June 2015, Vol. 242, No. 6

In The News

In The News: Obama Gives Final Approval to Cove Point LNG Terminal

The Obama administration on May 7 granted final approval to a $3.8 billion natural gas export facility in Calvert County, MD – the first gas export site on the East Coast. Environmentalists sued within hours to stop the project.

After lengthy reviews that spanned multiple federal agencies, the Energy Department approved plans for the Cove Point liquefied natural gas terminal. This allows Dominion Resources, Inc. to ship fuel to countries with which the United States does not have free trade agreements. The site, expected to come online by late 2017, is authorized to export up to 0.77 Bcf/d of LNG for the next 20 years.

“The development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development and job creation around the country. This increase in domestic natural gas production is expected to continue,” the Energy Department said in a statement.

With Keystone XL in Limbo, Sister Line Nears Billion Barrels to US

While TransCanada Corp.’s Keystone XL pipeline continues to stir debate at the highest levels of U.S. government, its namesake sister line is closing in on 1 billion barrels of oil sands crude delivered to refineries and added more than C$1 billion in EBITDA to the company’s bottom line in 2014.

The Keystone pipeline, which takes an indirect route from northeastern Alberta to Steel City, NE, and then on to refineries in the Midwest and Gulf Coast, has delivered 900 MMbbls since it went into service in 2010, two years after the company asked the State Department for the more direct Keystone XL line. The Keystone network now includes connections to Texas refineries that will be expanded later in 2015, TransCanada President and CEO Russ Girling said at the annual shareholder meeting May 1.

“We need a pipeline from Alberta to the Gulf Coast, and in the absence of that, we’ve moved to greater rail transportation,” Girling said. “We’ve seen rail transportation go from essentially zero to 1.5 million barrels per day. Certainly that has greater impact on [greenhouse gas] emissions, safety and the environment than building a pipeline.’

FERC Issues Pipeline-Friendly Rules

The Federal Energy Regulatory Commission handed interstate transmission companies two wins on two different issues. The commission had published a proposed policy statement last year allowing pipeline companies to charge extra “tracker” fees, or surcharges, to shippers and a proposed rule improving delivery coordination between gas suppliers and electric utility purchasers. A second proposed rule dealt with required timing of natural gas deliveries to electric utilities.

The final policy statement allowing trackers essentially endorses the proposed rule, and sets some conditions for the use of trackers by pipelines, none of them considered onerous. The tracker would have to be negotiated with customers, and the revenue raised be used by the interstate pipeline company to modernize infrastructure, for example.

The gas-electric coordination final rule paralleled the proposal of last year, except that it ditched a proposal to move the 9 a.m. Central Clock Time (CCT) start of the gas day to 4 a.m. CCT. The Interstate Natural Gas Association of America (INGAA) had opposed that move both for safety reasons, arguing certain operations would have to be done in the dark, and for financial reasons, as pipelines would have to provide uncompensated park-and-loan services for customers for which they do not have capacity.

INGAA had no problem with other aspects of the final rule, including moving the timely nomination cycle deadline for scheduling gas transportation from 11:30 a.m. CCT to 1 p.m. CCT and adding a third intraday nomination cycle during the gas operating day to help shippers adjust scheduling to reflect changes in demand.

– Stephen Barlas

Court Halts Stream Crossings by Gas Pipeline in Baltimore County

A Baltimore County judge has temporarily blocked completion of a 21-mile natural gas pipeline through northern Baltimore and Harford counties, declaring that state regulators have not done enough to protect environmentally sensitive waterways and historic properties.

The Maryland Department of the Environment was ordered to revise the permit it issued last year to Columbia Gas Transmission to lay a 26-inch pipeline from Owings Mills to Fallston. The judge said regulators failed to define how the company must protect rivers and streams, making it impossible to tell if the project meets state and federal water quality regulations, according to the Baltimore Sun.
The judge said the state didn’t properly notify affected property owners or give them a chance to weigh in on the $180 million project. Nor did the agency do enough to check for potential impacts to historic dwellings, he ruled.

Scott Castleman, a spokesman for Columbia Pipeline Group in Charleston, WV, said the company “will continue to work with state and local officials and neighbors to move this important project forward.”

Columbia is halfway done laying the pipeline, which runs parallel to an existing one. Castleman said the project is “vital to strengthening the natural gas infrastructure of central Maryland and surrounding communities.”

Enable Midstream Acquires Monarch Gathering Assets in Texas Panhandle

Oklahoma city-based Enable Midstream Partners, LP has completed acquisition of $80 million of strategic natural gas gathering assets in the Texas Panhandle from Monarch Natural Gas, LLC.

The assets are underpinned by long-term dedication of 35,000 net acres from a producer who is an Enable Midstream customer. The 88 miles of recently built gathering pipeline and 5,000 hp of associated compression will provide gathering services to the natural gas producer drilling in Lipscomb and Hemphill counties as well as other local producers.

“This acquisition opens new opportunities for us to grow by extending our midstream services to several producers operating farther west in the Cleveland Sands Play where wells continue to provide attractive returns,” said Enable Midstream President and CEO Lynn Bourdon.

Crimson Buys ExxonMobil Pipeline Assets

Houma, LA-based Crimson Gulf, LLC has acquired the South Marsh Island gathering system and the Southwest Louisiana Onshore Pipeline system from ExxonMobil Pipeline Co. The pipelines span a collective 220 miles from offshore Gulf of Mexico to Krotz Springs, LA, expanding Crimson’s capacity to transport crude oil in the region. The system includes 105 miles of offshore pipeline and 115 miles of onshore pipeline, including three break out tanks and pumping stations.

“This acquisition is very synergistic with our existing operations and expands the reach of our resources in the region, positioning Crimson for continued, healthy growth in the future,” said Larry Alexander, president of Crimson Gulf. “Crimson Gulf will continue to identify the right investment opportunities to support our expansion efforts and provide attractive transportation options for crude oil customers in South Louisiana and the Gulf of Mexico.”

Crimson Gulf has seen significant growth since it began operating in the Gulf of Mexico and Louisiana in 2012. Its network of owned and operated pipelines traverses over 800 miles and is comprised of nine pipeline systems connecting to 100 offshore oil platforms and production sites.

Constitution Pipeline Revises Application for New York State

Constitution Pipeline Company has re-submitted its application for a critical water quality permit to the New York state Department of Environmental Conservation (DEC). The permit is one of the last remaining hurdles for the 124-mile pipeline that will carry natural gas from Pennsylvania to New York City and New England. The Federal Energy Regulatory Commission has approved it.

Pipeline spokesman Christopher Stockton said the resubmission was requested by DEC to allow the agency more time to complete its review of the project’s potential impacts on wetlands and water quality. The agency had faced a May 8 deadline. He said there were no changes from the previous version, and he doesn’t expect it to delay DEC’s final determination. Stockton said the company hopes to start construction in the next few months.

Exelon Companies Support Baltimore with $200,000 Donation

To support residents of Baltimore as the city continues to recover from recent events and help set the stage for long-term solutions, Exelon and its Baltimore-based companies, BGE and Constellation, have made a joint donation of $200,000 to nonprofits that are leading response efforts.

To address immediate needs and support sustainable long-term programs, the companies will donate $100,000 to the Maryland Unites Fund, established by the United Way of Central Maryland in partnership with the State of Maryland, to provide humanitarian aid and emergency supplies to affected neighborhoods.
The companies also will contribute $100,000 to the Baltimore Community Foundation for the recently established Fund for Rebuilding Baltimore to help rebuild damaged businesses and support a sustained effort to address longer-term community needs. All of the funds will be used in direct support of these initiatives.

“The Exelon family of companies is part of the fabric of Baltimore and the surrounding communities. Not only do we have major business operations here, our employees and our customers live here,” said Chris Crane, president and CEO of Exelon. “The recent events affected us deeply, and we knew immediately that we needed to help.”

The companies are also collaborating with city and community leaders and organizations on longer term initiatives focused on job training and employment opportunities, youth development and strengthening neighborhood resources.

“BGE has roots in Baltimore that go back almost 200 years,” said Calvin Butler, BGE’s CEO. “We are strongly committed to Baltimore’s stability, economic vitality and community spirit.”

Employees will also participate in a number of company-supported volunteer efforts as community partners identify short- and long-term priorities.

Oregon LNG Says Local Permit Denial Not a Problem

Oregon LNG still plans to move ahead with its proposed $6.3 billion liquefied natural gas export facility in Warrenton despite a state agency decision upholding a county denial of a land-use permit for a pipeline to deliver gas to the facility, CEO Peter Hansen said.

The Oregon Land Use Board decision would have no effect on the LNG project, he said, because the Federal Energy Regulatory Commission (FERC), not the state, will regulate the development.

The Oregon Land Use Board of Appeals upheld Clatsop County’s denial of a permit for construction of a 40-mile segment of an 87-mile gas pipeline that would run through the county. In April, FERC set a schedule for environmental review of Oregon LNG’s proposal to build a facility near the mouth of the Columbia River. FERC expects to issue its final environmental impact statement for the project – the LNG plant and the pipeline – next February.

Hansen said the project sponsor will overlook the actions of the county and state board, saying they are irrelevant to the project’s outcome.

“We have had this ongoing conflict with Clatsop County for years, and we knew that they were not going to issue us a local permit, but we don’t need a local permit. It’s a FERC-jurisdiction pipeline and it’s very clear that local governments do not have jurisdiction and the state is not allowed to give them jurisdiction,” he said. “The county has adopted an anti-fossil fuel position.”

Offshore Technology Conference Attendance Remains Strong in 2015

More than 94,700 attendees from 130 countries attended the Offshore Technology Conference in Houston, a 10% drop from 2014 but still the sixth-largest attendance in the 47-year history of OTC. The sold-out exhibition was the largest in show history at 695,005 feet, including outdoor exhibits, up from 680,025 feet in 2014. The conference also had 2,682 companies exhibiting, up from 2,568 in 2014, representing 37 countries. International companies made up 42% of exhibitors.

UH Graduate Students’ Idea for Treating Frack Water Earns Top Honors

Graduate students from the University of Houston won top honors in the Texas Energy Innovation Challenge with a plan to harness geothermal energy to treat water produced during hydraulic fracturing.

The competition, held May 1 in Austin, featured five teams of graduate and professional students from across the state, tasked with researching and developing the most creative and cost-effective use for water produced from the hydraulic fracturing of wells. The competition was sponsored by Power Across Texas, with a panel of judges from the energy industry.

There is a growing desire to recycle or reuse the water used in the fracking process but the cost has kept many companies from doing so. Most inject the water into disposal wells. Concern has been raised about disposal wells – studies have linked wastewater disposal to small earthquakes, and many shale plays are in water-scarce regions.

UH team members, using the name GeoThermH2O, proposed to harness geothermal energy from decommissioned wells to reduce the cost of water treatment. Under their plan, a closed loop system using a small volume of freshwater would be recirculated in the decommissioned well to power a desalination unit, capable of cleaning and recovering about 70% of the water. That treated water could become an inexpensive, drought-resistant source of water for agricultural and nonpotable municipal use.

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