August 2016, Vol. 243, No. 8

Projects

Projects

Superior Court Sides with PennEast, Dismisses Trespassing Lawsuit

A New Jersey State Superior Court judge on July 7 rejected a lawsuit filed by HALT, an association of New Jersey landowners, and several of its individual members, in its attempt to prevent the PennEast Pipeline from being built.

Dismissing the complaint for trespass and nuisance filed by HALT and several of its members, the court denied their attempt to stop PennEast from taking project-related surveys. PennEast hailed the decision as a resounding victory and said it will resume and complete Project surveys where there is landowner permission, and continue working toward project approval.

“We respect the rights of every landowner, and have worked tirelessly to engage in a respectful dialogue that has, in many instances, resulted in modifications to the route and reduced landowner impacts,” said Pat Kornick, spokesperson for PennEast. “Unfortunately, some outside interests are willing to say or do anything to mislead the public. We’re pleased the Court agreed with PennEast and dismissed the claims. It’s unfortunate that HALT has wasted the Court’s time and taxpayer resources with this filing.

“PennEast remains committed to earning approval and responsibly constructing this $1 billion Pipeline Project that will provide greater energy security and lower energy costs for New Jersey and Pennsylvania families and businesses, create thousands of jobs, and deliver cleaner air for generations to come,” added Kornick.

“The actions and false claims by HALT leading to the July 7 dismissal by the New Jersey Superior Court are symptomatic of other actions taken by similar extreme groups, such as a separate frivolous lawsuit brought by the Delaware Riverkeeper Network that FERC has already stated should be dismissed because of a fundamental misunderstanding of FERC’s operations and funding.

“Yet another frivolous complaint was filed with FERC by the Eastern Environmental Law Center, the New Jersey Conservation Foundation and the Stony Brook-Millstone Watershed Association requesting an ‘evidentiary hearing’ of market need, which is duplicative and already covered by FERC’s multi-year review. Even the New Jersey Sierra Club objected to their actions and said the ‘suit could easily be dismissed,’” Kornick said.

NGL Energy Holds Second Open Season for Grand Mesa Pipeline

NGL Energy Partners LP announced that due to additional shipper interest a second binding open season was held that closed on July 28, 2016 for its wholly owned Grand Mesa Pipeline, LLC crude oil pipeline.

As proposed, the Grand Mesa pipeline will provide takeaway capacity for crude oil producers in the Denver-Julesburg Basin. The pipeline is expected to be in operation November 2016. It originates in Weld County, CO and extends 550 miles southeast to NGL’s crude oil storage terminal at Cushing, OK. The pipeline will be capable of receiving and batch transporting 150,000 bpd for delivery into the Cushing hub, which affords its shippers access to both U.S. Midcontinent refining and trading markets as well as the Texas Gulf Coast refinery complex.

Valley Crossing Pipeline Wins CFE Pipeline Contract

Spectra Energy Corp.’s subsidiary, Valley Crossing Pipeline, LLC, was awarded a 168-mile intrastate natural gas pipeline project by the Comisión Federal de Electricidad (CFE) – Mexico’s state-owned utility serving 37 million customers – to provide services beginning in 2018 to meet Mexico’s growing electric-generation needs.

Bill Yardley, president of U.S. Transmission and Storage for Spectra Energy, said, “Securing this project connects us to another key demand-pull market, and brings us closer to our goal of securing $35 billion in capital expansion projects by the end of this decade, with approximately $20 billion either in execution or in service since 2013.”

Valley Crossing will construct and operate a header system of over 5 Bcf/d near the Agua Dulce Hub in Nueces County, TX as well as a 2.6 Bcf/d pipeline originating at that header and extending to Brownsville. There, the pipeline will connect with the Sur de Texas – Tuxpan pipeline, (discussed in the following TransCanada news item), that will extend into Mexico.

TransCanada/IEnova to Build $2.1 Billion Gas Pipeline in Mexico

TransCanada Corp. announced that its joint venture with IEnova, Infraestructura Marina del Golfo (IMG), was chosen to build, own and operate the US$2.1 billion Sur de Texas-Tuxpan natural gas pipeline in Mexico. The project will be supported by a 25-year service contract for 2.6 Bcf/d with CFE.

Russ Girling, TransCanada’s president and CEO, said, “This new project brings our footprint of existing assets and projects in development in Mexico to more than US$5 billion, all underpinned by 25-year agreements with Mexico’s state power company.”

The bid for the Sur de Texas-Tuxpan project is in partnership with IEnova, a subsidiary of Sempra Energy. TransCanada will develop, operate and own 60% of the project with IEnova owning 40%. TransCanada expects to invest US$1.3 billion in the partnership to construct the 42-inch, 497-mile pipeline and anticipates an in-service date of late 2018. The pipeline will begin offshore in the Gulf of Mexico, at the border point near Brownsville and end in Tuxpan in the state of Veracruz.

In addition to a connection with CENAGAS’s pipeline system in Altamira, the project will interconnect with TransCanada’s Tamazunchale and Tuxpan-Tula pipelines as well as with other transporters in the region.

Monterra Energy Updates Plans in Texas and Mexico

Monterra Energy has updated its plans to build a refined products pipeline system, consisting of four independent assets: a port facility to receive product; a 1.2 MMbbl marine receiving terminal at Tuxpan, Veracruz; a 270-km pipeline into central Mexico; and a 600,000 bbl offloading terminal near Tula, Hidalgo, all with state-of-the-art measurement, SCADA and leak-detection technology.

Monterra has secured preferred, priority, 24/7/365 access to a 200-meter dock along the Pantepec River. The dock has a liquids hydrocarbon permit, making Monterra the only private company to control a facility with an existing permit at Tuxpan. The sheltered location along the river is expected to provide a strategic advantage to Monterra’s clients due to the possibility of significant and frequent weather delays at the current open water import locations in the Gulf of Mexico.

“We are well-positioned to develop the first private refined products pipeline made possible by the Mexican government’s energy reform,” said Monterra CEO Arturo Vivar.

Monterra launched the first CRE approved open season for the pipeline portion of the Tuxpan-to-Tula refined products system on June 1. To date, Monterra has received interest in excess of 100,000 bpd of clean fuels including diesel, gasoline and jet fuel from both Mexican and international groups. Monterra has developed a competitive market rate for system access and use, as compared with other logistics alternatives.

Crude Gathering System Planned in Permian Basin

A subsidiary of EnLink Midstream Partners, LP and EnLink Midstream will construct the Greater Chickadee crude oil gathering project in Upton and Midland counties in the Permian Basin. The partnership recently held a binding open season for the project that closed August 8, 2016.

Plans call for an investment of $70-80 million for the project which will include over 150 miles of high- and low-pressure pipelines that will transport crude oil to several major market outlets and other key hub centers in the Midland, TX area. The initial phase of Greater Chickadee will be operational in the second half of this year with full service expected early next year.

Holly Energy Partners Acquires Interest in Cheyenne Pipeline

Holly Energy Partners has acquired a 50% interest in Cheyenne Pipeline LLC, owner of the Cheyenne Pipeline, in exchange for a contribution of $42.5 million in cash to Cheyenne Pipeline LLC. The other 50% interest is owned by an affiliate of Plains All American Pipeline, L.P., that will continue to operate the Cheyenne Pipeline. The 87-mile crude oil pipeline, which runs from Fort Laramie, WY to Cheyenne, WY has an 80,000-bpd capacity.

Savage Solicits Commitments For North Dakota Pipeline

Savage Services Corp. held a binding open season that ran until June 9 to solicit commitments for the Savage DAPL Connector Pipeline to connect Savage’s Bakken Petroleum Services Hub in Trenton, ND to Dakota Access Pipeline’s nearby facilities.

The Savage DAPL Connector Pipeline would include 9 miles of 10-inch crude oil pipeline facilities. The pipeline will have an initial capacity of 60,000 bpd with an in-service date early in 2017. Savage is seeking commitments from interested parties capable of committing to ship at least 10,000 bpd, for a minimum contract term of seven years.

ConEd/Crestwood Equity Partners Close Northeast Pipeline, Storage JV

Consolidated Edison, Inc. and Crestwood Equity Partners LP formed a joint venture to own and develop Crestwood’s natural gas pipeline and storage business in southern New York and northern Pennsylvania.

Crestwood contributed its interstate natural gas pipeline and storage business to a new entity, Stagecoach Gas Services LLC, and a subsidiary of Con Edison Transmission, Inc., which is a wholly owned subsidiary of Con Edison.

Crestwood has agreed to contribute to Stagecoach Gas Services its existing New York intrastate pipeline and Con Edison Transmission has agreed to contribute $30 million which will be distributed to Crestwood.

Riverside Investment Partners with Kinder Morgan on Utopia Pipeline

Kinder Morgan, Inc. said Riverstone Investment Group LLC will become a 50% partner in the Utopia East Pipeline Project. Riverstone agreed to an upfront cash payment provided at closing, consisting of reimbursement to KMI for its 50% share of prior capital expenditures related to the project and a payment in excess of capital expenditures to recognize the value created by KMI in developing the project.

Riverstone also agreed to fund its share of future capital expenditures necessary to complete construction and commissioning of the pipeline project. The total project cost is estimated at $500 million.

Utopia is a common-carrier project that will include 215 miles of 12-inch pipeline constructed entirely within the state of Ohio from Harrison County to Fulton County. The pipeline will connect with an existing Kinder Morgan pipeline and associated facilities in order to transport ethane and ethane-propane mixtures to petrochemical companies operating in Ontario, Canada, for use as a feedstock. The proposed full in-service date is January 2018.

MDU Plans Pipeline Expansion in Eastern ND, Western Minnesota

WBI Energy, Inc., the pipeline and midstream subsidiary of MDU Resources Group, Inc., plans to build a 38-mile pipeline with the primary purpose of delivering natural gas supply to eastern North Dakota and far western Minnesota. An open season seeking capacity commitments on the Valley Expansion Project closed on July 15.

The proposed pipeline would connect the Viking Gas Transmission Company pipeline near Felton, MN to WBI Energy’s existing pipeline near Mapleton, ND. Cost of the project is estimated at $50 million.

As initially designed, the pipeline will be able to transport 40 MMcf/d of natural gas. With minor enhancements, it will be able to transport significantly more product if required, based on capacity requested during the open season or as needed in the future. WBI Energy is studying a route for the project and, once permitting and regulatory work is completed, construction could begin in early 2018 with completion late that year.

Vaquero Midstream Commissions Caymus l Gas Processing Plant

Vaquero Midstream has commissioned its Caymus I Natural Gas Processing Facility in Pecos County, TX supported by long-term commitments with major producers. The construction of a tailored UOP Russell 200 MMcf/d cryogenic processing plant, located on 330 acres, allows for future expansions of four additional 200 MMcf/d processing trains, so Vaquero can grow processing volumes. A Vaquero-owned and dedicated electrical substation with direct connect to a 138 kVA transmission line offers continuous, uninterrupted power service to the facility.

Caymus I is supplied by 80 miles of a high pressure gathering pipeline system, consisting of 30- and 24-inch pipe connecting Pecos, Reeves, Ward and Culberson counties to the facility and designed for volumes over 800 MMcf/d. A 16-inch residue header connects multiple outlets at the WAHA market including connections with Atmos, Enterprise, Northern Natural Gas and ONEOK’s WestTex Transmission system connecting to the Roadrunner Gas Transmission Pipeline. These four connections will allow access to more than 12 residue gas outlets accessing California, the Midwest, Gulf Coast and Mexico. The Vaquero 12-inch NGL header was also commissioned with outlets connecting to Lone Star’s est Texas Gateway Pipeline and Enterprise Chaparral systems.

Essar Projects Wins Pipeline Replacement Contact   

Essar Projects has been awarded a contract to replace 141 km of 18-inch pipeline in the Koyali-Viramgam section of Indian Oil Corporation Ltd.’s (IOCL)  Koyali-Sanganer pipeline. The contract is valued at more than INR 850 million, exclusive of the cost of pipes, which are being supplied by IOCL.

Originating at IOCL’s Gujarat Refinery in Koyali, Gujarat, the 1,056-km Koyali-Sanganer product pipeline is the company’s longest, and helps meet the oil needs in central India.

Shell Midstream Partners Acquires Onshore Assets

Shell Midstream Partners, L.P. has agreed to acquire additional equity interests in Zydeco Pipeline Company LLC, Bengal Pipeline Company LLC and Colonial Pipeline Company from Shell Pipeline Company LP, a wholly owned subsidiary of Royal Dutch Shell plc, for $700 million.  The acquisition will increase Shell Midstream Partners’ interests in Zydeco to 92.5%, Bengal to 50.0%, and Colonial to 6.0%.

“We chose to acquire additional interests in these high-quality assets given their strong operational performance and strategic fit in our portfolio,” said John Hollowell, CEO of Shell Midstream Partners.  He added, “These assets are well known to our unitholders and help position us to deliver our strategy and distribution growth from the assets’ predictable and stable cash flows.”