June 2017, Vol. 244, No. 6

In The News

In the News

Gulf Publishing Company Acquires Oildom Publishing, P&GJ

After three generations of family ownership, Pipeline & Gas Journal owner Oildom Publishing Company has been acquired by Houston-based Gulf Publishing Company in a deal that creates the world’s largest independent media company devoted exclusively to the international energy industry.

The acquisition adds P&GJ, Pipeline News and Underground Construction to Gulf Publishing’s portfolio of trade journals: World Oil, Hydrocarbon Processing, Gas Processing and Petroleum Economist.  It also expands its roster of major industry conferences with the addition of P&GJ’s Pipeline Opportunities Conference, the only event dedicated solely to the pipeline industry, and the Underground Construction Technology International Conference.

“The addition of Oildom is part of our strategic plan to expand as the leading provider of business and technical knowledge in the global oil and gas industry,” said John Royall, president and CEO of Gulf Publishing Company. “We are the go-to resource for our clients and Oildom’s people, products and services are an excellent complement to our organization as they extend our global leadership to the midstream and utility sectors.”

The acquisition was led by Royall and Houston investor Russell Denson, with financing from Main Street Capital Corporation. Denson is a veteran of the publishing industry and serves as chairman of Gulf Publishing Holdings, the parent company of Gulf Publishing Company.

Oildom Publisher Cleve Hogarth and the editorial and advertising staffs will continue in their roles at the combined organization.

“The acquisition by Gulf Publishing Company is the right thing for Oildom and it comes at the right time in our rich history,” said Hogarth. “Combining with Gulf Publishing’s strong capabilities in digital, data management and global reach allows us to take the Oildom media brands to the next level.”

Oildom owner and president Oliver Klinger III has retired but will remain involved in a consulting and advisory capacity.

“My main objective in transitioning ownership of Oildom is to ensure the continuation of the legacy started by my grandfather 109 years ago,” said Klinger. “With Gulf Publishing Company, we have found a capable and knowledgeable home for our employees, readers and advertisers.”

GOM Poised to Surpass Record 2016 Oil Production

 

Crude oil production in the U.S. Gulf of Mexico (GOM) is expected to reach record highs in 2017 and 2018, following a record annual high of 1.6 million b/d in 2016, according to the Energy Information Administration (EIA). Eight projects came online in the GOM, contributing to the high production levels, and seven more projects are expected to come online by the end of 2018.

In its latest Short-Term Energy Outlook report, the EIA projects annual crude oil production in the GOM will increase to an average of 1.7 million b/d in 2017 and 1.9 million b/d in 2018. Last year, production surpassed the previous high set in 2009 by 44,000 b/d, and the growth trend has continued in the early months of 2017.

Because of the length of time needed to complete large offshore projects, oil production in the GOM is less sensitive to short-term oil price movements than onshore production in the Lower 48 states. The number of development and exploratory wells drilled in the GOM has fallen in each year since 2012, although the number of development wells has fallen much faster.

FERC: Two Steps Toward Quorum, One Back

President Trump has made two anxiously awaited nominations to serve on the Federal Energy Regulatory Commission (FERC), which has been without a quorum since early February: Neil Chatterjee, a longtime energy advisor to Senate Majority Leader Mitch McConnell, and Robert Powelson, a member of the Pennsylvania Public Utility Commission.

FERC requires at least three commissioners to make major policy decisions. Only two commissioners currently serve on the five-member panel, but Commissioner Colette Honorable said she will step down when her term expires in June. Trump will have to nominate a Democrat to replace her, as rules require that no more than three commissioners can be from the same political party.

Noble Exits Marcellus, Expands Permian Assets

Noble Energy is making a strategic shift to West Texas oil from Appalachian natural gas. The Houston-based independent announced an agreement to sell all of its upstream assets in northern West Virginia and southern Pennsylvania for $1.2 billion after significantly increasing its Permian Basin holdings by acquiring Clayton Williams Energy. With the $2.7 billion acquisition, Noble Energy now holds the second-largest position in the Delaware Basin.

The Marcellus sale to an undisclosed buyer includes production of 415 MMcf/d of natural gas equivalent and a 100% working interest in 385,000 acres. “This enables us to further focus our organization on our highest-return areas that will deliver industry-leading U.S. onshore volume and cash flow growth,” explained Chairman, President and CEO, David L. Stover.

 PHMSA Adjusts Civil Penalties for Pipeline Safety Violations

The Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Final Rule to revise its regulations and increase the maximum civil penalty amount for violations of Federal pipeline safety law.

The maximum civil penalty for a single violation increased to $209,002 for each day the violation continues or $2,090,022 for a related series of violations of federal pipeline safety laws. Additionally, PHMSA may impose civil monetary penalties not to exceed $1,214 for a violation concerning employee protections or $76,352 for a violation concerning liquefied natural gas operations.

Shell, Saudi Aramco Separate Motiva JV

Royal Dutch Shell and Saudi Aramco have completed the separation of Motiva Enterprises, their Houston-based refining and marketing joint venture. Saudi Aramco’s refining subsidiary now owns the Motiva name and legal entity, including the refinery at Port Arthur, TX and 24 distribution terminals as well as exclusive rights to sell Shell-branded gasoline and diesel in Georgia, North Carolina, South Carolina, Virginia, Maryland, Washington, D.C., the eastern half of Texas and most of Florida.

Shell, through affiliated companies, now owns the refinery at Norco, LA where it operates a chemicals plant, along with the Convent, LA refinery and 11 distribution terminals. It retains Shell-branded markets in Alabama, Mississippi, Tennessee, Louisiana, part of the Florida panhandle, and the U.S. Northeast.

ConocoPhillips Selling San Juan Basin Assets

ConocoPhillips continued to shed North American properties with an agreement to sell its San Juan Basin assets to a Hilcorp Energy Company affiliate for $3 billion. The San Juan announcement closely followed a deal to divest the bulk of its Canadian holdings, and the company also confirmed it is giving up a 5% stake in the Point Thomson field on Alaska’s North Slope.

ConocoPhillips’ San Juan Basin assets produced 124,000 BOE/d last year, of which 80% was natural gas, and year-end proved reserves were reported at 600 million BOE. ConocoPhillips earlier agreed to sell its 50% interest in the Foster Creek Christina Lake oil sands partnership and most of its western Canada Deep Basin gas assets to Cenovus for $13.3 billion in cash and stock. Under terms of the deal, ConocoPhillips Canada will retain its operated 50% interest in the Surmont oil sands joint venture and its operated 100% Blueberry-Montney unconventional acreage position.

NuStar to Gain Permian Assets Through Navigator Energy Acquisition

NuStar Energy has agreed to acquire Navigator Energy Services for $1.5 billion in a deal that brings substantial West Texas assets to the San Antonio-based liquids terminal and pipeline operator.

The acquisition boosts NuStar’s holdings in the Midland Basin to over 500 miles of crude oil gathering and transportation pipelines, with 92,000 b/d, ship-or-pay volume commitments; a pipeline gathering system with over 200 connected producer tank batteries capable of over 400,000 b/d of pumping capacity covering over 500,000 dedicated acres with fixed fee contracts; and about 1 million barrels of crude oil storage capacity.

Pierce Junction Facility Commences Storage Operations

Fairway Energy Partners has begun commercial operation at its Pierce Junction Crude Oil Storage Facility. The project will serve the Houston area’s crude oil storage needs driven by the significant growth of pipeline-delivered crude oil into and through the Houston market.

Fairway began construction in 2015 to convert three existing underground storage caverns at the Pierce Junction Salt Dome in south Houston into crude oil storage service and to build out the supporting infrastructure to put the facility into commercial service. The recently completed phase of construction allows for crude oil storage in three segregated caverns with a total capacity of 7.5 million barrels.

Construction of two bi-directional, 24-inch pipelines is expected to enable Fairway to receive inbound crude oil from the Permian and Eagle Ford Basins, the Mid-Continent and Canadian regions as well as the Gulf of Mexico. The hubs also are expected to provide downstream connectivity to terminals, refineries and water outlets located in the Houston Ship Channel, Texas City and the Beaumont/Port Arthur market areas.  The facility’s initial operating capacity is 70% subscribed.

Vermont Gas Completes Pipeline to Addison County

(Burlington Free Press)

The 41-mile Vermont Gas pipeline extension into Addison County is finished, the utility announced recently, after over three years, $165 million and countless protests. According to a report in the Burlington Free Press, Don Rendall, president and CEO of Vermont Gas, said four business customers in Middlebury are connected to natural gas service provided by the pipeline extension.

“Now that the project is completed and we’re fully commissioned, we’ll be rolling out the service to families and businesses throughout Middlebury,” Rendall said. “We’ve got a lot of folks who have already let us know they’re interested and we look forward to having several hundred customers up and running by next heating season.”

Initially, natural gas service will be available only in Middlebury, but over the next couple of years Rendall said Vermont Gas will extend service to other towns along the pipeline’s route, such as Vergennes, New Haven and Bristol. He said ultimately the pipeline extension will serve as many as 4,000 families and businesses in Addison County.

Important Pipeline Safety Standard Publicly Available

Canada’s National Energy Board (NEB) is launching a one-year pilot program to make a key safety standard, known as CSA Z662 – Oil and Gas Pipeline Systems (CSA Z662), available online to the public free of charge. Previously this information was only available to the public through a paid online subscription, the NEB’s onsite library or through interlibrary loans across Canada.

CSA Z662 is incorporated by reference in the National Energy Board Onshore Pipeline Regulations (OPR) making it a regulation that applies to NEB-regulated oil and gas pipelines. It is also included in the NEB’s Filing Manual and companies must follow CSA Z662 when they submit an application for a new project.

CSA Z662 is comprised of over 500 pages of prescriptive and performance-based requirements and covers the technical aspects of design, construction, operation, maintenance, deactivation, and abandonment of oil and gas industry pipeline systems. CSA Z662 is continually reviewed and updated to incorporate lessons learned, technological advancements, and best practices. The pilot runs until March 2018 with the NEB covering the cost so Canadians can have full digital access.