form a master limited partnership that will include CenterPoint Energy's interstate pipelines and field services businesses and the midstream business of Enogex LLC, owned jointly by subsidiaries of OGE and Arclight.

A survey by the Common Ground Alliance (CGA) found 48% of homeowners who plan to dig this year for projects that include landscaping, installing a fence or mailbox or building a deck, pond or patio, will put themselves and communities at risk by not calling 811 to learn the approximate location of underground utilities.

Strategy Engineering & Consulting LLC was awarded a contract by Chesapeake Energy to design a Central Production Facility (CPF) in the Eagle Ford Shale.

A team of Carnegie Mellon University researchers visited Capitol Hill March 13 in hopes of establishing a government-university-industry research and education initiative to inform the public about issues surrounding shale gas and the environment so the nation can better prepare for its energy future.

Dakota Plains Holdings Inc. and joint venture partner, Petroleum Transport Solutions LLC, an indirect wholly owned subsidiary of World Fuel Services Corp., report construction is underway for the Pioneer Project.

To leverage abundant natural gas supplies and low wholesale costs, Illinois employer and labor organizations and Ameren Illinois outlined a legislative proposal to accelerate the modernization of Illinois' aging natural gas delivery infrastructure while maintaining Illinois Commerce Commission (ICC) regulatory oversight.

MarkWest Utica EMG LLC, a joint venture between MarkWest Energy Partners LP and The Energy and Minerals Group, has agreements with PDC Energy Inc. to provide gathering, processing, fractionation, and marketing services in the Utica Shale in Ohio.

Canada’s National Energy Board (NEB) will hold a public hearing to consider an application from Enbridge Pipelines Inc. to construct and operate a pipeline 112.5 miles in length to transport crude oil from Enbridge's existing Edmonton Terminal to its existing Hardisty Terminal.

North Dakota crude oil production (including lease condensate) averaged an all-time high of 770,000 bpd in December. Total annual production more than doubled between 2010-12 in the Bakken Formation in the Williston Basin. North Dakota production in 2012 trailed only Texas and the U.S. Federal Offshore region, and the state accounted for 10% of total U.S. crude oil production.

Natural gas production in Pennsylvania averaged 6.1 Bcf/d in 2012, up from 3.6 Bcf/d in 2011, reports the Pennsylvania Department of Environmental Protection (DEP). This came despite a significant drop in new natural gas wells.

Twin Eagle Resource Management LLC has entered into a marketing agreement with GT Logistics LLC to exclusively market crude oil rail trans-loading capacity at the GT OmniPort facility located in Port Arthur.

Port of Lake Charles Commissioners approved an option for a long-term lease agreement on 90 acres with Magnolia LNG, an Australian-based energy company that plans to build a $2.2 billion export facility that will produce 4 million metric tons of LNG per year.

TransCanada wants to build a 2,725-mile pipeline that will carry between 500,000-850,000 bpd of crude from Alberta and Saskatchewan to refineries in eastern Canada. When completed, it will create a domestic market for western Canada’s oil production and potentially open a channel for international exports.

CenterPoint Energy Bakken Crude Services, LLC (CEBCS) has entered into a long-term agreement with XTO Energy Inc., a subsidiary of Exxon Mobil, to gather XTO's crude oil production through a new crude oil gathering and transportation pipeline system in North Dakota's liquids-rich Bakken shale.

Cheniere Energy Partners’ subsidiary, Sabine Pass Liquefaction, LLC, has entered into an LNG sale and purchase agreement with Centrica plc under which Centrica will buy 91,250,000 MMBtu of annual LNG volumes upon the start-up of Train 5 operations.

Continental Resources Inc. has agreed to supply PBF with Bakken crude oil, which will be delivered by rail to PBF’s double-loop track at its refinery in Delaware City, DE.

Rangeland Energy expects to invest more than $150 million in a terminal and supporting infrastructure in Loving, NM. The company has contracts to purchase 770 acres near Loving and plans to begin development of a terminal facility capable of handling crude oil, frac sand, pipe and other products.

Encana Corp. and Ferus LNG Inc. plan to build an LNG production facility near Grande Prairie, Alberta.

Enterprise Products Partners L.P. has received transportation commitments to support development of a 270-mile pipeline header system that will deliver ethane to petrochemical plants in the U.S. Gulf Coast region.

Explorer Pipeline’s board of directors has approved funding for Phase 1 of the Manhattan Extension Project.

A consortium of German insurer Allianz and Canadian pension fund Ontario Municipal Employees Retirement System (OMERS) is buying Net4Gas, operator of the Czech gas pipeline system, seller RWE announced.

Russia’s antitrust watchdog is coming down on Gazprom and its well-connected pipe supplier by launching an investigation of their huge deals over past few years, claiming the world’s biggest gas producer and the North European Pipe Project restricted competition.

Indonesia wants to boost energy investments to meet growing domestic demand, while remaining a leading natural gas exporter.

Natural gas from a large offshore field is flowing into Israel, “an important step toward energy independence,” said Prime Minister Benjamin Netanyahu. The gas, located in Tamar reservoir, was discovered in the Mediterranean Sea in 2009. It ships to a terminal in the port of Ashdod.

Alarmed by the 13.4% jump in its natural gas import bill last year, Japan is planning a new energy strategy that could change how LNG is traded around the world and put pressure on some of the proposed Canadian LNG export projects.

National Grid began construction in late March to connect its existing distribution systems in Brooklyn and Queens which will provide additional natural gas and meet future energy needs for customers. This is the first pipeline to be installed in the area in 50 years.

Leaders of Qatar Petroleum Gas Operations last month hosted a ceremony laying the foundation stone of the New Support Campus Complex of QP Gas Operations at Mesaieed. The center will focus on attracting and developing Qatari trainees.

Qatargas recently sent its initial cargo of LNG to Singapore. The cargo was delivered aboard the Q-Max LNG carrier UMM SLAL to Singapore LNG Corp. Pte Ltd’s (SLNG) first LNG-receiving terminal at Jurong Island.

Sierrita Gas Pipeline LLC has filed an application requesting a Presidential Permit and authorization to construct border crossing pipeline facilities and export of natural gas at the International Boundary between the United States and Mexico in Pima County, AZ.

Spectra Energy Corp. has closed its acquisition of the Express-Platte Pipeline System, purchasing 100% interest in the 1,717-mile, crude oil system for $1.49 billion.

Sunoco Logistics Partners L.P. held a binding open season in March for its Mariner South Pipeline that will transport export grade propane and butane from Lone Star NGL LLC’s storage and fractionation complex in Mont Belvieu, TX to Sunoco Logistics’ terminal in Nederland, TX.

Work is set to start this summer on Tallgrass Energy Partners’ Pony Express Pipeline expansion. The pipeline will be comprised of a converted portion of an existing natural gas pipeline and new construction.

A reader elaborates on another method of applying zinc coatings for corrosion control.

Cybersecurity. Executives now take it much more seriously than even a couple of years ago, as hackers continue wreaking devastating impact worldwide, with 40% of all attacks directed at oil and gas companies. Being victimized by exponentially more attacks aimed not only at just compromising systems, but also causing severe disruptions, stealing proprietary information and for financial gain, the time to take action was literally “yesterday.”