January 2015, Vol. 242, No. 1

The inaugural SPE Caspian Technical Conference and Exhibition (CTCE) – the first technical oil and gas conference ever to take place in the region – attracted more than 500 industry professionals at the Korme Exhibition Center in Astana, Kazakhstan. The three-day event, hosted last month by Shell in partnership with the Kazakh Ministry of Energy and KAZENERGY Association, was the first one on this scale that SPE had organized in the region.

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The owners of WHC Inc. have decided to transition ownership to its senior management and their equity partner, Alvarez & Marsal Capital Partners (AMCP). This corporate recapitalization will provide the foundation for sustainable growth in a growing market.

You have to appreciate history, for it tells no lies and whether we like it or not, it tends to repeat itself. Last month I recalled how the Saudis ramped up production 30 years ago with the backing of the Reagan administration in order to wreck the Soviet economy though it also did long-term damage to the U.S. oil industry. With crude prices in the $55 range (as of Dec. 18), motorists are delighted but nerves are on edge in Texas and other regions where the economies depend on oil and gas production.

As the 2014 mid-term elections faded from view, one cogent footnote of the political power change was the significant shift in the money and manner of spending it in the national environmental movement. Even some of their harshest critics were noting a higher level of professionalism and use of legitimate spokespersons as they attempted to spend their growing cash infusion more strategically.

Declining crude oil prices will likely lead to reduced production, but consultants at Black & Veatch expect natural gas to meet increasing demands, particularly as new projects begin to come online in the near future.

Canadian hydrocarbon production is growing and the nation is looking to pursue offshore markets as an important element of a strategy for expanded oil and natural gas sales.

Cold weather can produce threats to the integrity of distribution pipeline systems. Integrity management (IM) concepts required an operator to identify threats as a necessary step to prioritizing integrity assessments and developing mitigations.

A federal approval for construction of a major natural gas pipeline that will ship supplies from the Marcellus to underserved New England and the Northeast markets closed out 2014 with a reminder to the industry of good things to come.

Construction of ExxonMobil’s PNG LNG Project in Papua New Guinea began in 2010 and delivered its first cargo of LNG in May 2014, ahead of schedule. The project took over 200 million work hours to complete and employed 21,000 people at its peak. There are 700 km of pipelines connecting the LNG facilities, which include a gas conditioning plant in Hides and liquefaction and storage facilities near Port Moresby with a capacity of 6.9 million tons per year.

The master limited partnership structure has been popular for pipeline companies for many years, and the shale boom has only intensified its usage—of the roughly 120 MLPs operating today, over 60 percent are less than five years old. But as the industry has adjusted to unconventional production and operations and construction activity assume a new normal, energy companies’ financial moves are becoming big news.

Local distribution companies are the most essential ingredient if natural gas is to become the predominant energy fuel in North America. Although strong inroads have already been taken, a number of challenges remain before the LDCs can take their rightful place in the natural gas value chain.

Heightened activity has supplanted cautious optimism among those in the U.S. natural gas industry. According to the third annual Strategic Directions: U.S. Natural Gas Industry report from Black & Veatch, that changing sentiment is underscored by its survey respondents, nearly 90% of whom expect electric power generation to dramatically increase gas consumption by 2020.

Africa’s importance as a major energy supplier will grow with the development of recently discovered oil and gas fields, most notably in West and East Africa, which will generate 8,558 miles of additional oil and gas pipelines (Table 1).

Natural gas production and pipeline construction thrive on predictability. They depend on reliably meeting milestones and deadlines in order to connect new sources of energy into supply lines.

TransCanada’s Keystone Pipeline has just completed a year’s service of bringing Canadian tar sand syn crude from Alberta to U.S. Gulf Coast facilities for refining and marketing. This was the third phase of the project. Bringing crude from Cushing, OK to Texas began in January 2013 and still has a lateral line to be completed that will bring crude oil from Nederland, TX to Houston-area refineries. A terminal will be completed in mid-2015 for the Houston refining.

Gas producers and pipelines seem in general agreement about a Federal Energy Regulatory Commission (FERC) proposal to improve coordination between gas suppliers and electric transmission providers. But regional electric buyers such as the ISOs and RTOs are a little disappointed.

Linde North America has completed installation of the gasifier vessel, a significant step in the construction of its new gasification train at its La Porte, TX facility. The plant is part of an investment that includes a state-of-the art air separation unit (ASU), which is also under construction. The gasification plant is scheduled to come on-stream in early 2015.

Venture Global LNG has announced plans to develop an LNG export facility, the Calcasieu Pass Project, in southwestern Louisiana. The project, south of Lake Charles, will be built, operated and manufactured in Louisiana and will create 1,500 construction jobs, 326 indirect jobs and 100 permanent jobs for the community.

ACI (Active Communications International) is holding the Next Generation Oil & Gas Pipeline Security conference Feb. 17-19, 2015 in Houston, TX. This conference is designed to provide a fully comprehensive platform to security experts involved in the protection of oil and gas infrastructure, assets and staff. The event will include methods of defense against threats such as attacks on supply infrastructure, accidents, natural and unnatural disasters and rising terrorism and cyber-attacks.

The Occupational Safety and Health Administration (OSHA) signed a two-year alliance with the National Service, Transmission, Exploration & Production Safety Network and the National Institute for Occupational Safety and Health to prevent injuries, illnesses and fatalities among workers in the exploration and production sector of the oil and gas industry.

Although the total tonnage of transport pipe needed in North America was down as of late summer, that has not been due to decreased construction activity ahead. Rather, it reflects NGL and oil pipes crowding out demand for large-diameter gas transmission pipe, and the prevalence of reversals and conversions of existing pipe, according to a report by Amanda Eglinton, senior research analyst for IHS Global Insight.

ABS was awarded a contract from South Korean shipyard Hyundai Heavy Industries (HHI) to develop subsea pipeline design criteria and associated training materials.

ShawCor’s Bredero Shaw pipe-coating division has received a second contract of $200 million from BP Exploration (Shah Deniz) Limited for the Shah Deniz Stage 2 development project. The contract is scheduled to be executed at the Caspian Pipe Coatings (CPC) plant in Baku.

GLENDIVE, Mont. (AP) — Workers recovered about 10,000 gallons of oil from a ruptured pipeline that spilled crude into Yellowstone River and contaminated the drinking water supply of an eastern Montana city downstream.

Applied LNG held a groundbreaking on Nov. 20, marking the start of construction on its Midlothian LNG facility - a first in the northwest region of Texas.

Navitas Midstream Partners has executed a long-term, fee-based agreement with an investment grade independent producer to provide gathering and processing services in the northern Eagle Ford Shale in Brazos and Grimes counties in Texas.

Eagle LNG Partners’ pre-filing review process for the Jacksonville LNG project was approved by the Federal Energy Regulatory Commission (FERC). The proposed LNG facility will serve domestic and international markets. Eagle LNG will receive and liquefy natural gas, temporarily storing the produced LNG and periodically loading it onto ocean-going vessels for use in marine fueling trade.

Lone Star NGL, a joint venture of Energy Transfer Partners, and Regency Energy Partners, has received board approval to construct a 533-mile, 24- and 30-inch NGL pipeline from the Permian Basin to Mont Belvieu, TX and convert Lone Star’s West Texas 12-inch NGL pipeline for crude oil and condensate service.

Freeport LNG Expansion received final approvals for its proposed natural gas liquefaction and LNG export facility on Quintana Island, near Freeport, TX.

Installation of Gulfstar One is complete - 21,500 tons of proof that American engineering and construction are alive and well. Gulfstar’s standard design approach allows customers to reduce cycle time from discovery to first oil. From sanctioning a project to completion, Gulfstar can be delivered in 30 months.

Rigs at risk from drifting icebergs can expect an early warning following research by the Memorial University of Newfoundland. The Autonomous Ocean Systems Laboratory (AOSL) at the university is part of a long-term study modeling the behavior of icebergs that includes acquiring real-world data that will increase the accuracy of predicting the rate and direction of their drift.

Matrix Service Company’s subsidiary, Matrix Service Inc., has been awarded an engineering, procurement and construction contract by North Dakota Pipeline Company (NDP), a subsidiary of Enbridge Energy Partners.

The Middle East will be a key market for oilfield services companies for decades to come as countries across the region seek to maximize recovery from maturing assets and bring new fields into production, reports energy specialist corporate advisory firm Simmons & Company International Ltd.

Monarch Oil Pipeline, a subsidiary of Monarch Natural Gas Holdings, is holding an open season through Jan. 30 to solicit capacity commitments from shippers for a new oil pipeline system to gather and transport crude oil from production areas in Hemphill and Lipscomb counties in Texas to Plains Pipeline’s Reydon Station in Roger Mills County, OK.

New incentives offered as part of Pakistan’s latest policies for petroleum resource production seem to be proving an attractive prospect for potential investors. However, an equally effective shale gas policy appears more unlikely, according to research and consulting firm GlobalData.

OPEC will stand by its decision not to cut output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, said the United Arab Emirates’ energy minister on Dec. 15, according to Bloomberg.

Hiland Crude completed an open season for commitments to expanded capacity of Hiland's 488-mile Double H crude oil transportation system. The recently completed pipeline originates in the Bakken oil production areas near Dore, ND and Sydney, MT and terminates at Hiland's tankage near Guernsey, WY.

SIOUX FALLS, S.D. (AP) — A pipeline oil spill in Montana that contaminated a river and a city's drinking water supply is adding to fears about a proposed pipeline to carry oil from western North Dakota to a terminal in Illinois for distribution to refineries in eastern states.

Rimrock Midstream entered into agreements with Grand Mesa Pipeline, a subsidiary of NGL Energy Partners, to construct and operate the Grand Mesa Pipeline.

Sacagawea Pipeline Company, an affiliate of Paradigm Energy Partners, completed an extended open season on Dec. 15. As planned, the pipeline will deliver crude oil from various points south of Lake Sacagawea in and around Johnson’s Corner and Keene, in McKenzie County, ND to destinations with takeaway options for both rail and pipe in Palermo and Stanley, ND.

Gas production has begun from Jack/St. Malo project in the U.S. Gulf of Mexico, a major step in Statoil’s plan to have more than a fourfold increase in offshore production from the U.S. Gulf of Mexico by 2020.

Statoil has proposed building a subsea pipeline twice as large as needed to take gas from Norway’s giant new Johan Sverdrup oil and gas field to accommodate future finds that could be tied into the new line, gas system operator Gassco said.

Studies by the National Ocean Industries Association (NOIA) and the American Petroleum Institute (API) show significant potential added energy and economic benefits to the United States if the eastern Gulf of Mexico and the Pacific outer continental shelf (OCS) were opened to offshore oil and natural gas development.

Technip has unveiled the name for its latest newbuild diving support vessel (DSV), being built by Vard. The vessel will be known as the Deep Explorer. The high-specification vessel will be equipped with terms of navigation Dynamic Positioning Class 3 navigation equipment and feature a 24-man saturated dive system. With a large deck area, working moon pool, work-class ROVs and a 400Te offshore crane, the vessel will provide diverless construction activities.

Velocity Central Oklahoma Pipeline LLC, a wholly owned subsidiary of Velocity Midstream Partners, will construct a crude oil gathering and transportation system in the fairway of the prolific SCOOP play in central Oklahoma. Continental Resources, an Oklahoma City-based exploration and production company, will be its customer.

Spectra Energy’s proposed Westcoast Connector Gas Transmission Project continues to advance, following receipt of an Environmental Assessment Certificate from British Columbia. The environmental review of the project assessed a natural gas transportation corridor that could accommodate up to two 48-inch pipelines with total design capacity of 8.4 Bcf/d.

White Cliffs Pipeline, owned by subsidiaries of Rose Rock Midstream, Plains All American Pipeline, Western Gas Partners, and Noble Energy, plans to expand capacity on its existing system to facilitate increasing shipments of crude oil from the Denver-Julesburg Basin to the Cushing hub.

Williams announced Transco has filed an application with FERC to expand its pipeline system to serve the growing need for natural gas by electric generators, natural gas distributors and end-users in the southeastern United States.

The new Cat? 586C Site Prep Tractor is a multi-purpose, heavy-duty machine with enough muscle to run power-hungry mulchers and brushcutters needed for clearing pipeline rights-of-way.

At 35-foot tall and equally as wide, a glycol dehydrator may be big, but this gift is a perfect fit just the same. The device, which is used to remove water from natural gas before compression and distribution, is now nestled snugly into one corner of the Susquehanna County, PA site of Lackawanna College's School of Petroleum & Natural Gas.

Aberdeen, Scotland-based Forth Inspection Service hired advanced non-destructive testing (NDT) equipment from Ashtead Technology to develop test methods as part of the quality-control procedures for new gas pipelines.

New products and services from PipeLine Machinery, T.D. Williamson, Powerblanket, L.B. Foster Ball Winch, Schneider Electric, McElroy, John Deere and more.

BOWLING GREEN, Mo. (AP) — More than four dozen homes near the town of Bowling Green in northeast Missouri have been evacuated due to the rupture of a natural gas pipeline.