November 2017, Vol. 244, No. 11

In The News

In the News

‘Open-Minded’ Ecuador to Offer Oil Production Blocks

Ecuadoran Minister of Hydocarbons Carlos Perez told an audience at Rice University’s Baker Institute his nation is “back to stability” and ready to offer new incentives to oil producers who are ready to ready to invest.

“The new president wants to change perception,” Perez said on Nov. 6. “He wants to be more open-minded.”

As part of that effort, Perez said Ecuador will offer oil exploration and production blocks, in January, under conditions designed to “attract more interest,” while allowing the country to compete more successfully with neighboring Colombia, Brazil and Peru.” The conditions include allowing producers take payment in oil, while exporting to local refineries or export the product elsewhere.

Perez said Ecuador is also looking for an outside company to invest in a new, 300,000 bpd oil refinery on the country’s Pacific Coast as a means to boost the nation’s economy. “Refineries can resolve political and social issues by keeping money in the country,” he said.

The former Haliburton executive’s remarks came as part of an address he gave on the outlook for hydrocarbons. Ecuador, one of the leading producers in Latin America, has the fourth-largest oil reserves in the region.

Perez, who also worked for Schlumberger, was appointed by newly elected President Lenin Moreno in an effort to promote the country’s energy agenda. The administration hopes to increase its oil production to 700,000 bpd by the end of its first term, four years from now. Total output for 2016 was 548,400 bpd.

Gulf Publishing Launches LNG Intelligence Service 

Gulf Publishing Company, owner of Pipeline & Gas Journal, launched the Energy Web Atlas to provide the downstream energy sector with easy access to information about the LNG industry.

A real-time project information platform, the ESRI-based energy web atlas (EWA) is a compilation of geospatial datasets covering the energy industry with maps and data dedicated to the LNG industry. It delivers actionable market intelligence within one easy-to-use, web-based resource.

“Data is always changing and searching for statistics and analysis related to LNG – such as project details and status, shipping routes and vessel data – can be time consuming and cumbersome,” said Scott Allgood, director of data for Gulf Publishing. “The Energy Web Atlas provides professionals in the industry with a much needed, quick and easy way to access real-time data that is required for daily decision-making.”

Allgood said EWA is a one-stop source for comprehensive industry intelligence. Tracking close to 500 LNG facilities and projects, EWA allows users to interrogate and export real-time project data, including details such as owner/operator, project status, storage and capacity.

In addition, a geospatial map tracking U.S. gas processing plants is also. This platform gives users access to detailed data and direct contacts for more than 500 gas processing plants. The dataset includes information on more than 400 natural gas underground storage locations and 58 natural gas storage hubs.

Pipeline Projects at Risk as Crude-by-Rail Makes a Comeback 

The advantages offered by rail transportation of crude oil, such as the flexibility and ease of access to remote shale plays, could undermine investments in pipeline projects in the future, according to a study conducted by two University of Chicago professors.

The cost of moving crude by rail may also influence the size of pipeline projects, with the authors of the study estimating that an increase of $1 per barrel in the cost of crude-by-rail transport could have added between 29,000 and 74,000 bpd capacity to the Dakota Access Pipeline.

Regulators Seek Heavy Fine Against Energy Transfer Partners 

Ohio’s environmental regulators more than doubled the proposed fines against a company building a natural gas pipeline from West Virginia to Michigan, claiming as of late September the two sides are at an impasse.

The fines now stand at $2.3 million and stem from what the Ohio Environmental Protection Agency says are numerous water and air pollution violations during construction of the $4.2 billion Rover Pipeline, AP reported.

The twin pipelines are being built across Ohio to carry natural gas from Appalachian shale fields to Canada and states in the Midwest and the South. Dallas-based developer Energy Transfer Partners (ETP) has fought efforts to resolve the fines, said Craig Butler, director of Ohio’s Environmental Protection Agency, and he has asked the state’s attorney general to get involved.

ETP said it will continue to work with the Federal Energy Regulatory Commission to meet its requirements. ETP was given approval to restart drilling which was halted after 2 million gallons of drilling mud seeped into a wetland in the spring. Spokeswoman Alexis Daniel said the project is expected to be completed and operating by the end of March.

Butler said ETP doesn’t think the state has authority to impose regulations because FERC already gave the company approval on the project.

ExxonMobil Expands Methane Reduction Program

ExxonMobil announced an enhanced program to reduce methane emissions from its production and midstream facilities across the U.S. The program will be led by subsidiary XTO Energy and includes efforts to develop and deploy new, more efficient technologies to detect and reduce facility emissions.

The program includes a commitment to phase out high-bleed pneumatic devices over three years, extensive personnel training, research, and facility design improvements for new operations.

XTO completed a pilot project in the Midland Basin testing low-emission designs that use compressed air instead of natural gas to operate pneumatic equipment that helps regulate conditions such as level, flow, pressure and temperature. The results indicated the feasibility of using similar designs for new and existing central tank batteries and satellites, to reduce the potential for methane emissions.

“We are implementing an enhanced leak detection and repair program across our production and midstream sites to continually reduce methane emissions, and are also evaluating opportunities to upgrade facilities and improve efficiency at both current and future sites,” said XTO President Sara Ortwein.

EIA Suggests Surge in Gas Production, Prices in 2018

The latest short-term report from the Energy Information Administration (EIA) suggests a substantial increase in natural gas production next year, with U.S. dry natural gas production forecast to average 73.7 Bcf/d in 2017, a 1.4 Bcf/d increase from the 2016 level. Production in 2018 is forecast to be 4.4 Bcf/d higher than the 2017 level.

In August the average Henry Hub natural gas spot price was $2.90/MMBtu, down 8 cents from July. Expected growth in gas exports and domestic natural gas consumption in 2018 contribute to the forecast Henry Hub natural gas spot price rising from an annual average of $3.05/MMBtu in 2017 to $3.29/MMBtu in 2018.

NYMEX contract values for December 2017 delivery traded during the five-day period ending Sept. 7 suggest a range of $2.39-4.34/MMBtu encompasses the market expectation for December Henry gas prices at the 95% confidence level.

The EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34% in 2016 to about 31% in 2017 as a result of higher natural gas prices and increased generation from renewables and coal. Coal’s forecast generation share rises from 30% last year to 31% in 2017. The projected generation shares for natural gas and coal in 2018 average 31% and 32%, respectively.

BP Sending Natural Gas into Mexico

BP has begun piping natural gas to buyers across eight states in Mexico as the country continues to open its energy sector to foreign investors, the company said recently. BP said it’s delivering gas to industrial companies, distributors and power producers purchasing a combined 200 MMcf/d of natural gas.

BP had secured rights to pipe gas to the country in an auction earlier this year. It also plans to open 1,500 gasoline stations in Mexico during the next half-decade; it opened its first stations in March.

NEB Cites Enbridge’s B.C. Pipeline Expansion Construction Failures

The National Energy Board (NEB) ordered a subsidiary of Enbridge to improve worker safety and environmental protection after several infractions were spotted during field inspections of a B.C. pipeline expansion project, The Canadian Press reported. The agency issued three orders to Spectra Energy Transmission concerning construction of its High Pine natural gas pipeline expansion project near Chetwynd, B.C.

The NEB said the new pipeline poses no immediate environmental or public safety concerns. The company is cited for failure to construct bridges over watercourses according to specification, failure to protect environmentally sensitive areas near streams, lakes and wetlands from disturbance, and inadequate sediment and erosion control measures at watercourse crossings.

Inspectors ordered the company to complete 27 measures. These include halting unsafe pipe handling activities, assessing adequacy of project oversight, immediately ceasing travel on bridges and ramps that span two watercourses, and submitting action plans to address management of construction activities.

The expansion project was approved a year ago. The pipeline moves 240 MMcf/d to the British Columbia Lower Mainland and into the U.S.

National Petroleum Council Asked to Study CO-2 Issue 

Energy Secretary Rick Perry asked an oil industry advisory council to look for ways to exploit technology that captures carbon emissions from coal-fired power plants by injecting the carbon dioxide into the ground to help drill for oil, Reuter said.

Perry, whose department cut funding for research into ways to make carbon capture and utilization technology commercially viable, said he wanted to hear from the industry on how to widely deploy the “exciting” technology.

“Integrating technology and deploying CCUS (carbon capture utilization and storage technology) at scale still remains a commercial challenge,” Perry told a meeting of the National Petroleum Council, a 200-member group of industry representatives that advises the energy secretary. He asked the council to undertake the study as part of a broader review of the country’s oil and gas transportation infrastructure for the first time in over 15 years, which he said was in need of major investment.

CO-2 pipelines would be used to move captured carbon from a coal plant to oil fields where the emissions could be pumped into the ground to extract oil. Perry said carbon capture and utilization had “exciting potential” and asked the industry group to offer policy and R&D recommendations. He touted the Petro Nova CCUS project in his home state of Texas, which will capture over 5,000 tons of CO-2 per day for enhanced oil recovery.

Energy Secretary Perry Wants to Save SPR 

The U.S. needs the Strategic Petroleum Reserve to safeguard the nation’s consumers and energy infrastructure from natural disasters such as Hurricanes Harvey and Irma, Energy Secretary Rick Perry told a recent news conference. Perry expressed his disapproval of President Trump’s proposal to sell half of the reserve but said he hopes that Harvey and Irma will serve as a reminder of the SPR’s importance.

NB Premier: Let Feds Pay For Rule Change

New Brunswick Premier Brian Gallant declared if the federal government wants to change the rules of the regulatory process for the Energy East pipeline, it should pay the added costs.

In a letter to Prime Minister Justin Trudeau, Gallant said the proposed project is in jeopardy because the National Energy Board (NEB) has said it would consider the impact of indirect greenhouse gas emissions caused by the project.

Gallant said Ottawa should pay for the analysis of upstream and downstream emissions, along with similar analyses of other ways of supplying oil. “Many people believe that the pipeline may ultimately be rejected due to political considerations,” he wrote. “I believe this project is in jeopardy and that is not in the interests of this country.”

Oryx to Build New Mexico-Midland Pipeline

Midland-based Oryx Midstream Services plans to build a 220-mile crude pipeline system in the Permian Basin that will run from New Mexico to Midland. The company said the 400,000-bpd network will run through Carlsbad, NM crude oil delivery points in Crane and Midland, TX.

The system will be constructed in phases, consisting of 6-, 20- and 24-inch pipeline, and is expected to go in-service by the end of 2018.

Producers Midstream Adding Gathering System

Producers Midstream is planning a new natural gas gathering system that will have up to 260 MMcf/d of cryogenic processing capacity in the Western Delaware Basin, through the formation of Culberson Midstream.

The system will consist of more than 70 miles of pipeline, up to 40,000 hp of compression, and a new cryogenic natural gas-processing complex with up to 260 MMcf/d of capacity to serve producers in the Wolfcamp, Bone Springs and Avalon formations. It should be operational early next year.