June 2016, Vol. 243, No. 6



TransCanada Gets Final Permits for BC GasLink Pipeline

TransCanada Corp. reported May 5 that it has secured the final permits needed to start construction and operation of its proposed Coastal GasLink pipeline. The company said the B.C. Oil and Gas Commission issued the last two of 10 permits needed and it now is awaiting a final investment decision from LNG Canada before starting construction.

The 650-km pipeline would link natural gas fields in northeastern British Columbia to LNG Canada’s proposed export project in Kitimat, B.C. The Shell-led LNG Canada consortium is expected to make a final investment decision on the project in late 2016 and, if approved, TransCanada could start pipeline construction next year.

TransCanada says it has approvals from 11 First Nations communities along the length of the proposed pipeline route after securing two more project agreements in January. It said progress is being made with the remaining First Nations groups.The company expects the pipeline to cost about $4.8 billion.

DBRC Seeks Independent Hearings on Proposed PennEast Project

In letter dated April 25 to the Federal Energy Regulatory Commission (FERC), the Delaware River Basin Commission (DRBC) withdrew its request for a joint public hearing and public meeting on the PennEast Pipeline’s PennEast project. Instead, the DRBC will conduct separate hearings on the proposed project.

Representing a nearly $1 billion investment, the PennEast Pipeline is a 118-mile, primarily 36-inch pipeline that will originate in Dallas, Luzerne County, in northeastern Pennsylvania, and terminate at Transco’s pipeline interconnection near Pennington, Mercer County, NJ.

Because of the high level of interest in the project, the DRBC expects to conduct multiple public hearings in Pennsylvania and New Jersey. DRBC does not expect to hold0 hearings this year. The yet-to-be-scheduled hearings will be conducted separately from the DRBC’s regularly scheduled quarterly public hearings.

A formal public comment period will be announced and comments will be solicited upon publication of the DRBC’s draft docket. Additional information on DRBC’s PennEast public comment process, including public hearing dates, times, locations, and procedures will be provided on the commission’s web site at www.drbc.net as soon as details become available. In the interim, written comments on the project may be emailed to penneastapp@drbc.nj.gov.

Individuals and organizations wishing to be added to the DRBC’s Interested Parties List (IPL) for the project should send their name, organization (if applicable), mailing address and email information to penneastapp@drbc.nj.gov or by U.S. mail to DRBC, Attn.: Project Review Section, P.O. Box 7360, 25 State Police Drive, West Trenton, NJ 08628. Parties on the IPL will receive public notices concerning the project directly when they are issued.

Magellan/TransMontaigne Plan Refined Products Pipeline 

Magellan Midstream Partners, L.P. and TransMontaigne Partners L.P. are assessing the development of a new refined products pipeline in South Texas.

The potential project would include construction of a 150-mile, 16-inch pipeline capable of transporting 150,000 bpd of gasoline, diesel fuel, propane and condensate from Magellan’s Corpus Christi, TX terminal to TransMontaigne’s Brownsville terminal to meet market demand in Brownsville and other South Texas markets or for ultimate delivery to Mexico via truck, rail or connections to pipelines owned by TransMontaigne and third parties. If warranted, capacity could be expanded to 250,000 bpd.

The pipeline could be operational by the end of 2018.

TransCanada to Build, Own and Operate $550 Million Pipeline in Mexico

TransCanada Corp. has been chosen to build, own and operate the Tula – Villa de Reyes pipeline in Mexico. Construction of the pipeline is supported by a 25-year natural gas transportation service contract for 886 MMcf/d with the Comisión Federal de Electricidad (CFE), Mexico’s state-owned power company.

“The Tula-Villa de Reyes Pipeline complements our existing pipeline network in Mexico and furthers our strategy of owning and operating highly contracted and regulated assets that generate stable and predictable earnings and cash flow streams,” said Russ Girling, TransCanada’s president and CEO.

TransCanada expects to invest US$550 million in the 36-inch, 261-mile pipeline and anticipates an in-service date of early 2018. The Tula-Villa de Reyes Pipeline is the most recent addition to TransCanada’s expanding portfolio in Mexico. TransCanada was awarded the pipeline in November. By 2018, TransCanada will be operating six major natural gas pipeline systems in Mexico, representing an overall investment of US$3.6 billion.

Jacobs Engineering Group Inc. received a contract for detailed engineering of facilities associated with the Tuxpan-Tula Pipeline project. Bonatti S.p.A. is the prime contractor. As the subcontractor for pipeline facilities, Jacobs is providing engineering, procurement and field engineering support for installation of a compressor station, a meter station and associated pipeline appurtenances.

Medallion Midstream Holds Open Season for Crude Line Expansion

Medallion Midstream ‘s subsidiary, Medallion Pipeline Company LLC, held a binding open season to solicit long-term commitments from shippers for firm transportation capacity on the fifth major expansion of Medallion’s existing crude oil pipeline system.

With addition of the project proposed by the open season, and two other projects proposed in two successful preceding open seasons in February, Medallion’s operations will include 380 miles of pipeline facilities providing shippers with significant flexibility to move crude oil to multiple markets via multiple transportation routes.

Medallion is seeking to obtain long-term volume commitments for firm transportation capacity on the Martin Lateral and the Midland Lateral. The expansion is expected to commence full commercial operations in the third quarter of 2016, although certain segments of the expansion project may start service on an interim basis on an earlier date.

The Martin Latera is a proposed 25,000-bpd crude oil pipeline, which will aggregate crude oil from multiple points of origin in Martin County, TX and extend in a southeasterly direction to a point of destination at the new Midland Hub in Midland County, TX.

The Midland Lateral is proposed to be capable of transporting 25,000 bpd from the Midland Hub to the Garden City Station and 90,000 bpd from the Garden City Station to the Midland Hub.

ExxonMobil Brings Gulf Field Onstream Under Budget, Ahead of Schedule


ExxonMobil started oil production under budget and ahead of schedule at the Julia oil field in the Gulf of Mexico. The first production well is online and a second well will start production shortly.

The Julia development is located 265 miles southwest of New Orleans in depths exceeding 7,000 feet. The initial development phase uses subsea tie-backs to the Chevron-operated Jack/St. Malo production facility, reducing the need for additional infrastructure and enhancing capital efficiency. Technology has also played a key role in the Julia development including the use of subsea pumps that have one of the deepest applications and highest design pressures in the industry.

“Successful deepwater developments like Julia, located more than 30,000 feet below the ocean’s surface, benefit from ExxonMobil’s disciplined project execution capabilities and commitment to developing quality resources using advanced technology,” said Neil W. Duffin, president of ExxonMobil Development Co.

The Maersk Viking drillship is drilling a third well expected to come online in 2017. Production results will help evaluate additional wells included in the initial development phase, which has a design capacity of 34,000 bpd .

ExxonMobil is on track to start up 10 new upstream projects in 2016 and 2017, adding 450,000 boe/d of working-interest production capacity. The company is enhancing resource value through production optimization, technology application and cost management.

Oregon LNG Project Cancelled

An announcement on the Oregon LNG web site said they planned to cease operations immediately and will not proceed with the LNG facility in Warrenton, OR and associated 85-mile pipeline in Woodland, WA. The move came after the owner of the project, Leucadia National Corp., decided to cease funding.

Pembina Wins Approval for Two Pipelines

Pembina Pipeline Corp. has received approval from the Alberta Energy Regulator for construction of two 270-km, 24 and 16 inch pipelines between Fox Creek and Namao, Alberta, as part of a series of projects forming its Phase III Expansions.

Once complete, Pembina will have four pipelines in the Fox Creek to Namao corridor, with an initial total design capacity across the company’s Peace and Northern systems of  900,000 bpd that can be expanded through the addition of pump stations to reach an ultimate capacity of 1.2 MMbpd. Each of the four pipelines will transport different products (crude oil, condensate, propane-plus and ethane-plus), creating optimal flexibility for customers. Construction of the Fox Creek to Namao Pipelines represents a significant portion of the overall Phase III Expansion program.

“Our Phase III Expansion program is the largest capital project in Pembina’s history and is poised to have a transformative impact on the future of our company,” said Paul Murphy, Pembina’s senior vice president, Pipeline and Crude Oil Facilities. Overall, the project is tracking on time and under budget. The company anticipates an in service date of mid-2017 for the entire Phase III Expansion program.

TRC Wins Second Phase of Gas Pipeline Replacement/Upsizing Project

Following a successful completion of Phase I, PSNC Energy, a Scana Company, awarded TRC Companies Inc. a contract to provide $12.4 million of additional engineering design, mapping, right-of-way and surveying services for the second phase of a natural gas pipeline replacement and upsizing project in North Carolina. When complete, the project will result in improved line integrity, enhanced safety and additional capacity for economic development using natural gas.

TRC’s participation in the first phase of the project, which involves the removal and replacement of 26 miles of existing pipelines, began in January 2015 and was placed into service in June 2016. During the second phase of the project, which involves installation of 46 miles of a larger pipeline, TRC will support PSNC with design and documentation for future integrity maintenance. Planning for Phase II began in March and construction is expected to be completed in the fall of 2017.

 ConEd/Crestwood Form Northeast Pipeline/Storage JV

Consolidated Edison, Inc. and Crestwood Equity Partners LP announced that their subsidiaries entered into definitive agreements to form a joint venture to own and develop Crestwood’s existing natural gas pipeline and storage business located in northern Pennsylvania and southern New York. These natural gas pipelines and storage facilities provide a critical link between natural gas supply sources and Northeast demand markets.

Crestwood will contribute its natural gas pipeline and storage business to a new entity, Stagecoach Gas Services LLC, and a subsidiary of Con Edison Transmission, Inc., which is a wholly owned subsidiary of Con Edison, will purchase a 50% equity interest in Stagecoach Gas Services for $975 million, with an implied market value of almost $2 billion. .

Stagecoach Gas Services, which will be managed by Crestwood and operated by a newly formed services company, will own four natural gas storage facilities (Stagecoach, Thomas Corners, Steuben and Seneca Lake) with a combined storage capacity of 41 Bcf and three natural gas pipelines (MARC I, North/South and the East Pipeline) with a combined throughput capacity of 2,960 MMcf/d. The assets boast a highly strategic asset footprint situated between robust Northeast natural gas supply basins.

Magnolia LNG Receives FERC Order

Magnolia LNG, LLC has received the Federal Energy Regulatory Commission (FERC) authorization to site, construct, and operate facilities to liquefy and export natural gas from its LNG terminal in Lake Charles, LA. The Louisiana Department of Environmental Quality (LDEQ) approved the air permit for the Magnolia LNG.

In a related matter, FERC authorized the Kinder Morgan Louisiana Pipeline LLC to install compression and related facilities on the KMLP Pipeline, facilitating the transportation of full feed gas volumes to the Magnolia LNG project.

Magnolia LNG proposes to construct and operate up to four liquefaction production trains, each with a capacity of 2 mtpa or greater using the company’s OSMR® patented LNG process technology. Construction and operation will include two 160,000m3 full containment storage tanks, ship, barge and truck loading facilities, and supporting infrastructure.

Bayou Bridge Pipeline Begins Commercial Operations

 Bayou Bridge Pipeline, LLC has started commercial operations on the 30-inch segment of the Bayou Bridge Pipeline from Nederland, TX to Lake Charles, LA. Bayou Bridge is jointly owned by subsidiaries of Phillips 66 Partners LP, Energy Transfer Partners, L.P. and Sunoco Logistics Partners L.P.

The joint venture completed a successful binding expansion open season to assess additional interest in transportation service from Nederland to refining markets east of Lake Charles on the Bayou Bridge Pipeline. Based on shipper commitments, the Louisiana segment of the pipeline from Lake Charles to St. James will be 24 inches in diameter.

At Lake Charles, Bayou Bridge will connect to Phillips 66 Partners’ Clifton Ridge terminal and Citgo’s Lake Charles refinery. At St. James, Bayou Bridge has agreed to connections to Plains Marketing, L.P.’s and NuStar Energy L.P.’s crude oil terminals. Bayou Bridge is in discussions with additional parties to connect to the extensive existing crude oil terminal infrastructure in the region.

Bayou Bridge is on schedule with respect to the 24-inch segment to St. James, and commercial operations are expected to begin in the second half of 2017.

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