November 2017, Vol. 244, No. 11



Ohio Gas Production Grows to 4.3 Bcf/d 

Ohio is now the country’s sixth-largest gas producing state. major natural gas producing states, due to the Utica Shale and a portion of Pennsylvania’s Marcellus Shale plays. Despite low prices in the $3 range, producers in the Utica have added 10 rigs since early March to now total 29. The Ohio Department of Natural Resources reports that second-quarter gas production hit 4.3 Bcf/d, up more than 16% from the second quarter of 2016.

Belmont, Harrison, Monroe, Carroll and Jefferson counties contributed 90% of the state’s output. Ohio has more gas opportunities with new pipelines coming to the area as well. The $4.2 billion, 713-mile Rover pipeline finally began Phase 1 operations Sept. 1 and was already delivering 600 MMcf/d. Rover’s Phase 2 will lift the project to its full capacity of 3.25 Bcf/d and could come online in December

Rover will ship Appalachian Basin gas to markets in the Midwest, Gulf Coast and Eastern Canada. With construction slowed by multiple delays and pressure from regulators, the gas market has been waiting for Rover’s arrival. The Nexus pipeline, at 1.5 Bcf/d capacity, has been approved by federal regulators with startup  scheduled for next year.

Construction Begins on 650-Mile Permian NGL Pipeline 

EPIC Y Grade Pipeline and EPIC Midstream Holdings have signed a definitive agreement with BP Energy Company to anchor the EPIC NGL Pipeline, a new 650-mile natural gas liquids pipeline that will link producers’ NGL reserves in the Permian and Eagle Ford Basins to Gulf Coast refiners, petrochemical companies and export markets.

Once completed, the 220,000 bpd pipeline will have multiple origin points in the Delaware and Midland basins. Destinations will include interconnects near Orla, Benedum and Corpus Christi, TX, where EPIC’s affiliate plans to build a fractionation complex to accommodate the pipeline’s volume. In the fourth quarter, EPIC will conduct an open season to provide interested shippers with an opportunity to secure firm capacity on the pipeline.

At the moment, the company is actively acquiring rights-of-way, and in some cases, multi-line rights will be pursued to accommodate both the NGL and crude oil projects. EPIC plans to have the initial phase of the pipeline in-service in early 2018.

Letter of Intent Signed to Develop Gulf Coast Express Pipeline 

Kinder Morgan Texas Pipeline, DCP Midstream and  a Targa Resources affiliate have signed a letter of intent to develop the Gulf Coast Express (GCX)  Pipeline Project as an outlet for natural gas production from the Permian Basin to markets along the Texas Gulf Coast.

As part of the agreement, Targa and DCP Midstream would commit significant volumes to the project, including certain volumes provided by Pioneer Natural Resources, a joint owner in Targa’s WestTX Permian Basin system and one of the largest producers in the Permian Basin.

The capacity of the GCX Project is expected to be a 1.92 Bcf/d and would include a lateral into the Midland Basin, consisting of 50 miles of 36-inch pipeline and associated compression to serve gas-processing facilities owned by Targa, as well as facilities owned jointly by Targa and Pioneer. The pipeline is expected to be in-service in the second half of 2019.

TransCanada Drops Energy East Oil Sands Pipeline 

TransCanada announced Oct. 5 that it was canceling the proposed $15.7 billion Energy East pipeline to transport 1.1 MMbpd from Western Canada to the Atlantic Coast. CEO Russ Girling said, “After careful review of changed circumstances, we will be informing the National Energy Board,” it won’t go ahead.

Supporters said the pipeline was necessary to decrease reliance on the U.S., which takes 97% of Canada’s energy exports. Alberta has the world’s third-largest oil reserves, with 170 Bbbls of proven reserves. When TransCanada announced the project in 2013 prices were near a $100 a barrel. Since then Alberta’s oil sands growth has slowed amid the decline in oil prices and environmental opposition.

Conservative opposition deputy leader Lisa Raitt called it a “terrible day for Canada,” blaming Prime Minister Justin Trudeau for not backing the project. “Everything Justin Trudeau touches becomes a nightmare,” Raitt told AP. Trudeau responded by accusing opponents of “stoking national divisions.” He said critics who attribute the cancellation to government regulation “ignore the obvious. Aside from its being intellectually dishonest, the reflexive stoking of regional tensions is a political dead end.”

When Energy East was first proposed, the global supply of crude was relatively tight, he said, warning that festering regional tensions bound the country in “paralyzing unity debates” from the 1970s through the 1990s.

The pipeline would have carried western crude from the Alberta oil sands to the Irving Oil refinery in Saint John, NB, as well as an export terminal. TransCanada wrote the NEB that it was abandoning the project because of the board’s decision to allow hearings to consider greenhouse gas emissions from producing and processing the oil it transports in the pipeline. The premiers of Alberta and New Brunswick have expressed disappointment, while Quebec politicians, along with Indigenous and environmental groups, welcome the project’s demise.

Conservative Leader Andrew Scheer called Energy East a “nation-building project” and disputed Trudeau’s claim that it  was canceled for business reasons. Some analysts questioned the need for the project after other pipelines were green-lighted, such as TransCanada’s Keystone XL project, which received U.S. approval to transport oil from Alberta to the U.S. Gulf Coast. But the Canadian Association of Petroleum Producers said all the pipelines are needed, predicting in June that national oil production will climb by 33% by 2030.

Pembina Expanding Pipeline as Part of Phase V Project

Pembina Pipeline is adding additional infrastructure and increasing operational flexibilities to its Phase V pipeline expansion, which includes a 20-inch pipeline from Lator to Fox Creek, Alberta. The capital cost estimate revision includes $90 million to add 40,000 barrels of operational crude and condensate storage, new tie-ins and site modifications, and a new pump station near Dawson Creek, B.C. Upgrades will also be made to an existing pump station at Gordondale, Alberta.

Through the enhancements, pipeline capacity will be increased by an incremental 45,000 bpd upstream of Laglace, Alberta. In addition to accommodating further demand, the company said the revision will improve operational efficiencies.

Phase V will address capacity constraints between Lator and Fox Creek and supporting future growth in the Montney and Deep Basin resource plays. The project could provide additional capacity in this corridor and access to Pembina’s downstream capacity at Fox Creek. Pembina plans to have Phase V in-service in late 2018.

Shell to Help Build Gas Pipeline in Nigeria

Shell is joining with a Nigerian company to develop gas pipeline infrastructure in that country in a deal that highlights the push by global energy companies to build gas demand in growing economies of Africa.

Shell’s Nigerian business has signed a $300 million agreement with Nigeria-based power provider Shoreline Energy to develop, market and distribute gas around Lagos, the commercial capital of Africa’s largest economy.

The deal is the latest example of global energy groups investing in terminals, pipelines and power infrastructure throughout Africa as a way to promote gas as the best solution to the continent’s chronic shortage of electricity-generating capacity.

Shell will help finance and develop a transmission and distribution pipeline network to generate revenues from a 20-year gas concession in Nigeria.

Oil and gas producers see Africa as a big part of their global effort to drive demand for gas as a cleaner, more efficient alternative to coal, diesel and oil in power generation, transport and industrial uses. Eni of Italy is investing in a gas terminal and pipeline to connect newly developed gas resources off the coast of Ghana to the local market, and Total of France is building a floating gas storage facility off Ivory Coast.

CH2M Awarded Offshore Africa Project for BP

CH2M has been awarded a new marine engineering support contract on BP’s innovative Tortue development offshore Mauritania and Senegal.

The new energy development project involves subsea gas production, a floating gas treatment facility, a pipeline with domestic gas connection points and a nearshore hub facility where the gas is converted into LNG. The hub facility provides breakwater-protected berths for a floating LNG production unit and for international export of LNG by ship.

CH2M’s preliminary front end engineering design (Pre-FEED) deliverables support final decision-making on the hub location, layout, and the form and method of construction of the inshore hub and support to marine operations and project execution planning.

BP named KBR as an engineering services contractor for the Tortue development, and KBR selected CH2M as the BP-approved civil and marine engineering support provider.

Tall Oak Constructing Gathering System in East STACK

Tall Oak Midstream III will construct a natural gas-gathering system in southeast Oklahoma’s East STACK play. Producers working in the East STACK are developing multiple-stacked pay zones, including the Woodford, Caney and Mayes formations. The system will span Hughes County and portions of Seminole, Pontotoc, Coal, Pittsburg, Atoka and McIntosh counties.

Initially, Tall Oak III’s East STACK system will consist of more than 50 miles of 12- to 20-inch pipeline, two compression facilities, a 5,000-bpd stabilizer, an associated slug catcher and condensate storage facilities. The system is expected to be in-service by the end of the year. Tall Oak III hopes to add a cryogenic processing facility to its system and is in discussions with producers to determine the best size and location for the plant to ensure flexible access to premium residue and NGL markets.

The announcement came two months after the formation of Tall Oak III, which is backed by an initial equity commitment of up to $200 million from EnCap Flatrock Midstream and the Tall Oak III management team. Tall Oak Midstream II continues to focus on operating and expanding its midstream assets in the Northwest STACK play. Tall Oak Midstream I was sold to EnLink in January 2016.


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