July 2017, Vol. 244, No. 7

Projects

Projects

Northern Gas Pipeline Construction Gets Green Light

Jemena received approval from Australia’s Northern Territory Government to construct the first 214-mile section of the $800 million Northern Gas Pipeline Project, a 386-mile pipeline that will connect Tennant Creek in the Northern Territory to Mount Isa in Queensland.

Jemena awarded a construction contract for the project to McConnell Dowell. Its scope of work involves the engineering, construction and commissioning of a 299-mile section of the line. Site activities are expected to start in the coming weeks, with the first gas expected to run through the pipeline in late 2018. About 150 miles of the pipeline is expected to be laid in 2017, with the project anticipated to be placed in service in 2018. Upon completion, the project will, for the first time, connect Northern Territory gas fields with the east-coast gas market.

Power of Siberia Pipeline Construction Ahead of Schedule

Gazprom reports construction of the Power of Siberia gas trunk line is ahead of schedule with over  684 miles of pipeline expected to be finished in 2017. Once completed the 1,864-mile, 60-inch pipeline will deliver natural gas from the Chayanda oil and gas condensate deposit in Yakutia and the Kovykta gas condensate field in the Irkutsk Region of Eastern Siberia for export to China.

Gas supplies to China via the eastern route will start from May 2019 through May 2021. In May 2017, the parties began to negotiate the exact starting dates for the deliveries. Discussions continue over gas to be supplied to China via the western route and from Russia’s Far East.

Tallgrass Energy, Saddle Butte Pipeline Propose Terminal

Tallgrass Energy Partners LP, through its subsidiaries Tallgrass Terminals LLC and Tallgrass Pony Express Pipeline LLC, have agreed with Saddle Butte Pipeline to develop the Tallgrass Grasslands Terminal. It will be located in the heart of the Platteville, CO oil terminal complex and will interconnect with Saddle Butte’s Denver-Julesburg Basin crude oil gathering system.

Pending successful conclusion of Pony Express Pipeline’s open season, the Tallgrass Grasslands Terminal will serve as a new pipeline origin for the Pony Express Platteville Extension. The Platteville Extension is expected to have an ultimate takeaway capacity of 80,000 bpd and should be in-service by mid-2018.

Saddle Butte’s Milton Terminal also will serve as an origin point on Pony Express, allowing Pony Express to offer direct refinery and Cushing terminal connections to Saddle Butte’s producer customers in the near term while the Tallgrass Grasslands Terminal is developed. The Milton Terminal will continue as an origin point when the terminal is operational. Tallgrass Terminals will wholly own and operate the Tallgrass Grasslands Terminal.

$4.78 Billion Bakken Pipeline System Begins Service

Energy Transfer Partners LP reports the Dakota Access Pipeline and the Energy Transfer Crude Oil Pipeline (ETCO), collectively the Bakken Pipeline, are in operation under the committed transportation service agreements through their respective pipeline systems.

The Bakken Pipeline, owned by Dakota Access LLC and Energy Transfer Crude Oil Co. LLC, is a 1,872-mile, mostly 30-inch pipeline system that transports crude oil from the Bakken/Three Forks productions areas in North Dakota to a storage and terminal hub outside Patoka, IL or down to additional terminals in Nederland, TX.

DCP Midstream to Expand Sand Hills NGL Pipeline

DCP Midstream LP announced an additional large-scale expansion of the Sand Hills NGL Pipeline with plans to initially spend $105 million toward long-lead equipment and right-of-way.

The expansion is designed to initially increase capacity by 85,000 bpd up to 450,000 bpd. This first phase will include partial looping of the pipeline and the addition of seven pump stations at a cost of $500 million. It is expected to be in-service in the second half of 2018. Additionally, future expansion may include adding a full loop of Sand Hills, which could raise capacity by over 100,000 bpd to a minimum of 550,000 bpd.

In January, DCP Midstream announced plans to expand the Sand Hills Pipeline’s existing capacity to 365,000 bpd, which is on target to be finished later this year. This expansion will add three additional pump stations and a lateral to increase Permian capacity and is backed by long-term, third-party plant dedications. In addition, multiple new supply connectors are in progress and will deliver incremental NGL volumes in 2017 and beyond.

Work Starts on Sur de Texas-Tuxpan Pipeline

Construction began on the Sur de Texas-Tuxpan natural gas pipeline, a 497-mile, 42-inch pipeline that will start offshore in the Gulf of Mexico and terminate at Tuxpan in the state of Veracruz. The project will have a capacity of 2.6 Bcf/d and provide gas to power plants in the states of Tamaulipas and Veracruz to serve Mexico’s eastern, central and western regions.

The project is a joint venture between TransCanada Corp. and IEnova, Sempra Energy’s Mexico unit. TransCanada will own 60% of the project with IEnova owning 40%. The pipeline is supported by a 25-year transportation service agreement with Mexico’s Comisión Federal de Electricidad and will connect with the Cenagas pipeline system in Altamira and TransCanada’s Tamazunchale and Tuxpan-Tula pipelines.

Kinder Morgan Moves Forward with Trans Mountain Expansion Project

Kinder Morgan Canada Ltd. completed its IPO and finalized the investment decision on the Trans Mountain Expansion Project. The decision to proceed triggers several important next steps including the finalizing of construction contracts and the actualization of the financial, employment and safety benefits the company has committed to through over five years of engagement and consultation.

The $7.4 billion project will parallel the 715-mile route of the existing Trans Mountain Pipeline that was built in 1953 and is the only West Coast link for Western Canadian oil. Pipeline capacity will increase from 300,000 bpd to 890,000 bpd. The project will add 609 miles of new pipeline and reactivate 120 miles of existing pipeline. To support the expanded pipeline, new facilities will include 12 new pump stations, 19 new tanks added to existing storage terminals, and three new berths at the Westridge Marine Terminal.

Construction is set to begin in September. The project is expected to be in-service by the end of 2019.

Targa Resources Pitches Grand Prix NGL Pipeline

Targa Resources Corp. intends to construct the Grand Prix Pipeline, a common-carrier natural gas liquids system that will transport volumes from the Permian Basin and Targa’s North Texas system to the company’s NGL market hub at Mont Belvieu, TX.

The pipeline will be supported by Targa’s volumes and other third-party customer commitments, and is expected to be operational in the second quarter of 2019. The capacity of the pipeline from the Permian Basin will be 300,000 bpd, expandable to 550,000 bpd.

First Reserve, Crestwood to Build Orla Express Pipeline

Crestwood Equity Partners LP and First Reserve announced Crestwood Permian Basin Holdings LLC, a joint venture focused on developing, owning and operating midstream infrastructure in the Delaware Basin, agreed to acquire Crestwood’s Willow Lake gathering and processing assets in Eddy County, NM. The companies said the joint venture approved construction of a 200 MMcf/d cryogenic gas processing plant near Orla, TX and associated pipeline infrastructure required to connect the Willow Lake system to the plant.

The initial project scope will include the Orla Express Pipeline, a 33-mile, 20-inch high-pressure line connecting the existing Willow Lake gathering system in Eddy County to the Orla plant. The Orla plant will provide full liquids handling and multiple residue and NGL interconnects. Initial project capital is projected at $170 million with an in-service date in mid-2018.

Upon completion, the integrated gathering and processing footprint will span over 100 miles and service customers across Eddy and Lea counties, NM and Loving, Ward, Reeves and Culberson counties, TX.

Medallion to Expand Crude Oil Pipeline System in Midland Basin

Medallion Pipeline Company LLC, a subsidiary of Medallion Midstream LLC, has launched a binding open season to solicit long-term firm shipper commitments for a major expansion of its crude oil pipeline system in the Midland Basin. The project will include two parts: the Wolfcamp Expansion, which will nearly double the capacity of Medallion’s existing Wolfcamp Connector mainline, and the Howard Expansion, which will increase the capacity of the existing Howard Lateral.

The Wolfcamp Expansion includes a 16-inch partial loop of the Wolfcamp Connector mainline in Howard, Glasscock, Mitchell and Scurry counties in Texas. The Wolfcamp Expansion will begin at the existing Howard-Wolfcamp Interconnect and extend 47 miles to the Colorado City hub where Medallion interconnects with several third-party carriers. This expansion will increase existing capacity on the Wolfcamp Connector mainline from 105,000 bpd to 200,000 bpd and provide firm shippers on the Wolfcamp Connector with multiple options for the receipt and delivery of crude oil.

The Howard Lateral Expansion will increase the existing 60,000 bpd capacity of the Howard Lateral to 85,000 bpd through the addition of pumping horsepower. Because of the bidirectional capabilities of the Howard Lateral, firm shippers on the Howard Expansion will have the flexibility to transport crude oil on several transportation paths. The overall expansion project is expected to start partial commercial operations in the third quarter and full commercial operations in the fourth quarter of 2017.

Uganda, Tanzania Team Up for East African Crude Oil Pipeline

Uganda and Tanzania have agreed to proceed with construction of the East African Crude Oil Pipeline, a $3.55 billion, 897-mile pipeline that will transport crude oil from Kabaale in the Lake Albert region of Uganda, to Chongoleani near the port of Tanga in Tanzania.

Gulf Interstate Engineering has been awarded the front-end engineering and design contract for the project, which is scheduled to last for eight months. The final investment decision is expected by fourth quarter of 2017 and construction is planned for 2020. Once completed, the East African Crude Oil Pipeline is expected to transport 200,000bpd of oil.

Open Season Underway for Permian Express 3 Pipeline

Energy Transfer Partners’ Permian Express Terminal and Permian Express Partners began a binding open season for Permian Express 3, developed to deliver crude oil from the Permian Basin to multiple markets. The pipeline will provide 100,000 bpd of capacity when service begins in the fourth quarter.

The company expects additional committed service opportunities to be offered in future open seasons that will provide for an estimated total capacity of up to 300,000 bpd.

The initial phase of the project will provide Midland Basin producers new crude oil takeaway capacity from this rapidly growing area to the Nederland, TX market. Future phases of the project are expected to offer crude oil transportation service from the Delaware Basin to multiple markets.

Midship Pipeline Receives Regulatory, Financial Milestones

Cheniere Energy Inc. has achieved important regulatory and financial milestones related to the development of the 200-mile, 36-inch Midship Pipeline, a proposed intrastate natural gas pipeline project.

Midship expects to receive FERC authorization in early 2018 and have the project online in late 2018 or early 2019. In addition to filing the FERC application, Midship Holdings LLC entered into agreements with investment funds managed by EIG Global Energy Partners (EIG) under which EIG-managed funds will invest up to $500 million in the Midship Project.

The Midship Project is being developed to create pipeline capacity of up to 1.4 MMDth/d of firm transportation to connect production from the emerging STACK and SCOOP resource plays in the Anadarko Basin in Oklahoma to growing Gulf Coast and Southeast markets.

The project will consist of new mainline pipeline, several laterals, compressor stations and interconnects that will provide receipts from STACK and SCOOP processing plants and provide deliveries to Bennington, OK, as well as access to downstream markets including the TexOk hub near Atlanta, TX and the Perryville Hub near Tallulah, LA.

Midship has already secured commitments from subsidiaries or affiliates of Cheniere, Devon Energy Corp., Marathon Oil Corp. and Gulfport Energy Corp. to support initial construction of 1 MMDth/d of capacity.