July 2020, Vol. 247, No. 7
Projects
Projects
First Piece of Keystone XL Pipeline Completed
TC Energy has completed the first piece of its disputed Keystone XL oil sands pipeline across the U.S. border and has started work on labor camps in Montana and South Dakota.
The 1,200-mile (1,900-km) pipeline from Alberta to Nebraska was stalled for much of the last decade.
Work on the $8 billion pipeline finally started in April at the border crossing in northern Montana. That 1.2-mile (1.9-km) section has now been completed except for some site reclamation activity, TC Energy spokeswoman Sara Rabern said.
The Calgary-based company has started site work for labor camps near Baker, Mont., and Philip, S.D., but it has not set a date to occupy them.
Montana officials have not yet received plans requested from the company to make sure it can prevent the camps from spreading the coronavirus, said Erin Loranger, a spokesperson for Montana Gov. Steve Bullock told the Associated Press.
The state expects to receive the plans before the camps are occupied, she said.
The company’s three-year construction timeline was put into doubt following a May 15 ruling from a federal judge in Montana that canceled a key permit from the U.S. Army Corps of Engineers. The permit is needed to build the line across hundreds of streams, wetlands and other water bodies along its route.
The ruling affected all new oil and gas pipeline construction and was appealed by the Trump administration and TC Energy.
The work in South Dakota began amid high tensions between South Dakota Gov. Kristi Noem and two Native American tribes that have been outspoken opponents of the pipeline.
The governor is trying to force two tribes – the Cheyenne River Sioux Tribes and the Oglala Sioux Tribe – to remove coronavirus checkpoints they have set up on federal and state highways in an attempt to keep infections away from their reservations.
The highways that the Cheyenne River Sioux Tribes are monitoring connect to several potential construction sites of the proposed pipeline route, which skirt tribal lands. The tribe has a policy of not allowing vehicles from any oil company on the reservation, and with the checkpoints set up, they would stop those vehicles.
Biden Would Rescind Keystone XL Permit if Elected, Campaign Says
Joe Biden’s campaign said if he is elected president, the Democratic nominee would rescind the permit for Keystone XL pipeline, effectively ending the project.
Construction of the pipeline, which would carry 830,000 bpd of crude from Alberta, Canada, to the U.S. Midwest, has been delayed for more than a decade by opposition from landowners, environmental groups and tribes.
The TC Energy project was recently handed another setback when a U.S. federal court ruled against the U.S. Army Corps of Engineers’ use of a new pipeline permit to cross bodies of water, potentially delaying construction further.
EU Court Throws Out Challenge from Nord Stream 2
Europe’s second-highest court rejected a challenge by the operators of the Nord Stream 1 and Nord Stream 2 pipelines against European Union gas rules, saying it was up to individual member states to enforce them.
The Nord Stream 2 pipeline, designed by Russia’s Gazprom to increase direct shipments to Europe, will carry gas from Russia to Germany under the Baltic Sea.
The Swiss-based operating company Nord Stream 2 AG had said the EU rules, which require separate companies to build, operate and own pipelines, would weaken the basis for funding the project. It turned to the courts to annul a relevant EU gas directive amendment adopted last year.
The general court dismissed the challenge, according to Reuters, saying the directive amendment did not directly affect the pipeline, and responsibility for enforcing the relevant EU law lay with the member states.
“Concerning both Nord Stream 2 AG and Nord Stream AG, the General Court finds that they (the companies) are not directly concerned,” the court said.
Nord Stream 2 said it was analyzing the ruling and had the option to file an appeal within two months.
“The court has not rejected our claim on substance, in particular that the amendment of the Gas Directive constitutes an unlawful discrimination of Nord Stream 2. Therefore, we maintain our claim,” it said.
Germany’s energy regulator declined to grant a waiver of the directives for the section that runs through German territory.
CPC Pipeline Expansion in Doubt After Leadership Shakeup
The CPC pipeline, essential to ship 1.4 MMbpd of light Caspian to the Mediterranean markets, is facing a shareholder standoff after its board was dissolved, potentially stalling expansion plans, three sources told Reuters.
The Caspian Pipeline Consortium (CPC), the largest privately operated route connecting oil fields in Kazakhstan and Russia with the Black Sea, is co-owned by a number of shareholders with a history of failing to reach agreement.
Disagreements between Russia’s oil pipeline monopoly Transneft, Kazakhstan and other shareholders have capped expansion plans in the past. CPC needs to add another 150,000 bpd by 2024 to accommodate growing oil output in the region.
In early March, Transneft blocked election of the new board of directors, after failing to win support from other shareholders for its proposal to change a marine support company in the CPC terminal near Novorossiisk, sources familiar with the details said.
Transneft, which owns a 7% stake in CPC, proposed to replace a long-serving Smit Lamnalco marine operator with its own unit, Transneft-Service, which other shareholders believed lacked the proper experience, the sources said.
“Main concern was that Transneft-Service doesn’t have proper qualifications and vessels to serve the CPC terminal,” one of the sources said.
Enbridge-Annova LNG Deal to Expand Valley Crossing Pipeline
Enbridge’s Valley Crossing natural gas pipeline from Agua Dulce to Brownsville, Texas, will be expanded along with the construction of a 9-mile (14.5-km) lateral to Annova’s LNG Brownsville export facility.
The precedent agreement provides for Valley Crossing Pipeline to transport 100% of the natural gas requirements at Annova’s 6.5-mtpa LNG facility, now under development.
“Annova LNG’s firm transportation arrangements will ensure security of supply and access to the most diversified, low-cost feed gas of any of the U.S. LNG facilities,” said Omar Khayum, CEO of Annova LNG.
The agreement provides for the execution of a 20-year firm transportation service agreement that will access multiple receipt points with major pipelines in the Agua Dulce area, providing gas supply diversity for Annova’s feed gas requirements, the company said.
In October 2018, Annova LNG announced that Black & Veatch and Kiewit invested in the facility and were awarded the engineering, procurement and construction (EPC) contract on a joint basis. It is scheduled to commence commissioning in 2024 and commercial operations in early 2025, Annova said.
The Brownsville facility will use electric-driven compressor engines and source its electricity from carbon-free, renewable energy resources, making it “the most sustainable and reliable provider of LNG from the United States,” according to Khayum.
Canada’s Enbridge placed the 168-mile (270-km) Valley Crossing Pipeline into service in November 2018 to transport up to 2.6 Bcf/d (74 MMcm/d) of natural gas to the Comisión Federal de Electricidad (CFE), Mexico’s state-owned utility, which serves about 37 million customers.
Energy Transfer’s Expansion Could Face Delays Amid Cuts
Energy Transfer is slashing at least $400 million from its 2020 capital spending budget to $3.6 billion and will consider doubling the cuts after losses caused by oil prices driven lower by the coronavirus (COVID-19) pandemic, the company said.
“As everybody knows, we’re in kind of unprecedented times that nobody could ever have predicted,” said Marshall McCrea, Energy Transfer’s chief commercial officer on an earnings call.
Among the projects facing delays from any further cuts is Energy Transfer’s plan to expand its 570,000-bpd Dakota Access Pipeline (DAPL), company officials said, but added that they were aiming to remain on schedule.
Flows on DAPL, which runs from North Dakota to Illinois, will likely be increased to 750,000 bpd, said Energy Transfer Chief Financial Officer Thomas Long.
Demand destruction caused by COVID-19 has resulted in a surging amount of unwanted oil since the beginning of the year, quickly filling up tanks and raising storage costs.
Energy Transfer said it has been able to ease this year’s financial blows with its storage assets, including securing 6.2 million barrels of leased capacity in the U.S. Department of Energy’s Strategic Petroleum Reserve.
Energy Transfer is also in the process of reducing between $200 million to $250 million in costs at its corporate offices and elsewhere in the company, officials said.
Dominion Seeks More Time to Complete Atlantic Coast Pipeline
Following a favorable decision from the U.S. Supreme Court, Dominion Energy asked U.S. energy regulators for more additional time to complete the long-delayed Atlantic Coast pipeline from West Virginia to North Carolina.
“Due to unforeseen delays in permitting, additional time is required in order to complete the construction,” Dominion said in a filing, which sought two additional years.
The U.S. Federal Energy Regulatory Commission (FERC) approved Dominion’s request to build Atlantic Coast in October 2017, authorizing the company to complete the project by October 2020.
The company still needs to renew permits from the U.S. Forest Service and U.S. Fish and Wildlife Service (FWS) that were voided by decisions in the U.S. Court of Appeals for the 4th Circuit, and a state air permit for a compressor in Virginia.
Dominion told Reuters it expects to receive the necessary approvals by the end of the year. Construction on the 600-mile (966-km) project was suspended in December.
The company now expects the pipeline to cost around $8 billion and to enter service in early 2022.
Eni, Sonatrach Complete Algerian Gas Pipeline
Eni completed construction on the gas pipeline connecting Bir Rebaa Nord (BRN) and Menzel Ledjmet Est (MLE) fields in the Berkine Basin in southeastern Algeria. The 16-inch (406-mm), 115-mile (185-km) pipeline has a gas transport capacity of 7 MMscm/d.
The project will allow for the export of the associated gas produced in Block 403 (BRN and BRSW) and the development of the gas fields of the blocks of North Berkine, where the drilling of the first four wells was completed and linked just a year after the farm-in agreements in the concessions of Sif Fatima II, Zemlet El Arbi and Ourhoud II came into force in February 2019.
Production from the oil fields in the same blocks began in May 2019 and will continue to develop during the current year.
This is an example of a “fast track” project, which saw a shared commitment by Eni and Sonatrach, based on a common strategy of an accelerated time to market and on the availability and ability of the contracting companies of the Sonatrach group to carry out the works.
When fully operational, the gas project of the Berkine Nord will bring production to a total of 230 million cubic feet (6.5 million cubic meters) and 10,000 barrels of associated liquids, which, together with the oil development, will lead to an overall production of 65,000 boe/d by 2020.
Eni has been present in Algeria since 1981 with an equity production of 90,000 boe/d, making the company one of the main international players in the country.
Eni announced it has successfully completed the construction of the gas pipeline connecting Bir Rebaa Nord (BRN) and Menzel Ledjmet Est (MLE) fields in the Berkine Basin, in the southeastern part of Algeria.
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