P&GJ’s 2015 survey figures indicate 100,114 miles of pipelines are planned and under construction worldwide. Of these, 57,201 represent projects in the planning design phase while 42,913 reflect pipelines in various stages of construction.
Following is a look at new and planned pipeline miles in the seven basic regional groups (see area map). North America – 34,147; South/Central America and Caribbean – 8,327; Africa – 7,015; Asia Pacific – 31,348; Former Soviet Union and Eastern Europe – 12,632; Middle East – 4,976; and Western Europe and European Union – 1,669. For information on these and other pipeline projects, see P&GJ’s sister publication, Pipeline News.
The EIA’s Short Term Energy Outlook released in November shows total U.S. crude oil production averaged an estimated 8.9 MMbpd in October, and monthly average production was forecast to surpass 9 MMbpd in December. Projected total crude oil production averages 9.4 MMbpd in 2015 and would be the highest annual average production since 1972. Natural gas plant liquids production is expected to increase from 2.6 MMbpd in 2013 to 3.2 MMbpd in 2015.
Natural gas working inventories on Oct. 31 totaled 3.57 Tcf, 0.24 Tcf (6%) below the level a year ago and 0.26 Tcf (7%) below the previous five-year average (2009-13). Despite the lower stocks at the start of the winter heating season, EIA expects the Henry Hub natural gas spot price to average $3.97/MMBtu compared with $4.53/MMBtu last winter. This price forecast reflects both lower expected heating demand and significantly higher natural gas production.
The EIA’s report, Liquids Fuels and Natural Gas In the Americas, points out the trend of foreign investors in hydrocarbon resources in the Americas and countries with the most open structures – like Canada, Brazil, Colombia, and the United States. Mexico, which has adopted new reforms that allow some foreign private investment in the energy sector, looks to join their ranks.
Investor focus is on developing and producing liquid fuels and natural gas. Moreover, both international oil companies and state-owned oil companies in the Americas have made the most substantial investments, followed by companies based in Europe, Asia and Oceania. Asian investments have dramatically increased in the past five years, in particular, investment by China’s national oil companies to secure both crude oil supplies and physical assets, such as refineries.
Not surprisingly, the hot topic in North America is TransCanada’s long-delayed Keystone XL pipeline to ship crude oil and diluted bitumen from Alberta’s oil stands to refineries in the U.S. The first three phases of the project have been built. The fourth phase, Keystone XL, calls for a 1,179-mile, 36-inch pipeline to move oil sands from Hardisty, Canada to Steele City, NB, and allow product to be shipped to Texas refineries on the Gulf Coast.
Now, with the U.S. House and Senate under Republican control, one of the first pieces of legislation was the Keystone XL bill. The House recently voted 266 to 155 to approve construction. At the time of this writing, a similar bill was scheduled to go to the Senate for a vote, although President Obama has threatened a veto.
Much of the activity in the region continues in shale play areas. Sunoco Logistics Partners plans to build the $2.5 billion Mariner East 2 pipeline to carry up to 275,000 bpd of NGLs from the Marcellus and Utica shale plays to East Coast ports. The first phase of the project, Mariner East 1, was scheduled to be completed by year-end 2014 and carry70,000 bpd of NGLs. Mariner East 2 is scheduled to begin service by the end of 2016 and will connect processing plants in western Pennsylvania, West Virginia and eastern Ohio with the Marcus Hook Industrial Complex near Philadelphia.
Sunoco announced a successful open season for its Permian Longview and Louisiana Extension projects that will carry oil from the Permian Basin in Texas to refiners in the eastern part of the state and Louisiana.
Atlantic Coast Pipeline, LLC, a Dominion Resources, Duke Energy, Piedmont Natural and AGL Resources joint venture, plans to build 550 miles of pipeline that will originate in Harrison County, WV in the heart of the Marcellus Shale basin. The ACP project will provide wholesale transportation services from the Marcellus and Utica plays to Virginia and North Carolina markets. The initial scope of the pipeline is designed at 1.5 MMDth/d.
Williams’ Western Marcellus Pipeline project is designed to provide over 1 Bcf/d of gas transportation capacity from receipt points in the western Marcellus and Utica areas to points as far south as Transco’s Zone 3 compressor station 65 in Mississippi and as far north as the proposed Zone 6 River Road point in Pennsylvania by late 2018.
Lone Star LLC, a joint venture of Energy Transfer Partners and Regency Energy Partners LP, will construct a 533-mile, 24- and 30-inch NGL pipeline from the Permian Basin to Mont Belvieu, TX and convert Lone Star’s existing West Texas 12-inch NGL pipeline into crude oil/condensate service. The new pipeline and conversion projects, estimated to cost between $1.5-1.8 billion, should be operational by the third quarter of 2016 and first quarter of 2017, respectively.
TransCanada is moving ahead with its $12 billion Energy East project that will convert a portion of natural gas pipeline capacity in 1,864 miles of its existing Mainline to crude oil service and constructing 870 miles of pipeline. Energy East will have a capacity of 1.1 MMbpd and is anticipated to be in service by late-2017 for deliveries in Québec and 2018 for deliveries to New Brunswick.
The company is involved with Brion Energy Corp., formerly Phoenix Energy Holdings Ltd., to develop the Grand Rapids Pipeline project in northern Alberta. The $3 billion project includes crude oil and diluent lines to transport volumes 287 miles between the oil sands northwest of Fort McMurray and the Edmonton/Heartland region. The pipeline is expected to be placed in service in stages with initial crude oil service by mid-2016.
In northeast BC, Pembina Pipeline Corp. has a $210 million NEBC expansion to transport condensate and NGLs for producers in the liquids-rich Montney resource play. The project entails constructing 370 miles of up to 12-inch pipeline with a base capacity of up to 75,000 bpd. Pembina anticipates bringing the project on-stream in 2017.
Profound change could be coming to Mexican oil production. Oil and gas production could rise up to 75% compared to EIA’s assessment last year – a result of new legislation opening the energy market to direct foreign investment.
“The changes in EIA’s assessment of Mexico’s liquids production profile are profound,” the agency said. “Although there are many complexities to the new reform and many details that still must be settled before they can take effect, reform is expected to improve the long-term outlook for growth in Mexico’s petroleum and other liquids production.”
Previously, foreign companies have been forced to partner with state-owned petroleum company Pemex. The new law introduces profit- and production-sharing contracts for foreign companies as well as licenses that allow companies to be paid with the oil and gas extracted in mining projects.
TransCanada’s presence is growing as Mexico seeks to connect supply of natural gas to demand markets by expanding its transportation grid. Key for much of this growth in infrastructure is the increase in demand from industrial users as well as from the power sector, which is pursuing a reliable low-cost source of clean energy.
In 2012, TransCanada was awarded two pipeline projects in the northwest region. The El Encino-Topolobampo Pipeline and the El Oro-Mazatlan pipelines are expected to be into service in 2016. The pipelines will connect U.S. natural gas to key demand centers along the Pacific Coast of Mexico. By 2016, TransCanada’s total investment in Mexico will be US$2.6 billion.
NuStar Energy L.P. and PMI, an affiliate of Pemex, have signed a letter of intent for a proposed joint venture in which the companies will fund new pipeline and storage assets which NuStar would manage and operate. Plans call for a pipeline to deliver LPGs and refined products from Mont Belvieu and Corpus Christi, TX to Nuevo Laredo and Burgos-Reynosa. The projects are expected to be completed and placed into service in the second half of 2016.
Odebrecht is constructing the 750-mile Los Ramones pipeline for Pemex that will extend from the U.S.-Mexico border into central Mexico. The pipeline has a transportation capacity of 2.1 Bcf/d and is slated for completion later this year.
Mexico and Guatemala signed an MOU last April to build a $600 million, 370-mile pipeline to transport gas from Salina Cruz to Escuintla, Guatemala. Pemex will build a 260-mile segment of the line and Guatemala the remaining 112 miles.
Caribbean/South & Central America
This region accounts for 8,327 miles of new and planned pipelines.
SICIM SpA is working in Colombia to complete a three-phase construction contract to build the 596-mile Oleoducto Bicentenario oil pipeline from Casanare to the Port of Covenas. The $4.2 billion project is expected to be completed later this year.
Brazil’s Petrobras has contracted Saipem for construction of subsea facilities for the Lula Norte, Lula Sul, and Lula Extremo Sul projects in the Santos Basin.
Saipem will install three offshore pipelines, associated pipeline end terminals and freestanding hybrid risers for the gas export systems to be installed in the Lulu field in water depths up to 7,200 feet. The work is scheduled to begin this year.
Petrobras plans to develop the Iracema oil filed 160 miles off the coast of Rio de Janeiro in the Santos Basin. Technip was awarded a contract from Tupi BV, a consortium made up of Petrobras Netherland BV (65%) BG (25%) and Galp (10%), to supply 70 miles of flexible pipes.
In Trinidad, Technip is working for BP Trinidad and Tobago LLC to develop the Juniper project off the southeast coast. The project will feature construction of an unmanned platform together with corresponding subsea infrastructure, a first for BP Trinidad and Tobago. The development will include five subsea wells and will have a production capacity of 590 MMscf/d. First gas is expected in 2017.
Pipeline sabotage from oil theft and poorly maintained, aging pipelines have continued to cause oil spills resulting in land, air, and water pollution. Despite the challenges, developments are underway.
Off Angola, a consortium comprising Technip and Heerema Marine Contractors won a contract from Total E&P Angola for the engineering, procurement, construction, installation and pre-commissioning for the subsea umbilicals, risers and flowlines part of the Kaombo project in water depths up to 2,000 meters. The project is scheduled for completion in 2018.
Construction of the multi-product oil pipeline from Mombasa to Nairobi began last July after the signing of a contract between the Kenya Pipeline Co. and the contractor Zakhem International Construction Co. Ltd. The project includes design and supervision for construction of the 280-mile, 14-inch pipeline that will replace the existing Mombasa-Nairobi multi-products line built in 1973 by Zakhem.
Toyota Tsusho is designing an oil export pipeline from Uganda to Kenya’s coast. Construction of the 808-mile pipeline is estimated to cost $4.5 billion.
Awaiting development is the 870-mile oil pipeline proposed by Japan’s Toyota Tshusho from Jabu, South Sudan to Kenya’s Lamuport on the Indian Ocean coast.
Several Middle East countries continue to increase exports to Europe and the Asia Pacific region and it remains the largest source of China’s crude oil imports.
In eastern Saudi Arabia, Foster Wheeler’s Global Engineering and Construction Group will develop the Fadhili Gas project which has a planned total processing capacity of 1.5 Bcf/d of non-associated gas. The work scope includes the onshore Khursaniyah upstream facilities, the Fadhili downstream pipelines, a residential camp and industrial support facilities at the new gas plant.
In Oman, Jacobs Engineering Group Inc. was awarded a contract by BP for process and infrastructure work on the Greenfield Khazzan project. This includes services in relation to $2 billion of gas gathering and water pipelines, wellhead production facilities and export pipelines for development of the southern sector of Block 61.
Gasco has launched construction on the Habshan-Maqta-Taweelah Gas Pipeline project which includes installing two 52-inch pipelines, one 52-inch pipeline and one 42-inch pipeline. Completion is slated for 2016.
Alexey Miller, chairman of Gazprom, and Mehmet Konuk, chairman of Botas Petroleum Pipeline Corp., signed a Memorandum of Understanding in Ankara on Dec. 2 for an offshore gas pipeline across the Black Sea toward Turkey. The pipeline will have a capacity of 63 Bcm, with 14 Bcm for Turkish consumers and nearly 50 Bcm conveyed to the border between Turkey and Greece where a delivery point will be arranged. The Russkaya compressor station under construction in the Krasnodar Territory will serve as the pipeline starting point.
News of the Turkish pipeline came on the heels of reports that Russian President Putin had decided to drop the proposed the South Stream pipeline project and the existing facilities were to be repurposed for the new Turkish pipeline.
In eastern Russia, Gazprom is building the Power Of Siberia Gas Transmission Pipeline that will convey gas from the Yakutia and Irkutsk gas production center to the Far East and China. The pipeline will run 2,845 miles through Russia’s Irkutsk Region, the Republic of Sakha (Yakutia), the Amur Region, the Jewish Autonomous Region and the Khabarovsk Territory and have an annual capacity of 38 Bcm of gas.
By late 2018, a 1,362-mile pipeline section will be built to connect a field in Yakutia to the city of Blagoveshchensk on the Russian-Chinese border. Construction of the Chinese section will start soon with completion in 2018.
Transneft is constructing the 435-mile Kuyumba-Taishet pipeline that will run from Siberia’s northern fields and transport oil to China with initial capacity of 15 million tons per year.Transneft is also constructing the 311-mile Zapolyarye-Purpe Pipeline that will also run to Asia. Completion of both oil links is expected by the end of 2016.
A BP Plc-led group has begun a project to pipe natural gas from Phase 2 of the Shah Deniz project in Azerbaijan to Italy, offering the European Union an alternative to Russian supplies. The 2,175-mile corridor will include three pipelines connecting BP’s Sangachal terminal south of Baku, the Azeri capital, with southern Italy via Georgia, Turkey and Greece. Construction is due to be completed in 2018 with first gas deliveries to Europe planned in 2019.
Asia’s robust economic growth boosts demand for energy. The EIA projects total liquid fuels consumption in Asian countries outside the Organization for Economic Cooperation and Development (OECD) at an annual growth rate of 2.6%, from 20% of world consumption in 2008 to over 30% by 2035. Similarly, non-OECD Asia consumption grows by 3.9% annually, from 10% of world consumption in 2008 to 19% by 2035. EIA expects China to account for 43% of that growth.
With Southeast Asian domestic oil production projected to stay flat or decline as consumption rises, countries are looking to new sources to meet domestic demand. China in particular promotes natural gas as a preferred energy source and has set an ambitious target of increasing the share of gas in its energy mix from 3% to 10% by 2020. The South China Sea has potential for significant gas discoveries, creating an incentive to secure larger parts of the area for domestic production.
As to area activity, Gujarat State Petronet Lt.d (GSPL) has awarded Engineers India Ltd. a contract for three natural gas pipelines totaling 2,485 miles. The first pipeline (985 miles) will run from Mallavaram to Bhilwada, the second (1,025 miles) will run from Mehsana to Ghatinda, and the third (47 miles) will run from Bhatinda to Jammu-Srinagar. Total capacity of all three pipelines is 76.25 MMcm/d. Construction is slated for completion in 2017.
In China, China National Petroleum Corp. is constructing the third West-East gas pipeline. The 4,522-mile system consists of one trunk line, eight branches, three gas storage facilities and an LNG station. It will cross 20 provinces and transmit 30 Bcm/y. Completion is scheduled later this year.
CNPC has proposed fourth and fifth West-to-East gas pipelines that are in the planning phase. Both systems are expected to have 45 Bcm/y capacity. CNPC is building 124 miles of the 188-mile pipeline from central India to the north of the country for Reliance Industries Ltd.
Technip won a contract by Total E&P Borneo B.V. involving a project modifying onshore facilities as well as construction of an onshore pipeline to transport gas to the Brunei LNG plant. The project is scheduled for completion in mid-year.
Australia/Papua New Guinea
In Australia six large LNG projects are in development. Four draw from gas fields off the north coast of Western Australia (Gorgon, Prelude, Wheatstone and Ichthys) and two are in Queensland (Gladstone LNG and Australia Pacific LNG). Australia has over $180 billion worth of LNG projects under construction.
Recently completed was the Queensland Curtis LNG (QCLNG) facility. On Dec.28 the BG Group loaded its first cargo of LNG from its Queensland Curtis LNG (QCLNG) facility. Loading of a BG Group LNG vessel took place at the Queensland Curtis LNG plant, one of three projects Bechtel is building on Curtis Island on Australia’s East Coast.
Bechtel is building six production trains on Curtis Island which will produce about 25 million tons of LNG annually when complete in 2016, the equivalent to powering a city the size of Tokyo with 13 million people. Bechtel is also the principal downstream contractor for the Chevron-operated Wheatstone Project in Western Australia.
Western Europe/European Union
A rise in North Sea oil and gas investments is driving activity in several Western European countries, including the UK and Norway. On the Norwegian Continental Shelf, Statoil began construction of the 298-mile, 30-36-inch Norwegian Sea Gas Infrastructure (NSGI) pipeline in the Luva Field. First production is anticipated in 2016.
Statoil and partners are active in the Edvard Grieg and Ivar Aasen fields where oil will be transported via a 27-mile pipeline to the Grane oil pipeline, then to Sture. The transport solution is a precondition for developing the fields.
In the UK North Sea, Technip is working for EnQuest on the $4 billion Kraken development 250 miles northeast of Aberdeen and 80 miles east of Shetland at a water depth of 120 meters. The contract includes fabrication and pipelay of 30 miles of rigid pipe. First oil is due in 2017.
The Maersk Oil UK-operated Culzean project, one of the largest gas discoveries of recent years in the UK North Sea, has taken a significant step forward. Maersk Oil UK and co-venturers JX Nippon Exploration and Production (UK) Limited and Britoil have chosen a standalone facility to develop the discovery: a complex of bridge-linked platforms with a 12-slot wellhead platform, a central processing facility and utilities/living quarters. Total investment exceeds $4.7 billion. First gas is set in 2017.
Slovak gas pipeline operator Eustream plans to build a $937.5 million pipeline to carry natural gas from Western Europe to the Balkans, relieving the region of its almost total dependence on Russian supply. The 355-mile Eastring Pipeline would have capacity of up to 20 Bcm/y and be able to transport gas from Russia to the Balkans, or from the West to the Balkans.