P&GJ’s Midyear International Pipeline Report

August 2015, Vol. 242, No. 8

P&GJ’s 2015 international pipeline survey indicates 70,308 miles of pipeline are in various stages of construction or planned. Of these, 32,013 miles account for projects in the planning and engineering phase, while 38,295 miles are in various stages of construction.

The following reflect new and planned pipelines miles in the six basic geopolitical regions used in this report (see accompanying map). Asia Pacific – 31,250; Former Soviet Union and Eastern European Countries – 15,110 ; South-Central America and the Caribbean – 6,036; Middle East – 8,841; Africa – 3,406 ; and Western Europe and European Union countries –5,665. For information on these and other pipeline projects, see P&GJ’s sister publication, Pipeline News.

Energy Outlook

The 2015 edition of the BP Statistical Review of World Energy highlights the continuing importance of the U.S. shale revolution, noting the U.S. surpassed Saudi Arabia as the world’s biggest oil producer and Russia as the world’s largest producer of oil and gas.

The Review records primary energy consumption slowing markedly, with growth of just 0.9% in 2014, a lower rate since the late 1990s (other than in the immediate aftermath of last decade’s financial crisis). Chinese growth in consumption fell to its lowest level since 1998.

The Review provided the accompanying graph while noting that world natural gas consumption grew just 0.4%, well below the 10-year average of 2.4%. Production grew 1.6% in 2014, below its 10-year average of 2.5%. Growth was below average in all regions except North America. The U.S. (+6.1%) recorded the largest increase, accounting for 77% of net global growth. The largest volumetric declines were in Russia (-4.3%) and the Netherlands (-18.7%).

Pipeline shipments declined 6.2%, the most on record, driven by drops in net pipeline exports from Russia (-11.8%) and the Netherlands (-29.9%).

Africa

Following a ruling on a maritime border dispute between Ghana and Ivory Coast, Tullow Oil Plc is continuing development work on the Tweneboa, Enyenra and Ntomme (TEN) project off the West African coast. The project remains on schedule to deliver first oil in 2016.

Operator Anadarko selected a consortium for initial development of the onshore LNG park in Mozambique. This includes two LNG trains, two LNG storage tanks and associated utilities and infrastructure.

A feasibility study is planned for a segment of the 487-mile Eldoret-Kampala-Kigali pipeline. An initiative of Kenya, Uganda and Rwanda, the pipeline will deliver refined products from Uganda to Rwanda, eliminating tanker transportation. Completion is scheduled in 2017.

Caribbean, South and Central America

Tipiel S.A., Technip’s subsidiary in Colombia, has a contract from Consorcio Constructor Ductos del Sur covering development of a pipeline to transport gas from the Camisea field to southern Peru. Launched by Peru, the project includes 1,056 miles of 32-inch pipeline.

In Brazil, Fluor was part of a consortium awarded a contract by Parnaíba Gás Natural (PGN) for engineering, procurement and construction (EPC) of a natural gas project in the state of Maranhão. The developers will be responsible for the EPC of a gathering system in the Gavião Branco field as well as a pipeline transporting the gas to a production and treatment facility located at the Gavião Real field.

Western Europe, European Union

BP and its co-venturers, ConocoPhillips, Chevron and Shell, recently completed installation of the Clair Ridge platform. The field is west of Shetland in depths of 140 meters. Development comprises two bridge-linked platforms and pipelines to connect storage and redelivery facilities on Shetland. The next milestone will be installation of the production and drilling platform topside modules, scheduled in 2016 with production in 2017.

On the Norwegian shelf, development of the Johan Sverdrup discovery is projected to prolong the life of the Norwegian oil industry for several decades. The discovery is being developed to reach first oil in 2019.

The full field gross recoverable contingent resources range for Johan Sverdrup is estimated at between 1.7-3 billion barrels of oil equivalent with 95% being oil. When the full field plateau production is reached, it could represent 25% of Norwegian oil and gas production.

Field development is being undertaken in several phases and with multiple fixed platform installations. Oil and gas production will be transported to shore via dedicated oil and gas pipelines. A 170-mile, 36-inch oil pipeline will be installed and connected to the Mongstad oil terminal on the west coast of Norway. A 103-mile, 18-inch gas pipeline will be installed and connected to the Kårstø gas terminal for processing and onward transportation.

Slovak pipeline operator Eustream will begin operations of the Hungarian-Slovakia gas pipeline. The reverse-flow pipeline will have an annual capacity of 155 Bcf on flows from Slovakia to Hungary and of 56.5 Bcf/yr the other way. The goal is to widen options for gas flows in central Europe, making the region more resilient to potential disruptions of Russian gas supplies via Ukraine, and ease reverse-flow gas supplies to Ukraine.

Asia Pacific

China National Petroleum Corp.’s third West-to-East natural gas pipeline is slated for completion later this year. The line will run from western Xinjiang to Fujian. It will cross 10 provinces and have a total length of 4,584 miles, including 3,240 miles of trunkline and eight branches. The project includes three gas storages and a LNG plant. It will have a capacity of 30 billion cubic meters per annum (Bcma).

CNPC proposes fourth and fifth West-to-East Gas pipelines, both anticipated to have a capacity of 45 Bcma.

India’s Oil and Natural Gas Corp. announced a $6.51 billion program to develop new oil and gas fields and increase its petroleum production. ONGC allocated $3.77 billion to develop six projects on India’s east and west coast and $2.73 billion to redevelop the Mumbai High fields and the Heera-South Heera fields in the western offshore region.

The company’s largest single project is the western offshore Daman field, costing an estimated $949.42 million to develop. Cumulative production from Daman is projected to reach 977 Bcf of gas by 2034-2035.

Australia

With four operating LNG developments, six more under construction and other projects being considered, LNG remains the focus in Australia where Bechtel is constructing the state’s first three LNG plants to convert commercial quantities of coal seam gas into liquid form ready for export. When complete, the operators will produce the commodity for export to global customers.

At full capacity, the three Curtis Island projects combined will begin producing about 25 mtpa of LNG for the global market later this year. Bechtel is also the principal downstream contractor for the Chevron-operated Wheatstone Project in Western Australia.

Work is ahead of schedule on Shell’s Prelude Floating LNG project. The FLNG facility will be the largest floating offshore facility in the world and will be towed 200 miles northeast of Western Australia. Completion is due in 2016.

Former Soviet Union & Eastern Europe

Azerbaijan wants to establish a Southern Corridor for gas exports to Europe via the Shah Deniz 2 project in the Caspian. This involves one of the world’s largest gas projects and will increase production of the Shah Deniz field. The Shah Deniz development is being implemented with expansion of the 429-mile South Caucasus pipeline. Investment of the two components is $28 billion. First gas from the field to Georgia and Turkey is targeted in 2018.

Construction has begun on the Trans-Anatolian Natural Gas Pipeline (TANAP) from Azerbaijan that will travel through Georgia and Turkey to Europe. The pipeline will be a central part of the Southern Gas Corridor, connecting the Shah Deniz to Europe through the South Caucasus Pipeline (SCP) and Trans Adriatic Pipeline (TAP).

Gazprom announced the construction start of the Turkish Stream pipeline to replace the South Stream project. Turkish Stream would start near Anapa and terminate in northwestern Turkey. Capacity of the pipeline is 2.2 Tcf a year of gas with Turkey taking 490 Bcf and the rest exported to Europe. The project should be completed by 2019.

Work is underway on the Power of Serbia 2,500-mile pipeline to deliver 38 bcma of Russian gas to China. The pipeline should be operational in 2018. Work will begin soon on a second PoS pipeline.

In the Arctic Transneft began work on the 435-mile Kuyumba-Taishet oil pipeline that will run from Siberia’s northern fields to China. In Eastern Siberia, Transneft is constructing the 300-mile Zapolyarye-Purpe pipeline that will run to Asia. The final phase is to set for 2016.

In the early planning phase is the proposed 1,137-mile, 56-inch gas pipeline that will run from Turkmenistan to Afghanistan, Pakistan and India.

Middle East

The first phase of Kuwait Oil Co.’s Lower Fars heavy oil development includes a 100-mile pipeline to transport the crude. When fully operational the project will produce 60,000 bopd.

In Abu Dhabi, Gasco has launched construction on the Habshan-Maqta-Taweelah gas pipeline project. This includes two 52-inch pipelines and a 52-inch and 42-inch pipeline. Completion is slated for 2016.

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