Pilgrim Pipeline Looking To Move Products, Crude In Hudson Valley Corridor

February 2015, Vol. 242, No. 2

Michael Reed, Managing Editor

The Pilgrim Pipeline project has the potential to do more good for the Northeast than just bolstering the flow of refined products and crude between New York Harbor and Albany, NY – it could also remove 6 billion gallons of petroleum a year from barges on the Hudson River.

“By vastly reducing the number of barge trips up and down the river the quality of air will be significantly improved not only in New York and New Jersey, but also downwind,” Errol Boyle, president of Pilgrim Pipeline, told PG&J. “The risk of small or even catastrophic spills is eliminated as well.”

As designed, the $820 million Pilgrim Pipeline will consist of a products pipeline running north from the harbor to Albany, delivering barrels that are currently arriving by barge, Boyle said. A separate pipeline will deliver crude oil to the harbor without the need for unit trains.

The pipelines will cover 58 miles in New Jersey and 115 in New York along the same route. Preliminary plans call for the pipelines to be no more than 24 inches in diameter. The system will ship 400,000 bpd of crude from Albany to the liquids hub in Linden, NJ and have shut-off valves at 10-mile intervals.

From a safety standpoint, data from the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) show pipelines have a better record when measured by incidents, injuries and fatalities than marine transportation, including barge operations. Additionally, shipping refined petroleum products by barge from New York Harbor up the Hudson River to serve the Hudson Valley Corridor poses a threat to the area’s black sturgeon and other endangered species.

Pilgrim estimates its pipeline will replace more than 1,200 barge trips per year. Based on EPA and state data, the annual total greenhouse gas emissions in carbon dioxide equivalent (CO2e) for transporting the crude and refined products by the Pilgrim Pipeline would be about 20% lower than moving the same volumes of crude and refined products by barge.

“We are going to transport the same number of barrels as unit trains do now,” Boyle said. “Will it affect the unit train movement into the refineries? I don’t know. The economics are there, but it will be up to the individual shippers to make that determination.”

The area to be served is one of the last remaining heavily populated places in the United States still relying on river barges to transport critical supplies of oil and refined products, including gasoline and heating oil to homes and businesses. This has left it susceptible to shortages when rivers and harbors freeze in the winter.

Connecticut-based Pilgrim, a private company formed in 2003, intends to submit its permits for work to begin in both New Jersey and New York early this year. If all goes as planned, the company expects the pipelines to be operational in 2017.

“As with most pipelines and construction projects, there will be rivers and wetlands to cross and aquifers to contend with,” said Boyle, whose career includes executive management stints with All American Pipeline and Cajon Pipeline. “This will require that a myriad of other permitting issues be avoided or mitigated.”

Because pipelines are not affected by adverse weather the way barges and other forms of transit are, the Pilgrim Pipeline project will complete a permanent, secured supply chain for the region all the way to the Gulf Coast. In other words, a barrel into the pipeline equates to a barrel out of the pipeline at its destination.

“As long as there is heating oil available in New York Harbor, Pilgrim will be able to deliver that to the distributors along the Hudson Corridor,” Boyle said. “There will be no disruptions in the winter months due to ice flows, or during extremely adverse weather conditions like the hurricanes that have shut the harbor down for several days. The pipeline will continue to run during these times.”

Once in service, Pilgrim Pipeline will offer shippers savings of about 25%, the company estimates, and address long consumer waiting times caused by the limited number of holding tanks available and the relatively small size of tankers in use on the Hudson River. This will allow additional standby transportation capacity to be available for surges in demand.

Despite these advantages, the sensitive nature of the environment has caused some concern among those living in the region. The New Jersey Assembly on Dec. 18 approved a resolution opposing the pipeline, driven largely by uneasiness over safety. Pilgrim continues to hold meetings with county and local governments in affected areas.

To the extent resistance to the pipeline has occurred at local meetings, it has come primarily from outside groups opposed to all carbon-released energy, not this pipeline in particular, Boyle said.

“The few truly local residents who have taken part in public meeting so far are mostly curious about where the route will be sited,” the Oregon State College alum said. “Right now the pipeline is still subject to being moved” if technical or environmental issues so dictate.

As proposed, about 93% of the route would fall alongside or within existing transportation corridor rights-of-way, which would limit Greenfield construction and provide the least amount of disturbance to residents of both states.

As the pipeline heads south from the state capital of Albany it will run along the New York State Thruway within the existing highway easement. In New Jersey, the vast majority of the route would run along existing utility rights-of-way.

Additionally, surveys that must be conducted in accordance with New Jersey state regulations require a standard land review before permits are issued. This would mean less clearing of vegetation, less crossing of privately owned properties and the ability to better avoid endangered species. The footprint of the pipeline is only about 66 inches wide.

Pilgrim plans to outsource construction of the pipeline to a consortium of contractors who will draw skilled employees from labor unions. At its peak, the multiple spreads in New Jersey and New York will require about 2,000 temporary workers. At the project’s completion about 50 permanent jobs will have been created.

“The availability of labor is one of our concerns,” Boyle said. “We are aware there are a number of proposed pipeline projects falling within our same time frame. It is something that we keep in mind and it definitely will be a challenge.”

The larger pipeline projects planned for construction in the area include:

• Sunoco Logistics’ $2.5 billion natural gas liquids (NGL) pipeline from the Marcellus and Utica shales to refineries and export points on the East Coast. The Mariner East 2 will start in Ohio, running about 350 miles to Houston, PA where existing lines will run parallel to the East Coast. The pipeline will initially move 275,000 bpd of NGLs when it becomes operational in the fourth quarter of 2016.

• The recently federally approved 124-mile, 30-inch Constitution pipeline, which will connect gas from Susquehanna County, PA to existing transmission lines in New York. Operated by subsidiaries of Williams Partners, Cabot Oil and Gas, Piedmont Natural Gas, and WGL Holdings, construction is expected to begin by March with the pipeline possibly going online by the end of next year and shipping 650 MMcf/d.

With the Pilgrim Pipeline traversing several sensitive water areas and operating in limited space much of the time, crews will be using horizontal directional drilling (HDD) more frequently than they would otherwise.

“We know there are areas where we will be going through rock,” said Boyle, who began his career as an engineer for Mobil Pipeline. “That, along with several bodies of water we have to cross, will present a fair number of challenges.”

Boyle, who has been involved in petroleum transportation for more than 45 years and has experience with pipelines, marine tankers and trucks, said in the final analysis it’s not transportation that creates demand.

“The pipeline is the best and safest means of transporting crude oil to its destination,” Boyle said. “Will refineries along the East Coast run more crude oil because they have access to a pipeline? No. They run at a capacity that is dictated by market economics and demand for the refined products, not based on a connection or lack of a connection to a pipeline.”

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