July 2016, Vol. 243, No. 7

Projects

Projects

Two KMI Projects Gain FERC Approval

Kinder Morgan, Inc.’s subsidiaries, Elba Liquefaction Co., (ELC) and Southern LNG Co., have authorization from the Federal Energy Regulatory Commission (FERC) for the $2 billion Elba liquefaction project. It will be constructed and operated at the existing Elba Island LNG Terminal near Savannah, GA.

As previously announced, the first of 10 liquefaction units should be placed in-service in the second quarter of 2018, with the remaining nine units coming online before the end of 2018. This project is supported by a 20-year contract with Shell.

KMI also said Elba Express Co. and Southern Natural Gas Co. have received FERC certificates of public convenience and necessity for the Elba Express modification project and Southern Natural Zone 3 expansion project, respectively.

These projects total $306 million and include additional compression and related work for north-to-south capacity expansions on Elba Express Pipeline that will supply additional gas to industrials and utilities in Georgia and Florida and to Elba Island for liquefaction. Facilities for these pipeline projects are expected to be placed in-service late this year.

The Elba liquefaction project has authorization from the Department of Energy to export to Free Trade Agreement (FTA) countries. An application to export to non-FTA countries is pending, but is not required for the project to move ahead. The liquefaction project is expected to have a total capacity of 2.5 mtpa of LNG for export, equivalent to 350,000 MMcf/d of natural gas.

Mountaineer NGL Storage Holds Open Season for NGL Storage

Mountaineer NGL Storage concluded a non-binding open season for its natural gas storage project near Clarington, OH which resulted in requests for over three times the amount of initial planned capacity.

David Hooker, managing director of Mountaineer NGL Storage, said scaled development began in late May. “We’ll begin the permitting process for LPG storage, initiating a 3-D seismic shoot over the property, drill a test well, and coring the salt to confirm its suitability for LPG storage,” he said.

The storage project should break ground in early 2017 with a planned in-service date of early 2018. Mountaineer plans to offer up to 2 MMbbls of initial storage capacity with over 40,000 bpd of load-in and load-out. The project will store ethane, propane, butane and y-grade products for a growing number of gas processors, producers, markets and commodity traders seeking to exploit the wet gas production from the Marcellus/Utica shales.

 Texas-Mexico Pipeline Planned

Howard Midstream Energy Partners said its subsidiary, Dos Águilas Pipeline, completed a successful open season on the Dos Águilas project, receiving more than sufficient customer interest to proceed with the project as planned. The project is an open access system of refined products terminals and pipelines from Corpus Christi, TX to northern Mexico. The project could be in-service in 2018.

Howard Energy Partners Chairman and CEO Mike Howard said, “The customer response we received during the open season exceeded our expectations. It validates the need for the project and confirms the Howard Energy philosophy that what is good for Mexico is good for South Texas.”

 The Dos Águilas pipeline project will offer direct transportation services for gasoline, ultra-low sulfur diesel and jet fuel from the Corpus Christi refinery complex to Laredo, TX onto northern Mexico markets through deliveries to Nuevo Laredo, Tamaulipas and Monterrey, Nuevo León. While Dos Águilas customers will experience seamless transportation service, for permitting and regulatory purposes, the project is broken down into four pipelines, with different names:

• Border Express Pipeline, originating in Corpus Christi, delivering to Laredo;
• Borrego Pipeline, originating in Laredo, terminating at the International Border Crossing (U.S.).
• Poliducto Frontera Pipeline, originating at the International Border Crossing (Mexico), delivering to Nuevo Laredo, Tamaulipas.
• Poliducto del Norte Pipeline, originating in Nuevo Laredo, Tamaulipas, delivering to Monterrey, Nuevo Leon.

Sunbury Pipeline Gets FERC Approval

GI Sunbury, a subsidiary of UGI Energy Services, received FERC approval to construct and operate the 35-mile Sunbury Pipeline. The pipeline will bring natural gas supplies to homes and businesses in central Pennsylvania. One primary end-user is Hummel Station, a 1,124-MW combined-cycle, gas-fired power plant being built at the site of the shuttered coal-fired Sunbury Generation Facility near Shamokin Dam, Snyder County.

John Walsh, president and CEO of UGI Corp.  said, “The Sunbury Pipeline will establish a vital delivery link between abundant Pennsylvania natural gas and the Hummel Station, and is another example of UGI’s efforts to bridge the infrastructure gap between low-cost producing areas of Pennsylvania and consuming areas across our region.”

The pipeline, comprised of 20-inch steel pipeline and related facilities, is designed to deliver up to 197 MMcf/d of natural gas. The pipeline originates in eastern Lycoming County and extends south through Montour, Northumberland and Union counties before terminating at Hummel Station. The pipeline provides supply flexibility to parts of the UGI Utilities distribution system along the route. Construction of the pipeline is expected to be completed by November.

3.5-Mile Ohio Horizontal Well Might Set Length Record

Officials with Eclipse Resources believe they hold the record for the longest horizontal well in the United States, located near Quaker City in Guernsey County, OH. Horizontal drilling and fracking called for drilling a vertical well 2 miles or deeper into the ground. The contractors then drilled a horizontal shaft from that point that can now extend as far as the 3.5-mile-long well.

“The company completed drilling its extended reach lateral test well, referred to as the Purple Hayes well, with a completed lateral length of just over 18,500 feet in the condensate area of its Utica Shale acreage in fewer than 18 days,” Thomas Liberatore, Eclipse Executive Vice President told the Wheeling News – Register.

The drilling cost just $854 per lateral foot, he added, “an industry-wide step change in the cost structure of Utica Shale drilling.” In the first quarter, Eclipse reported 201 MMcf/d of gas production, a 26% increase from the same time in 2015.

 Williams Holds Binding Open Season for Transco Expansion

Williams Partners completed a binding open season June 9 for the Northeast Supply Enhancement project, which it now expects to place in-service for the 2019-20 winter heating season.

The project will provide 394.1 MMcf/d of firm natural gas transportation capacity from Transco’s Compressor Station 195 in York County, PA to the Rockaway Transfer Point, an existing interconnection between the Lower New York Bay Lateral and the Rockaway Delivery Lateral in offshore New York.

Prior to the open season, Williams executed precedent agreements with subsidiaries of National Grid, the largest distributor of natural gas in the Northeast, for firm transportation service under the project which will help meet growing demand gas demand in the Northeast. The project will consist of adding looping and compression to existing Transco pipeline facilities. Williams does not anticipate the project scope will change based on the outcome of the open season.

NextDecade Seeks OK for LNG Export Facility. Pipeline

NextDecade filed an application with the FERC to site, construct and operate Rio Grande LNG, a proposed 27 mtpa LNG export facility near Brownsville, TX and the Rio Bravo Pipeline, a 137-mile pipeline system.

Rio Grande LNG, a wholly owned subsidiary of NextDecade, is a multibillion-dollar land-based LNG export project located on a 1,000-acre site along the Brownsville Shipping Channel in Brownsville. The facility will be constructed in phases timed to meet market demand. The pipeline will supply the facility with its feed-gas, connecting the facility to the highly liquid Agua Dulce gas market hub.

The first phase of the LNG involves a direct investment of $8 billion. A final investment decision will follow full authorization to construct, expected in 2017. NextDecade expects to begin exporting LNG from Rio Grande LNG by 2020.

Oryx Launches Open Season for Delaware Basin Extension

Oryx Midstream Services operating subsidiary, Oryx Southern Delaware Oil Gathering and Transport, has launched an additional binding open season to secure commitments and acreage dedications on the extension of the Oryx Trans Permian pipeline system. The binding open season ended June 17 and construction should be completed by the fourth quarter.

The proposed extension is supported by two producers that operate about 50,000 acres in Reeves and Ward counties. It will consist of 120 miles of new pipeline and connect to Oryx’s existing OTP gathering, transportation and storage system. Upon completion of the extended system, the OTP system will include over 350 miles of oil pipeline, supported by over 230,000 dedicated acres.

Trans Mountain Gains NEB Nod

Canada’s National Energy Board (NEB) concluded the Trans Mountain Expansion project is in the public interest and recommended the Federal Governor in Council approve the expansion. The recommendation will allow the project to proceed with 157 conditions if approved by the Governor in Council. The federal government will make the final decision on the project in December.

Trans Mountain officials said they continue to analyze the NEB’s conditions for implications to community commitments, costs and project timeline. An in-service date in December 2019 is still expected.

Pembina Plans $130 Million Investment in Alberta

Pembina Pipeline entered into agreements with a multinational, investment-grade customer to construct infrastructure relating to the company’s 100 MMcf/d shallow cut gas plant, Duvernay I.

The supporting infrastructure includes condensate, gas and water field handling, a gas gathering trunk line, and a fuel line, valued at $130 million. The Field Hub is committed under a long-term, fixed-return agreement and will connect to the customer’s development well pads, providing separation, stabilization and other supporting services.

In addition, Pembina will construct a 35-km gas gathering trunk line, which creates a gas gathering backbone between the Tony Creek, Alberta and Fox Creek, Alberta areas that will connect the Field Hub to the Duvernay I facility. The Field Hub will also connect into Pembina’s Peace Pipeline system.

To align with the in-service date of Duvernay I, Pembina expects to bring the Field Hub into service in the second half of 2017.

NEB Issues Order to TransCanada Keystone Pipeline

The National Energy Board (NEB) issued a board order to TransCanada Keystone Pipeline to ensure environmental protection and mitigation measures continue on the Keystone XL project. This is despite the U.S. Department of State’s decision of Nov. 3 not to issue a presidential permit.

During NEB inspections on the project in Alberta, technicians observed reclamation had not been completed at two horizontal directional drill staging areas. These areas included a portion of the pipeline right-of-way and construction access roads at the Red Deer River and South Saskatchewan River crossings. As a result, the NEB issued notices of non-compliance related to erosion control and weed management, which required corrective actions.

When the Keystone XL project was approved April 27, 2010, the NEB required completion of conditions at various stages during construction of the approved project. The NEB order requires the company to submit information by Dec. 1 concerning, among other issues, surveys of wildlife, vegetation, wetlands and weeds, along with  mitigation plans and evidence of consultation with provincial and federal authorities.

Kinder Morgan Withdraws FERC Application for NED Pipeline

Kinder Morgan withdrew its FERC application to construct the Northeast Energy Direct (NED) pipeline. The 420-mile pipeline would have carried Marcellus Shale gas from Pennsylvania into New England. While the project had met with strong opposition from environmental groups and property owners, it had support of natural gas distribution companies, industry groups and electrical utilities.

Company officials reportedly blamed the decision to poor market conditions that made it unacceptable to use shareholder funds to develop the project.

Texas-Based Pipeline Planned  

ITC Pipeline Co. held an open season ending June 23 for a new petroleum products pipeline system in Pasadena, TX. The system consists of two 36-inch injecting pipelines and two 16-inch return lines, running 1.7 miles between a terminal facility and interconnections with Colonial Pipeline Co. and Explorer Pipeline Co.

Additionally, a 16-inch pipeline will run 3.8 miles between the terminal and an interconnection near Witter Street in Pasadena. The system is scheduled to begin service in the third quarter.