Enbridge is reducing its workforce by 5% as low oil prices continue to reverberate through the energy sector. The move affects 500 people at all levels of the company in the U.S. and Canada. The company also is leaving 100 positions unfilled. TransCanada has also been cutting staff, starting with its higher leadership ranks.
“While Enbridge is more resilient to commodity price downturns than others, we’re not immune,” spokesman Graham White said. “We’re taking these actions to remain competitive, ensure we can continue to serve our stakeholders well and to further strengthen our foundation for the future.”
Phillips 66 has overhauled how it plans for earthquakes, a sign U.S. energy companies are starting to react to rising seismicity around the world’s largest crude hub in Cushing, OK, Reuters reported. The changes include new protocols for inspecting the health of crude tanks, potentially halting operations after temblors and monitoring quake alerts.
Uptick in Quake Activity Leads to New Strategy
A 4.7 magnitude quake struck in Oklahoma on Nov. 19, the strongest temblor there since 2011. A month earlier, a 4.5 magnitude quake hit near Cushing. Regulators called for nearby disposal wells to shut or curb intakes. Phillips, a refiner, has 167,000 bpd of pipeline capacity and 700,000 barrels of storage tanks at Cushing, home to about 57 MMbbls of crude and a nexus for U.S. supply.
Though most oil companies test the integrity of tanks on an ongoing basis and many told Reuters their tanks are built to the latest construction standards and building codes, some scientists suggest standards should be tightened.
Man-made quakes are not accounted for in tank standards published by the American Petroleum Institute and design loads from the American Society of Civil Engineers.
Canada’s Ban on Tankers Could Kill Northern Gateway Pipeline
Newly elected Canadian Prime Minister Justin Trudeau has put his pledge to ban oil tanker traffic into motion. Trudeau asked his Minister of Transportation to “formalize a moratorium on crude tanker traffic on British Columbia’s North Coast,” the Calgary Herald reported.
This could potentially shut down the Northern Gateway pipeline in which crude oil from Alberta would be piped up to north to British Columbia and then shipped overseas.
The $6.5 billion project from Enbridge was approved in 2014 under 209 conditions. Enbridge spokesperson Ivan Giesbrecht said the company would add “any improvements deemed necessary” to ship the products.
PSE&G Gets OK to Replace 400 Miles of Gas Mains
New Jersey regulators approved a Public Service Electric & Gas Co. plan to replace 400 miles of gas mains over a three-year period and allow the utility to recover the $650 million cost with higher rates. PSE&G can raise rates only as the work is placed into service, according to the Board of Public Utilities.
Upon completion, a typical residential gas customer who uses 1,010 therms a year will pay another $4.80 per month. The utility is replacing aging metal gas mains with plastic piping less likely to leak methane. PSE&G also committed to cover the $205 million cost of installing an additional 110 miles of gas mains in the next three years.
One-fifth of North Dakota’s natural gas production is flared because of lack of infrastructure to take the commodity to market. The gas is mostly a byproduct of North Dakota’s crude oil production.
The state has lowered its percentage targets for flaring, but production increases could keep the volume of gas flared the same. In 2012, North Dakota surpassed Wyoming as the state with the highest volumes of flared natural gas. Even wells connected to gathering systems burned off part of their gas and may require compression and capacity additions to handle the state’s fast gas output growth, the EIA said.
IEA: Global Gas Demand to Grow 50% by 2040
China and the Middle East, spurred by lower prices and ample supply, will drive global natural gas demand growth in the next 25 years as consumption in Europe fails to recover to peak levels seen in 2010, said the International Energy Agency (IEA).
Both regions will become larger users than Europe by 2035, IEA said in its World Energy Outlook 2015. Global demand for gas will rise 1.4% a year to 182 Tcf in 2040, up 50% from 120 Tcf in 2014.
“With gas prices already low in North America, and dragged lower elsewhere by ample supply and contractual linkages to oil prices, there is plenty of competitively priced gas seeking buyers in the early part of the Outlook,” IEA said. Gas will account for 24% of power generation by 2040, up from 21% in 2013, as the share of dirtier coal falls to 30% from 41%.
Lower prices “seem set to boost gas demand in major importing regions, reinforcing our view that natural gas is a fuel well-placed to expand its role in the global energy mix,” IEA said.
|PA Pipeline Task Force Makes 184 Suggestions
The Pennsylvania Department of Environmental Protection released its first set of recommendations from a newly instituted pipeline advisory task force charged with improving natural gas pipeline development in the state.
The 184 recommendations come from 12 working groups and range from educating farmers about pipelines to leveraging Pennsylvania’s massive natural gas resource position atop the Marcellus Shale to help the state comply with the federal government’s Clean Power Plan.
“This is an important first milestone in developing the framework to help guide responsible pipeline development in Pennsylvania,” DEP Secretary John Quigley said. “This draft report is the culmination of hundreds, if not thousands, of hours of work done by the members of this task force and by the volunteers on the 12 workgroups.”
The task force has representatives from gas producers such as EQT, Royal Dutch Shell, Rice Energy, Southwestern Energy and Talisman Energy, as well as midstream operators including CONE Midstream Partners, Kinder Morgan, MarkWest Energy Partners, Williams Cos. and Sunoco Logistics Partners.
Many of the recommendations overlap: the environmental protection working group had seven separate methane reduction recommendations, ranging from minimizing methane leaks during compressor shutdowns to DEP establishing a leak detection and repair program for all above-ground pipelines.
Other recommendations call for routing pipelines away from wetlands and forests while sharing right of ways and ensuring revegetation of those rights-of way. The safety and pipeline integrity group had recommendations calling for improved leak detection, cathodic protection of pipelines, as well as giving the state’s Public Utility Commission the ability to issue safety regulations for non-jurisdictional pipelines, mainly gathering lines.
The task force was created by newly elected Democratic Gov. Tom Wolf in May to make recommendations to speed the planning, routing and permitting of all the new pipelines Pennsylvania anticipates being built to handle gas being produced from the Marcellus and Utica shales, as well as recommending best practices for pipeline safety and operation.
Pennsylvania already has 12,000 miles of large-diameter oil and gas pipelines, but is expecting explosive growth through 2030, the report said. “The miles of natural gas gathering lines alone will at least quadruple by 2030,” the task force’s report said.
Increasing Terrorist, Criminal Threat Driving Pipeline Safety Market
The global oil and gas pipeline safety market to grow at a CAGR of 7.17% in terms of revenue over the period 2015-2019, according to global consultants Research and Markets.
The report noted governments worldwide are implementing strict regulations in the oil and gas industry and adhering to these regulations is increasingly becoming mandatory for the oil and gas companies. In order to meet the industry standards and ensure compliance with the industry regulations, oil and gas pipeline companies are adopting safety devices and management systems, a key step in implementing safety measures.
The report said the high cost of implementation is a key challenge faced by the global oil and gas pipeline safety market.
Utica Shale Could Be Nation’s Next Big Gas Play
EQT this past summer drilled what by some measures is the biggest gas gusher ever. The Pittsburgh company’s well in southwestern Pennsylvania spewed enough gas in its first 24 hours – 73 MMcf – to power every home in Pittsburgh for nearly three days. Named Scotts Run 591340 after a coal field that sparked a regional energy boom after World War I, the well has continued to produce at unusually high rates with no signs of fading soon.
However, since EQT finished drilling the gusher in July, its shares have lost 29% and natural gas prices have dropped 24%.
“Because the Utica is a big unknown, fear has overtaken the market,” said Matt Portillo, managing director at energy-focused investment bank Tudor, Pickering, Holt & Co.
EQT said it would suspend drilling projects in other parts of Pennsylvania to concentrate on the Utica, which it thinks has the potential to be so prolific that it could lower gas prices and make competing projects uneconomical. Meanwhile, stockpiles of gas in the Lower 48 exceeded 4 Tcf for the first time ever the week ending Nov. 27.
Exelon Recognized for Leadership in Climate Change
Global not-for-profit CDP, which works to disclose corporate greenhouse gas emissions, named Exelon to the 2015 Carbon Disclosure Leadership Index for its leadership in climate change transparency, marking the sixth time the energy company has appeared on the index.
“As a leader in the energy industry, we take very seriously our responsibility not only to address our impact on the environment but to be forthright in reporting it,” said Chris Crane, president and CEO of Exelon. “We are honored to have our climate change reporting recognized again by CDP and will remain dedicated to transparency for our customers, shareholders, communities and employees.”
Exelon scored 100 out of 100 possible points, making it one of the highest-ranked utilities and one of the top scorers among S&P companies on the index. Top scores indicate a high level of transparency in the disclosure of climate change-related information, helping investors assess corporate accountability and preparedness for changing market demands and emissions regulation.
ESIA Completes Acquisition of Douglas Westwood
Energy Software Intelligence Analytics completed acquisition of Douglas-Westwood Limited. The acquisition represents ESIA’s next step in delivering a growth strategy for the company that includes a mix of new product development and acquisitions, according to a news release.
Formed in January, ESIA is assembling a portfolio of businesses that deliver data, research and insight for the global energy exploration and production markets and support services. ESIA has acquired four companies since its formation, including Douglas-Westwood. Formed in 1990, DWL is a market-leading brand in multiclient research, strategic and commercial reviews for the OFS market, servicing the largest financial, E&P and service company clients.
Shell Adds 2,800 More Job Cuts After Takeover of BG Group
Royal Dutch Shell now plans to cut 2,800 jobs following its takeover of smaller rival BG Group. Shell said the cuts were in addition to previously announced plans to reduce its own headcount and contractor positions by 7,500 worldwide.
“Shell currently expects an overall potential reduction of approximately 2,800 roles globally across the combined group, or about 3% of the total combined group workforce,” Shell said in a statement. Shell, which will now seek approval from both sets of shareholders, remains on track to complete the deal in early 2016.
Shell’s $84 billion (79 billion euros) acquisition of BG Group has been cleared by authorities in China, Australia and Brazil, as well as the European Commission. The deal is aimed at helping Shell boost its flagging output thanks to BG’s strong position in LNG.
“I am delighted we now have all the pre-conditional approvals needed to move to the next important phase,” Shell CEO Ben van Beurden. “This is a strategic deal that will make Shell a more profitable and resilient company in a world where oil and gas prices could remain lower for some time.”
Marcellus Shale Crowding Out Other Gas From Northeast Markets
There is additional proof that the U.S. is about to become a net exporter of natural gas, if one observes developments in the Northeast. The region extending from Maine to New Jersey and Pennsylvania was a net exporter of gas at times in 2015, knocking down the region’s average pipeline gas imports from other parts of the U.S. and Canada to just 300 MMcf/d in 2015, according to data provider PointLogic Energy. That would be the lowest level back to 2007, if the trend persists, according to a Bloomberg report.
The data underscore how the flood of gas from the Marcellus and Utica shale formations in the eastern U.S. is transforming the country’s role in the global market. “The Marcellus has really come into its own,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “There’s certainly no shortage of gas anywhere in the U.S now, and that means exports are around the corner.”
The U.S. is on course to become a net gas exporter in 2017, Jan Stuart, global energy economist at Credit Suisse Group in New York, said in a note to clients Dec. 9. Production may climb 6.3% in 2015 to 79.58 Bcf/d, reaching a record for the fifth consecutive year, government data show.
Natural gas futures have collapsed under the weight of the supply glut. Meanwhile, the first LNG in the Lower 48 states soon will open in Sabine Pass, LA.