P&GJ’S Mid-Year International Pipeline Report

August 2012, Vol. 239 No. 8

Rita Tubb, Managing Editor

P&GJ’s latest international pipeline survey indicates 97,763 miles of pipelines are in various stages of construction and planned.

Of these, 72,443 account for projects in the planning and engineering phase and 25,320 are in various stages of construction. The figures show a 11,091-mile increase since P&GJ’s January 2012 report when the international sector accounted for 86,672 miles of new and planned pipelines.

The following reflect new and planned pipeline miles in the six basic geopolitical regions used in this report (see accompanying map): Asia/Pacific – 32,434 miles; former Soviet Union and Eastern European countries – 25,529 miles; South-Central America and Caribbean 15,749 miles; Middle East – 10,311 miles; Africa – 9,000 miles; and Western Europe and European Union countries – 4,740 miles. For information on these and other pipeline projects, see P&GJ’s sister publication, Pipeline News.

Energy Outlook
The International Energy Outlook 2011 (IEO2011), released by the U.S. Energy Information Administration (EIA), shows world energy use increasing 53% by 2035 with China and India accounting for half of the total growth.

Other key findings in the Outlook indicate that the economies of China and India are among those least affected by the prolonged global recession. With strong economic growth projected in both countries, their combined energy use will more than double by 2035, when they account for 31% of energy consumption. In 2035 the report indicates that China’s energy demand will be 68% higher than in the U.S.

The Outlook notes that world natural gas trade, both by pipeline and by LNG, is expected to rise. Most of the projected increase in LNG supply comes from the Middle East and Australia where several projects should become operational in the next decade. World liquefaction capacity will more than double, from about 8 Tcf in 2008 to 19 Tcf in 2035. Pipelines under construction or planned will increase natural gas exports from Africa to European markets and from Eurasia to China.

Asia/Pacific
With robust economic recovery expected to continue in China, India, and other non-OECD nations, it is no surprise the Asia/ Pacific accounts for the highest number of new and planned pipeline miles. Of the 32,435 miles, 20,957 represent pipelines in the design/engineering phase, 11,477 reflect projects in various stages of construction
India has announced plans to double its natural gas pipeline network over the next five years to 18,642 miles including development of a national gas grid by 2017.

Other Asia/Pacific nations with growing energy needs are Japan and South Korea. As one of the top energy importers and to improve its energy security, South Korean oil, gas, and electricity companies are aggressively seeking overseas exploration and production opportunities to meet future demand.

Following the Fukushima disaster, Japan is anxious to increase imports of crude as well. Although primarily dependent on the Middle East for its crude imports, the nation’s leaders are looking to Russia, Southeast Asia, and Africa to diversify its oil imports. One option being studied is an underwater pipeline from Russia. Gazprom recently completed a pipeline that carries gas to Sakhalin, in which a spur could be extended across the Sea of Japan.

China, India and Australia remain the most active in terms of construction.
Most of the activity in China is driven by state-owned China National Petroleum
Corp. (CNPC), parent of China’s largest oil and gas producer PetroChina Co. Ltd.

PetroChina has signed an agreement with several state and private investors to co-fund a third West-to-East pipeline that would take central Asian gas to China’s southeastern coast. The cross-country pipeline, scheduled to become operational by the end of 2013, carries a cost of US$18.25 billion and will extend more than 3,107 miles. There are also plans for a fourth West-East gas pipeline.

Construction is under way on two pipelines and a refinery in Yunnan province for CNPC. The pipelines are being built to handle imports from Myanmar starting in 2013. The 440,000-bpd oil line and the 12 Bcm/d gas line start at Kyaukryu port on the west coast of Myanmar. Each pipeline extends almost 500 miles inside Myanmar before entering China where the two lines will each extend another 1,056 miles.

India’s state-owned gas utility, GAIL India Ltd., accounts for several new and planned pipeline project. Work is to start soon on the 686- mile Kochi-Bangalore natural gas pipeline. Gail’s plans call for commissioning the pipeline that will pass through 16 districts by March.

GAIL has agreed to buy gas from Turkmenistan that will be transported via the proposed 1,043-mile, 56-inch Afghanistan-Pakistan- India (TAPI) pipeline. The pipeline will originate at South Yolotan-Osman in Turkmenistan and will traverse 90 miles in Turkmenistan, 457 miles in Afghanistan and 497 miles in Pakistan before entering India at Fazilka in Punjab.

Australia
Australia’s dependence on oil imports is projected to continue to increase as domestic consumption increases and production slowly declines.

On the natural gas side, the distances between Australia and its key natural gas export markets in Asia discourage any pipeline trade; all exports are in the form of LNG. As a result, Australia’s LNG exports are projected to expand to 85 Bcm in 2020 and 115 Bcm in 2035, more than a four-fold increase over current levels, according to EIA’s Outlook.
As to recent activity, Woodside achieved start-up of its Pluto LNG project in Western Australia in March. The area accounts for several LNG sites under construction and planned. The most notable is the Shell Prelude FLNG facility that will be the world’s largest floating offshore facility. It will tap around 3 Tcf/e of resources from the Prelude gas field.

Several unconventional or coal seam gas (CSG) to LNG projects are under construction. The largest of these is the Gladstone project being led by Australia’s Santos along with Petrona Total and KOGAS. The project involves: development of CSG resources in the Bowen and Surat Basins in Southeast Queensland; a 260-mile pipeline from the gas fields to Gladstone; and construction of a 7.8 Mtpa two-train LNG plant and associated port development infrastructure. First LNG is expected in 2015.

Other CSG- to-LNG projects in Queensland include: the Arrow Energy Curtis Island project being developed by a Shell-PetroChina joint venture; the Australia Pacific project, a joint venture between ConocoPhillps and Origin Energy; and the Queensland Curtis project by BG Group. They are expected to deliver 1,232 Bcf/y by 2016.
Collectively, Australian LNG facilities, under construction and planned, will require more than 4,000 miles of pipeline construction.

FSU, Eastern European Countries

Russia, along with several FSU countries and others, continues to construct oil and gas pipelines to reach Europe and the Asia/Pacific.

Gazprom has several projects under construction and consideration, including a further expansion of Nord Stream by adding two pipelines. The first of Nord Stream’s two existing parallel pipelines started operations last November. Nord Stream completed the second of the two pipelines June 28. This 760-mile pipeline will be de-watered and dried before being joined to the onshore landfall sections in Russia and Germany. It is scheduled to become operational as part of the twin pipeline system later this year. ?
In partnership with CNPC, Gazprom plans to build the 1,615-mile Altai pipeline within the existing transmission corridor from western Siberia to Novosibirsk with a follow-up extension to the Russian-Chinese border. First supplies are planned for 2015.

Gazprom is also working to deliver gas from the Bovanenkovo field. So far workers have welded 610 miles of the Bovanenkovo–Ukhta pipeline with 585 miles already trenched and buried. The 745-mile pipeline will have a design capacity of 140 Bcm/a. It will join with the 808-mile Ukhta– Orzhok pipeline, which will have a design capacity of 81.5 Bcm/a. Commissioning is scheduled for fall.

Transneft is building the 2,900-mile Eastern Siberia-Pacific Ocean (ESPO) Pipeline from Taishet, Siberia to Nakhodka on the Pacific Ocean to export oil to the energy hubs of the Asia/Pacific. In 2010 the first section of the pipeline, running from eastern Siberia to China’s northeastern frontier, was completed. The remainder of the pipeline, scheduled to be finished by 2013, is expected to transport up to 1.6 MMbpd, about one-third of Russia’s oil exports, to China, Japan, and South Korea.

BP has proposed an alternative pipeline to feed Europe with Caspian natural gas. Called the South East Europe Pipeline, it would link major Azerbaijan gas fields to a gas hub in Austria running from western Turkey across Bulgaria and Romania to Hungary’s border, a similar route to that of the EU-backed Nabucco pipeline. The pipeline would be 808 miles, one-third the length of Nabucco.

Although several more crude lines are planned in the region, they have experienced delays. (For details see P&GJ’s sister publication, Pipeline News).

One crude project going forward is the 311-mile Zapolyarnoye-Purpe pipeline that will supply 300,000 bopd to China. The pipeline is intended to link Yamal fields to the ESPO Pipeline. Scheduled to be built in three phases by 2016, it will have capacity of up to 45 MMmt/a.

Africa
Last year’s political uprisings in Libya and Egypt along with kidnappings in West Africa, security risks in North Africa and oil pipeline vandals continue to pose potent threats to the successful operation of upstream and downstream sectors of Africa’s oil and gas industry. Of the 9,000 miles of new and planned pipeline projects about 2,000 miles of construction is believed under way.

Among these is a $1.2 billion lump-sum EPC contract awarded to Petrofac by In Salah Gas, co-owned by Sonatrach, BP and Statoil, to develop the Garet el Befinat, Hasi Moumene, In Salah and Gour Mochmound fields in Algeria. Petrofac will provide a new central production and gas gathering facility with the capacity to produce 16.8 MMcm/d, associated permanent camps and 186 miles of pipelines for gas collection from the infield wells and export to the existing Krechba facility. Completion is scheduled in 2014.

In Algeria Saipem is working on the GK3 project for Sonatrach to install a 48-inch gas pipeline system from Mechtatine to Tamlouka, then connecting the latter to Skikda and El-Kala on the northeastern coast, for 219 miles. The project will allow Sonatrach to expand its gas transport capacity to 9 Bcm/y in order to feed the future Galsi export gas line, which will connect Algeria to mainland Italy via Sardinia, as well as the new LNG train in Skikda and two power plants.

The region also accounts for several offshore projects. Off Angola, Serimax is involved in welding works on Total’s CLOV SURF project. This project involves 5,500 welds of 10- and 12-inch pipe to be installed in 1,000 and 1,400 meters of water with completion slated in 2013.

Algeria and Italy will build an import pipeline from Algeria to Italy via Sardinia. The project involves an international offshore section of the pipeline which will run from the Algerian coast to southern Sardinia (near Cagliari) where it will link up with the Italian section. The line will be 650 miles with 372 miles offshore. Initial transportation capacity will be 8 Bcf/d.


Western Europe, EU Countries

While Europe’s economic troubles continue, Western Europe, and in particular the UK North Sea sector, has seen a strong upturn in offshore activity.

Recent activity has seen moves to open up the Southern Gas Corridor – an initiative by the European Commission to supply gas from the Caspian and Middle East to Europe. This came about as the BP-led Shah Deniz consortium selected the Nabucco West project as its delivery option through central Europe.

Insert Nabucco West Map sent to Sheri 7/5/12 here:

The Nabucco West proposal involves a 808-mile, 48-inch pipeline that will transport gas from the vicinity of the Turkish-Bulgarian border through Bulgaria, Romania and Hungary to Austria with offtake stations in each transit country. First gas exports are expected in 2017.

Nabucco West will follow similar principles as the original concept so the pipeline will be designed to be a scalable and multi-source natural gas transmission infrastructure. Capacity could be scaled up from 10 Bcm to 23 Bcm to respond to demand.

Earlier, the consortium selected the Trans-Adriatic Pipeline (TAP) as the potential route for export of Stage 2 gas to Italy. The Shah Deniz consortium has closely worked with TAP, recently concluding a cooperation agreement. The consortium plans to work with the owners of the two selected pipeline options. A final decision between these projects and related gas sales agreements are due in 2013.

A second proposed Southern Gas Corridor project is the Greece–Italy Natural Gas Interconnector (IGI). Hellenic Gas Transmission System Operator (DESFA SA) awarded Penspen Ltd. and its local partner, C&M Engineering S.A., the basic engineering design FEED contract for the onshore portion of the360-mile, 42-inch project. Delivery of Caspian and Central Asian gas via the IGI to southeastern Europe is expected in 2014.
In the UK North Sea, Endeavour Energy UK Ltd. awarded Technip a contract for the East Rochelle development. The contract covers full project management and detailed design, fabrication, installation and pre-commissioning of 19 miles of pipe-in-pipe, flexible riser, free issue umbilical, subsea isolation valves and manifolds. The offshore installation campaign is scheduled for completion later this year.

Off Scotland, Total and DONG Energy began construction in late 2011 on twin 18-inch subsea pipelines, each 87 miles, and will start construction late in 2012 on a 30-inch, 143-mile pipeline as part of the development of the Laggan and Tormore gas fields. The$ 3.8 billion project includes a new gas plant at Sullom Voe on Shetland. First gas is planned during 2014 at a peak rate of 14 MMscm/d.

In Germany, work began in 2011 on a 121-mile section of the Norddeutsche Erdgasleitung (NEL) Pipeline that is to run through the state of Lower Saxony. The NEL Pipelines will connect to Nord Stream Pipeline as well as the OPAL natural gas pipeline running to the Czech Republic with the European transmission network. The project is being executed by Wingas, E.ON Ruhrgas and Gasunie.

Statoil has assumed responsibility for the Norwegian Sea Gas Infrastructure (NSGI) project from Gassco and will construct the 298-mile, 30-36-inch subsea pipeline from the Norwegian Continental Shelf to an onshore processing facility at Nyhamna. Production from the field is anticipated in 2016.

Middle East
The Middle East is seeing substantial increases in energy demand which could lead to more pipelines.

Penspen Group and Technip are working for Kuwait Gulf Oil Company to manage and build a gas and condensate export system from Khafji, Saudi Arbia to Kuwait. The export system will include facilities carrying 40 MMcf/d of gas via pipeline to Kuwait and 68 miles of 12-inch export pipeline with 26 miles offshore.

Saudi Aramco awarded Saipem a contract for the Al Wasit Gas development involving the Arabiyah and Hasbah offshore fields that will require 12 wellhead platforms, two tie-in platforms and one injection platform, a 36-inch, 162-mile export trunkline and 125 miles of mono-ethylene glycol (MEG) pipelines, 125 miles of subsea electric and control cables and 25 miles of offshore flowlines. Work includes shore approaches and 75 miles of onshore pipelines. Completion is scheduled in 2013-14.

In the Arabian Gulf, McDermott is working on a turnkey EPCI contract to installation several platforms and subsea facilities as well as modifications to existing infrastructure and more than 62 miles of rigid and flexible pipelines and cables.

South America, Central America, Caribbean
This region has seen a recent upturn in construction and holds promise for more.
In Argentina, pipeline construction is expected to increase with news that YPFB SA will invest about $7 billion a year from 2013-2017 to increase production.

In southern Peru, construction has begun on the South Andean Gas Pipeline (also known as the Gasoducto Andino de Sur). The 675-mile pipeline will transport gas from central to southern Peru for use in copper mines. The route runs from the Camisea gas fields, located in Cusco, to Juliaca, and Andean city near the Bolivan border. Conduit Capital subsidiary Kuntur Transportadora de Gas, winner of the construction contract, said construction is expected to take up to three years.

In Venezuela, Saipem has a contract with PDVSA Petroleo S.A. to install a 36-inch, 68-mile export sea line to connect the Dragon Gas platform off the northeast coast to the CIGMA complex near Guiria and in the Gulf of Paria. Completion is scheduled for early 2013.

Several projects are slated in Brazil where plans by Petrobras call for Saipem to install the Guara and Lula-Northeast gas export pipelines in the Santos Basin. A 34-mile, 18-inch line will connect the Guara FPSO vessel to a subsea gathering manifold in the Lula field; a second 14-mile, 8-inch line will connect the Lula-Northeast FPSO to the same manifold in the Lula field.

Colombian projects include an oil pipeline to link the Llanos Basin to the Pacific coast. Planners envision commissioning the 200,000- 400,000 bpd line by 2016.

Acknowledgement
U.S. Energy Information Administration, The International Energy Outlook 2011 (IEO2011).
Pipelines International , July 5, 2012
Rigzone, July 3, 2012.