September 2022, Vol. 249, No. 9

Projects

TC Energy Expects Coastal Gas Line to Cost Nearly $9 Billion

NGL Energy Partners Places 225-Mile Ambassador Pipeline in Service  

NGL Energy Partners placed the Ambassador Pipeline system in service in Michigan. The Ambassador Pipeline System consists of a 225-mile (362-mile) bidirectional pipeline with multiple supply and delivery points.

The pipeline connects central, northern and western Michigan propane customers to millions of gallons of underground storage capacity in the eastern part of the state.  

“In addition to the supply benefits to Michigan’s many propane customers, the Ambassador Pipeline will reduce truck traffic, road wear and tear, and a substantial reduction of CO2 emissions every year, benefitting residents throughout the state,” Jeff Pinter, executive vice president of NGL’s Liquids Logistics segment, said of the project.  

NGL’s Wheeler Terminal is located at the midpoint of the pipeline and includes on-site storage of 480,000 gallons of propane. The Kalkaska terminal is located at the northern end of the pipeline and has 420,000 gallons of total storage.   

Both Wheeler and Kalkaska use two truck-loading bays capable of flowing up to 600 gallons per minute, which allows propane transports to load in about 25 minutes.  

Energy Transfer to Evaluate Haynesville Carbon Capture Project  

CapturePoint Solutions (CPS) signed a letter of intent with Energy Transfer to participate in a feasibility study to capture CO2 emissions from natural gas production facilities in the Haynesville Shale.  

The proposed initial joint endeavor would capture, transport and sequester CO2 emissions from natural gas processing facilities in the Haynesville Shale in northwest Louisiana, one of the largest natural gas fields in the United States.  

Energy Transfer would capture the CO2 from Energy Transfer’s affiliated natural gas facilities in the Haynesville Shale and build and operate a pipeline to the CENLA Hub storage sites.   

CPS would build and operate capture services for third-party Haynesville Shale facilities as well as develop the sequestration sites where all captured CO2 would be permanently secured in geologic storage up to 2 miles (3 km) underground.  

The hub has the potential to be one of the largest, onshore, deep underground carbon storage centers in the United States, with the capacity to permanently secure millions of tons of CO2 annually that might have otherwise been emitted into the atmosphere.  

CPS is evaluating and developing a number of proposed storage sites in the CENLA Hub. It filed for a U.S. Environmental Protection Agency (EPA) Class VI permit in June 2022 to advance the first operational location.   

Howard Energy to Expand South Texas Natural Gas Transportation System  

Howard Energy Partners (HEP) plans to expand its capabilities to gather, treat and transport natural gas produced from the Austin Chalk and Eagle Ford Shale plays in and around Webb County, Texas.  

Through its joint venture with Dos Caminos and an affiliate of Eagle Ford Midstream (EFM), the company expects to double its throughput capacity to 2 Bcf/d (57 MMcm/d), using enhancements to existing systems and construction of a new pipeline.  

HEP’s and EFM’s systems currently supply premium markets, including Mexico and Gulf Coast liquid natural gas (LNG). Dos Caminos was created to develop additional natural gas transportation opportunities in the Eagle Ford Shale region of South Texas and to jointly market capacity on HEP’s and EFM’s existing South Texas systems.   

“Given our unique pipeline footprint and history in South Texas, we are best situated to respond to the significant natural gas production growth in the Webb County area,” Mike Howard, CEO of HEP, said. “These projects will be completed in phases with the initial phase anticipated to be completed in the third quarter of next year and the remainder in 2024.”  

Enterprise to Expand Shin Oak Pipeline System in Permian  

Enterprise Products Partners unveiled plans to expand its natural gas liquid (NGL) pipeline system in the Permian Basin and build two processing plants to further support ongoing production growth in the basin.  

The company plans to expand its Shin Oak NGL pipeline system via looping and modification of existing pump stations. This initial expansion would add up to 275,000 bpd of capacity, with completion expected in the first half of 2024.  

In the Delaware Basin, Enterprise will add a third plant at its Mentone cryogenic natural gas processing plant in Loving County, Texas. The project will increase capacity at Mentone by 300 MMcf/d (8.5 MMcm/d) and allow Enterprise to extract an incremental 40,000 bpd of NGL.   

Long-term capacity agreements support the expansion; it is expected to begin service at the end of the first quarter of 2024.  

“The Permian Basin continues to be the driver for U.S. production growth of crude oil, natural gas and NGLs that supports increasing energy demand both domestically and abroad,” A.J. “Jim” Teague, co-CEO of Enterprise, said. “The reliable supplies are a vital necessity for world markets, given the disruptions caused by the Russian invasion of Ukraine.”  

Upon completion, Enterprise will have a total nameplate natural gas processing capacity in the Delaware Basin of 2.2 Bcf/d (62 MMcm/d) and more than 300,000 bpd of NGL extraction capabilities.  

Energy Transfer Reports Recent Pipeline Leak in Louisiana  

Energy Transfer has disclosed that a pipeline rupture in Louisiana occurred July 22, releasing 8.2 MMcf (232 Mcm) of natural gas, according to a report filed with the U.S. National Response Center.  

The cause of the rupture remains under investigation, and a sample section of the pipeline has been s ent to a lab for examination, said a spokesperson for the Louisiana Department of Natural Resources.  

Energy Transfer has 30 days to provide Louisiana with a report on the cause of the leak, after which the department will conduct its own review.  

Magellan’s Permian-Houston Crude Pipelines’ Volumes Drop  

Magellan Midstream Partners reported declining volumes on the Longhorn and BridgeTex pipelines in the most recent quarter. Both carry crude from the Permian Basin to Houston.  

It’s possible shippers on the long-haul crude oil lines took volumes elsewhere, likely to be exported from Corpus Christi, Texas, the top port for oil exports, and to the broader international market, as Europe’s demand for barrels increased following Russia’s invasion of Ukraine.  

“That’s an example of potential decisions that our shippers could be making,” said Magellan CEO Aaron Milford, during an investor’s call. “We don’t expect that to continue forever, but there are moments where they may be making those decisions for sure.”  

The Port of Corpus Christi is the largest U.S. crude export port.  

Shippers that did not fulfill their commitments would still have to pay deficiency payments, which are penalties for not shipping oil.  

Volumes on the 450-mile (724-km) Magellan’s wholly owned Longhorn crude oil pipeline from West Texas to Houston averaged about 200,000 bpd in the three months ending June 30, compared to 260,000 bpd in the same period last year.  

The BridgeTex crude pipeline from the Permian to Magellan’s East Houston terminal, which is a joint venture, dropped to 215,000 bpd from nearly 315,000 bpd from a year ago.  

The Tulsa, Oklahoma-based company said in December that it expected relatively flat volumes for a few years on the Longhorn and the BridgeTex crude pipelines.  

Caspian Pipeline Consortium Says Oil Supplies Notably Down  

Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, said that supplies were significantly down, without providing figures.  

According to Reuters, CPC, which handles about 1% of global oil, said the reduced offtake from the Kazakh Tengiz field was caused by maintenance issues, and that volumes from a second Kazakh field, Kashagan, were down because of halted production.  

Kazakhstan’s Tengizchevroil, a Chevron-led consortium, scheduled maintenance at its Tengiz oilfield in August, but CPC did not say if that had caused the decreased production at the Kashagan field.  

The North Caspian Operating Company, which runs the Kashagan field, did not immediately reply to a Reuters request for comment.  

Kazakhstan is the second-biggest oil producer among the ex-Soviet countries after Russia, pumping 1.5 MMbpd of oil. Both countries are members of the OPEC+ group to coordinate oil production.  

Australia’s Santos Buys Underground Pipeline Due to Supply Crunch  

Australia’s Santos Ltd. bought a company that owns an approved underground pipeline route with the ability to move natural gas from Santos’ planned Narrabri project.  

Santos did not disclose the cost of buying Hunter Gas Pipeline, according to Reuters, but a spokesperson said it was “not a significant sum.”  

Hunter Gas Pipeline previously said it was valued at $850 million (A$1.2 billion). Santos said it plans to start construction in early 2024.  

The company’s long-delayed Narrabri project is awaiting regulatory approval that would allow it to start appraisal drilling. Santos has said it would need about two years of appraisal drilling before it would be near a final investment decision on the project.  

In August, the competition watchdog Australian Competition and Consumer Commission (ACCC) recommended restrictions on exports of liquefied natural gas (LNG) to avert a gas supply shortage, which the government is reviewing.  

Mexican Utility Sign Deal to Build $4.5 Billion Gas Pipeline  

TC Energy reached an agreement with Mexican state utility Comisión Federal de Electricidad (CFE) to develop a $4.5 billion natural gas pipeline.  

The offshore Southeast Gate-way Pipeline will supply natural gas to Mexico’s central and southeast regions, the Canadian pipeline operator added.  

The CFE deal comes as Canada and the United States are bickering with Mexico over the United States-Mexico-Canada Agreement. CFE Energy said sanctioning of the pipeline would expand its secured capital program to $33 billion.  

TC Energy Expects Coastal Gas Line to Cost Nearly $9 Billion  

TC Energy expects its Coastal GasLink pipeline project to cost $8.72 billion (C$11.2 billion), nearly 70% higher than initially budgeted.  

The long-delayed pipeline is expected to be integral to Canada’s contribution to the global liquid natural gas (LNG) market, which has seen demand surge as Europe and Asia seek alternatives to Russian energy imports.  

TC Energy also said it has settled long-running disputes with LNG Canada, a consortium led by Royal Dutch Shell, over the project, adding the pipeline is about 70% complete and is expected to be in mechanical in-service by the end of next year.  

The 416-mile (670-km) Coastal GasLink pipeline, announced in 2018, is being built to transport natural gas to an LNG Canada facility at the west coast of British Columbia, Canada’s first LNG export terminal.  

In February, the company said pipeline workers were attacked by masked assailants, who also damaged millions of dollars’ worth of equipment and construction trailers.  

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