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LEADERS IN CORROSION PREVENTION& SEALING TECHNOLOGYWWW.DENSO.NET
HEAT SHRINK SLEEVES
LIQUID EPOXY COATINGS
PETROLATUM TAPE & MASTIC
BUTYL & BITUMEN TAPES
WP Cover FEB 2019.indd 1 14/01/2019 14:16
®
Volume 19 Number 2 - February 2019
Visit us at PPIM 2019HOUSTON (TEXAS), USA18-22 February 2019BOOTH # 507
www.rosen-group.com
Ad_WorldPipelines_PPIM2019_A4_19.1.1.indd 1 1/18/2019 1:26:57 PM
Contents
ON THIS MONTH'S COVER
Member of ABC Audit Bureau of Circulations
ISSN
14
72-7
390
Reader enquiries [www.worldpipelines.com]
Copyright© Palladian Publications Ltd 2019. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK.
www.worldpipelines.com LEADERS IN CORROSION PREVENTION
& SEALING TECHNOLOGYWWW.DENSO.NET
HEAT SHRINK SLEEVES
LIQUID EPOXY COATINGS
PETROLATUM TAPE & MASTIC
BUTYL & BITUMEN TAPES
WP Cover FEB 2019.indd 1 14/01/2019 14:16
®
Volume 19 Number 2 - February 2019
WO
RLD
PIP
ELIN
ES
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EB
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AR
Y 2019
OFC_WP_February_2019.indd 1 25/01/2019 10:14
WORLD PIPELINES | VOLUME 19 | NUMBER 2 | FEBRUARY 2019
Winn & Coales International Ltd, established in 1883, has over 135 years’ service to industry. The company is known internationally for its DensoTM range of
anti‑corrosion and sealing coatings, which offer long‑term, cost‑effective protection for buried pipelines in a variety of different environments. Its brands
include ProtalTM liquid coatings, Premier Shrink SleevesTM for welded pipeline joints, ArchcoTM linings for steel and concrete, SteelcoatTM for above ground steel
protection and SeaShieldTM systems for protecting marine structures.
03. Editor's commentCompelled to steal.
05. Pipeline newsUpdates on the progress of the Trans Mountain Expansion Project, Keystone XL, TAP, and more.
PAGE
12
THE MIDSTREAM MONEY MACHINEGordon Cope investigates how the US oilpatch is firing along on all fronts and why they need the midstream sector now more than ever.
The US oil and gas sector is going gangbusters. According to the Energy Information Administration (EIA), gas production averaged 83.2 billion ft3/d in 2018, and crude production exceeded 11 million bpd late in 2018.
While some of the new production occurs in mature basins, much is in new regions that require extensive pipeline infrastructure to deliver to market. The Interstate Natural Gas Association of America (INGAA) estimates that North American midstream operators will spend an average of US$27.5 billion annually on oil, gas and NGL infrastructure over the next 20 years.
Natural gasShale drillers in the Appalachia have been able to boost output to a record high of almost 30 billion ft3/d in late 2018. The amount now represents over one-third of the US output.
In late 2018, TransCanada’s WP Xpress (WPX) natural gas pipeline expansion project came into service with the completion of the Eastern Build portion. The US$900 million project is an upgrade to an existing pipeline that has been servicing Mid-Atlantic markets for over six decades. The upgrade included 48 km of looping and incremental power to seven compressor stations. Along with the completed Western Build, the system now has an additional 1.3 billion ft3/d capacity.
Also in late 2018, the US Federal Energy Regulatory Commission (FERC) approved further expansion of Enbridge’s Nexus natural gas pipeline system. The US$2.6 billion system – which runs from Ohio to Michigan – is designed to collect output from the Marcellus and Utica shales
12 13
27 69 77
REGIONAL REPORTS: USA12. The midstream money machineGordon Cope investigates how the US oilpatch is firing along on all fronts and why it needs the midstream sector now more than ever.
18. The clash in CaliforniaChris Amstutz and Matthew Mattingly, Choice! Energy Management, USA.
23. From independence to collaborationBob Peterson, Arthur D. Little, Houston office, USA.
KEYNOTE27. Redefining pipeline researchTami Beal, Pipeline Research Council International, USA.
DEVELOPMENTS IN COATINGS33. Cracking the codeRobert Buchanan, Seal for Life Americas.
41. Composite tape is the new metalJason Pomante and Denis Kato, Arkema, France.
COMPRESSOR TECHNOLOGY57. Time for a redesignScott Tackett and Gautam Chhibber, Siemens, USA.
PIPELAYING65. Survival at any depthTeofilo Barbosa Neto, Airborne Oil & Gas, the Netherlands.
PIPELINE REMEDIATION & REPLACEMENT69. Preparation for rehabilitation Carmine Parisi and Agostino Napolitano, Saipem S.p.A., Italy.
PIPELINE INTEGRITY MANAGEMENT73. Management lessonsHans Overdijkink, DMC-1, part of Intero Integrity Services.
77. Using data to optimise integrity resourcesRobert Zmud, PureHM, Canada.
81. Navigating the new mapping landscapeJoseph Hlady, Infrastructure Mapping and Autonomy, Canada.
INLINE INSPECTION85. Tech ahead of the gameSimon Slater, ROSEN Group, USA.
PAGE
46
An award winning
endeavour
IPLOCA MEMBER CONTENT
S abal Trail Transmission, LLC, a joint venture of Spectra Energy Partners, NextEra Energy, Inc. and Duke Energy, is a 515 mile interstate natural gas pipeline
providing transportation services for power generation needs to Florida Power & Light and Duke Energy of Florida.
Gulf Interstate Engineering Company performed engineering, procurement and construction management (EPCM) services for the Sabal Trail project from 2013 to 2017, from FEED through commissioning and start-up.
The Sabal Trail project was awarded the 2018 IPLOCA Excellence in Project Execution Award. Challenging in both scope and scale, the project was subject to exacting regulatory and jurisdictional requirements and was tested by varied and demanding environmental conditions, adverse weather conditions, problematic geology, constant organised protests and a tight construction timeline – construction was substantially completed in eight months.
Client and EPCM contractor developed an integrated team to manage the project and fostered a collaborative partnership that delivered a successful project to the satisfaction of all stakeholders.
The project was completed on schedule and on budget while setting an exemplary safety record and without receiving a single non-compliance citation from the Federal Energy Regulatory Commission (FERC), the Pipeline and Hazardous Materials Safety Administration (PHMSA), or any of the other 100 federal, state and local authorities with jurisdiction over the project.
Sabal Trail also received the S&P Global Platts 2017 Construction Project of the Year award. The project aimed to increase reliability of the region’s energy delivery system, provide supply liquidity to electric generation customers in the Southeast and positively impact local economies.
Sabal Trail is capable of transporting over 1 billion ft3/d or more of natural gas to serve
Author, Gulf Interstate Engineering Company, USA, outlines taking an EPCM approach to the Sabal Trail pipeline project, which won the 2018 IPLOCA
Excellence in Project Execution Award.
46 47
EPC46. An award winning endeavourGulf Interstate Engineering Company, USA.
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CommentEDITORElizabeth [email protected]
Annual subscription £60 UK including postage/£75 overseas (postage airmail). Special two year discounted rate: £96 UK including postage/£120 overseas (postage airmail). Claims for non receipt of issues must be made within three months of publication of the issue or they will not be honoured without charge.
Applicable only to USA & Canada:World Pipelines (ISSN No: 1472-7390, USPS No: 020-988) is published monthly by Palladian Publications Ltd, GBR and distributed in the USA by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional mailing offices. POSTMASTER: send address changes to World Pipelines, 701C Ashland Ave, Folcroft PA 19032
Palladian Publications Ltd, 15 South Street, Farnham, Surrey, GU9 7QU, ENGLAND Tel: +44 (0) 1252 718 999 Fax: +44 (0) 1252 718 992 Website: www.worldpipelines.com Email: [email protected]
On 18 January, seven weeks into the new presidency of Andrés Manuel López Obrador, a fuel pipeline exploded in Tlahuelilpan, in the
state of Hidalgo, north of Mexico City. A gasoline pipeline had been illegally tapped and as hundreds of locals gathered to fill containers with the gushing oil, an explosion and subsequent fire killed at least 98 people and left 60 more in hospital. While Mexico mourns those lost in the tragedy, it also asks itself serious questions about illegal pipeline activity, corporate corruption and widespread poverty.
Organised crime is likely to blame for the tapping activity: analysts agree that the tappers of the pipeline probably weren’t opportunistic thieves, but instead co‑ordinated criminals working in a network that involves complicit locals, gang members and bribed or coerced oil company officials. The siphoned fuel is thought to be re‑sold to colluding gas stations and distributors, who sell it at cheaper rates.
Gangs are estimated to have stolen US$3 billion equivalent in fuel from Mexican state‑owned oil company Pemex in 2018. According to officials, gang members drilled illegal taps into pipelines 12 581 times in the first 10 months of 2018; that’s about 42 per day. It’s a huge problem for the nation and one which President Andrés Manuel López Obrador is keen to stamp out.
As one of his first acts as President, AMLO (as he is often called) ordered the shutdown of several of the country’s most theft‑vulnerable pipelines, sending 4000 troops to guard the pipeline assets and fuel depots, and deploying helicopters to scan the skies for thieves. Fuel from Mexican ports was shipped via truck instead of pipeline, which caused massive delays at filling stations and forced AMLO to reopen most of the pipelines after a few weeks.
On the day of the explosion, military personnel were dispatched to the site of the tapping but stood back as hundreds of people took their fill. A week earlier, people in a different town had attacked soldiers who had tried to stop them from illegal tapping.
AMLO swiftly assumed responsibility for the disaster. At a news conference, he said:
“we have the conviction that the people are good, that they are honest, that if they arrived at these extremes, these practices, it’s because they were completely abandoned” by the state. Keen to characterise his administration as different to those that came before, his approach to the fuel theft strikes a markedly compassionate note previously missing in the country’s dialogue on crime.
Under former President Enrique Peña Nieto, the oil industry was liberalised, allowing for foreign investment. This raised retail prices and gave the gangs an opportunity to undercut prices at the pump. Fuel theft was tolerated for years, punished by martial law and largely considered the price of doing business in the country, but
organised crime has become more sophisticated and both drug and oil crime has infiltrated deep into society. During Nieto’s term, Mexico fell 30 rungs on Transparency International’s world corruption ranking.
AMLO’s leftist leaning, light‑handed dealing with fuel theft has drawn both praise and criticism. He campaigned as a ‘Mr Clean’ type and takes a
moral approach to the business of governing, with sensitivity to the hardships of his people.
But now he has an uphill climb: it’s a challenge to fight crime effectively and be empathetic to those driven to partake in crime by poverty and lack of opportunity. It will also be a challenge to root out corruption in government and corporate environments. Earlier this year, it was alleged in the trial of a cartel gang member that Nieto took a US$100 million bribe from drug lord Joaquin ‘El Chapo’ Guzman during his presidential tenure.
Pemex employees and officials have long been suspected of involvement in fuel theft. The company is also being scrutinised for possible delays in shutting off the pipeline once the rupture had been detected. Pemex is reported to have closed the valve approximately four hours after detection. Mexico’s pipelines are vulnerable to attack and are patched up, needing modernisation. US$10.4 billion was allocated for pipeline maintenance two years ago, but work has yet to begin. Meanwhile, the country is investing in more tanker trucks for future oil transport.
MANAGING EDITORJames [email protected]
EDITORIAL ASSISTANTLydia [email protected]
ADVERTISEMENT DIRECTORRod [email protected]
ADVERTISEMENT MANAGERChris [email protected]
ADVERTISEMENT SALES EXECUTIVEWill [email protected]
PRODUCTIONBethany Rees [email protected]
DIGITAL EDITORIAL ASSISTANTNicholas [email protected]
SUBSCRIPTIONSLaura [email protected]
WEBSITE MANAGERTom [email protected]
FUEL FROM MEXICAN PORTS WAS SHIPPED VIA TRUCK INSTEAD OF PIPELINE
COMPELLED TO STEAL
A Division of STANLEY Oil & Gas I STANLEYInspection.com
The time is now for a real breakthrough in pipeline inspection.
Real-time digital imaging is the new standard in pipeline inspection. NEXRAY is the new standard in real-time digital imaging.
The NEXRAY real-time radiography system is made up of two main components—a medical-grade digital detector and an x-ray source—used to generate inspection images digitally and deliver real-time image output.
Engineered to inspect the integrity of girth welds, NEXRAY is designed for onshore, offshore, spoolbase, and tie-in use in both small-diameter and large- diameter applications.
FEBRUARY 2019 / World Pipelines 5
World NewsPipeline systems to combine for downstream markets
Tallgrass Energy, LP (TGE) and Kinder Morgan, Inc. (KMI) have announced an agreement to jointly develop a solution to increase existing crude oil takeaway capacity in the growing Powder River and Denver‑Julesburg basins and to add incremental capacity to the Williston Basin and portions of Western Canada.
Pursuant to the agreement, the proposed venture would include both existing and newly constructed assets. TGE would contribute its Pony Express Pipeline System, and KMI would contribute portions of its Wyoming Intrastate Company and Cheyenne Plains Gas Pipeline and begin the process of abandonment and conversion to crude oil service. In addition, approximately 200 miles of new pipeline would be constructed to provide crude oil deliveries into Cushing, Oklahoma.
In total, the combined pipeline system is expected to be capable of delivering up to 800 000 bpd of light crude oil and 150 000 bpd of heavy crude oil from points in Wyoming and Colorado to TGE’s and KMI’s Deeprock terminal in Cushing. From there, customers will have pipeline connectivity to the Gulf Coast and export markets through TGE’s planned Seahorse Pipeline and other existing or proposed future pipeline projects. The combined project is expected to provide initial service as
early as the second half of 2020.“This combination of assets creates a significant growth
opportunity for both companies,” said Tallgrass Chief Operating Officer Bill Moler. “Shippers benefit by gaining access to a pipeline system that can source from multiple basins and access numerous demand markets, including existing refinery connections on Pony Express and Tallgrass’ downstream options. Other shipper benefits include a quicker in‑service date and the ability to batch a greater variety of common streams.”
“There are a number of competitive advantages to jointly developing this project and leveraging KMI’s and TGE’s existing assets, including the expansion of our Double H Pipeline system,” said Don Lindley, Chief Commercial Officer for Products Pipelines at KMI. “Chief among them is the ability to quickly and efficiently place an additional 550 000 bpd of crude transportation takeaway capacity in service from the Rockies, which helps domestic producers and offers near‑term relief for Canadian producers.”
Completion of the transaction between TGE and KMI remains subject to conditions, including receipt of applicable state and federal regulatory approvals, among other items.
DNV GL: greater investment expected to fuel oil and gas industry growth
New research has revealed that companies’ resilience to volatile market conditions will be put to the test in 2019, as business leaders expect the industry to commit to greater investment to meet hydrocarbon demand.
Two‑thirds (67%) of senior oil and gas professionals believe more large, capital‑intensive oil and gas projects will be approved this year, according to ‘A test of resilience’, DNV GL’s ninth annual report on the outlook for the oil and gas industry.
Some 70% plan to increase or maintain capital expenditure in 2019 – nearly double that of 2017’s figure of 39%.
Recruitment is firmly back on the agenda after four years of consistent reductions, supported by cost‑efficiency measures. A third (34%) of the 791 senior professionals surveyed expect to grow their workforce in 2019 – more than three times as many respondents than four years ago (10%). Over a third (39%) also expect to increase the use of contractors this year.
The oil and gas industry’s efficiency efforts coincide with a third (36%) of senior oil and gas professionals expecting increased research and development (R&D) spending this year.
Digitalisation comfortably leads R&D priorities for the oil and gas industry in 2019, with 60% of respondents to DNV GL’s research expecting their organisation to increase spending in this area in 2019.
Half (51%) of senior industry professionals will focus on actively adapting to a less carbon‑intensive energy mix in 2019, up from 44% last year. While momentum for long‑term decarbonisation is building, DNV GL’s research indicates that companies today are more likely to be doing so because they are told to, rather than because they want to.
NEB denies requests to halt Trans Mountain Expansion Project work
The National Energy Board (NEB) has rejected a request by the City of Burnaby to rescind two Orders that authorise Trans Mountain Pipeline ULC to undertake pipeline relocations and decommissioning works at its Burnaby Terminal. The decision enables the company to continue its ongoing work to modify existing piping and related infrastructure within the facility.
The City of Burnaby requested that the NEB rescind the Orders after the Federal Court of Appeal judgement on 30 August 2018 quashed Federal Government approval for the Trans Mountain Expansion Project. At the time, the City of Burnaby argued that the works authorised in the two Orders were primarily to allow for construction of infrastructure related to the Expansion Project.
In its decision, the NEB found that the piping modifications at the Burnaby Terminal are not associated with the Expansion Project and that the relocation and decommissioning Orders appropriately allow Trans Mountain to optimise the site in preparation to offer new services to shippers. The NEB also permitted the company to continue tree clearing as part of the approved works.
The NEB concluded that replacement of the original piping with new piping designed to allow the passage of inline inspection tools will improve the integrity of the Burnaby Terminal.
The NEB provides regulatory oversight on all aspects of the existing Trans Mountain Pipeline system and associated facilities. The NEB’s reconsideration hearing of the Trans Mountain Expansion Project is ongoing, independent of this request by Burnaby to rescind the two orders.
6 World Pipelines / FEBRUARY 2019
IN BRIEF
World NewsALGERIASONATRACH, in partnership with the Directorate of Training and Vocational Education, recently launched the first pipeline welding course for young people in the region.
SAUDI ARABIASaudi Aramco’s Uthmaniyah Gas Plant (UGP) has been recognised by the World Economic Forum (WEF) as a ‘Lighthouse’ manufacturing facility, a leader in technology applications of the Fourth Industrial Revolution.
EUROPEIn 2018, Nord Stream AG transported 58.8 billion m3 of natural gas to consumers in Europe through the Nord Stream pipeline, representing both an annual increase and the highest utilisation since the start of operations.
USAEPIC Midstream Holdings, LP has reaffirmed that the EPIC Crude Oil Pipeline remains on schedule to begin interim service from Crane, Texas to Corpus Christi, Texas, during the 3Q19.
FINLANDTo support the goals of the EU’s Energy Union, a decision was made in 2018 to open the Finnish gas market on 1 January 2020. The decision has led to reformations in the natural gas legislation. Due to these changes, the company constructing the Balticconnector pipeline, Baltic Connector, has been transferred under Suomen Kaasunsiirtopalvelut Oy, effective 1 January 2019.
DUBAIVallourec’s Middle East team recently gathered to inaugurate the extension of the Jafza One office in Jebel, Dubai. The new office brings together the commercial and corporate teams for the region under one roof.
TAP completes successful project financing
As one of Europe’s most strategic projects, TAP successfully completed financial close in December 2018, securing €3.9 billion – the largest project finance agreed for a European infrastructure project in 2018.
Luca Schieppati, TAP’s Managing Director, said: “With the financial close now achieved, TAP has reached another major milestone of the project’s progress. TAP has voluntarily committed to comply with environmental and social standards required by the international financial institutions. As such, all necessary assessments to substantiate this commitment have been undertaken and met by TAP. This also included a thorough environmental and social assessment. With project financing now concluded, TAP can progress to the final completion of the project and delivery of Shah Deniz II gas in 2020.”
“As the EU Bank, the European Investment Bank (EIB) recognises the important contribution to improving security of energy supply in Europe that the Trans Adriatic Pipeline will bring and has provided €700 million for this, the largest energy project in Europe currently being built. The EIB is pleased to have been an anchor lender to the project, alongside the EBRD and other leading financial institutions, to successfully
finance this complex and ambitious project and welcomes the continued close co‑operation between all project partners to ensure that environmental, social and technical best practice is followed.” said Andrew McDowell, European Investment Bank Vice President, responsible for energy.
Nandita Parshad, EBRD Managing Director Sustainable Infrastructure, said: “The Trans Adriatic Pipeline will set the foundation for an integrated gas market across south‑eastern Europe and enhance the region’s strategic status as an energy hub. We believe that gas remains an important transition fuel in this region that can help displace coal and facilitate penetration of renewables.”
The financing is provided by a group of 17 commercial banks, alongside the EBRD and the EIB. Part of the financing is covered by the export credit agencies: bpifrance, Euler Hermes and Sace. The project raised €3765 million in third party senior debt with a door‑to‑door tenor of 16.5 years, combining commercial debt along with development financial institutions and export credit agencies related financing.
Costs have previously been funded in full by TAP’s shareholders: BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).
Xodus hires specialist to enhance social performance expertise
International energy consultancy Xodus Group has strengthened its social performance capabilities with the appointment of a new Social Impact Specialist.
Karen Nash, who will be based in the company’s London office, will be responsible for developing and enhancing social performance, including social impact assessment and management approaches, stakeholder engagement and community development and partnership.
Steve Swindell, Managing Director of Xodus added: “Karen has an impressive track record of identifying and solving key social performance issues across a range of habitats. Addressing social impacts is a huge part of every energy project and as an industry, it is essential we continue to address these issues to the best of our abilities and that we continue to look for new ways of solving them effectively and efficiently.
Keystone XL pipeline authorised for more construction
The National Energy Board (NEB) has approved TransCanada’s Keystone Pipeline GP Ltd (Keystone) request to begin winter clearing work on the North Spread of its Keystone XL Project.
Keystone has now satisfied the regulatory requirements for winter 2019 clearing of trees and shrubs along the pipeline route’s north section, starting at Hardisty, Alberta.
The NEB’s approval applies to the North Spread of the project only. Clearing activities in other areas of the project, other construction activities, and any activity during the restricted activity periods for migratory birds are excluded from this approval.
Further pipeline construction would be subject to NEB approval of other condition compliance submissions. The NEB will continue to provide regulatory oversight throughout all stages of this project to protect the public and the environment.
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8 World Pipelines / FEBRUARY 2019
EVENTS DIARY
5 - 7 February 2019
Subsea Expo
Aberdeen, UKhttps://www.subseaexpo.com/
6 - 10 February 2019
71st Annual PLCA Convention
Amelia Island, Florida, USAhttp://www.plca.org/
18 - 19 February 2019
Midstream Oil and Gas Congress 2019 (MOGC 2019)
Thessaloniki, Greecehttps://mogc.eu/
18 - 22 February 2019
Pipeline Pigging & Integrity Management Conference 2019
Houston, USAhttp://www.clarion.org/ppim/ppim19/index.php
25 - 27 February 2019
Operational Excellence in Energy, Chemicals & Resources Summit
Houston, USAhttps://opexandriskmanagement.iqpc.com
17 - 21 March 2019
NASTT No-Dig
Chicago, USAhttp://nodigshow.com/
18 - 21 March 2019
14th Pipeline Technology Conference
Berlin, Germanyhttps://www.pipeline-conference.com/
24 - 28 March 2019
CORROSION Conference & Expo 2019
Nashville, USAhttp://nacecorrosion.org/
World News
To read more about the articles go to www.worldpipelines.com
Web Highlights
➤ Costs of protecting assets from cyberattacks exposed
➤ Emerson launches new platform for automation training
➤ New partnership formed for sensor technology
➤ Atlantic Coast Pipeline’s motion for clarification denied
M&As helped oil and gas companies survive last five years
Mergers and acquisitions (M&A) played an important role in helping oil and gas companies survive through one of the most tumultuous times over the last five years, as oil price continues to be volatile ever since falling from US$100/bbl in 2014, according to data analytics company, GlobalData.
GlobalData’s report: ‘M&A in Oil and Gas’ reveals that falling revenues and rising debts compelled oil and gas companies to realign their strategic objectives and reshape their portfolios, leading to a large number of M&A deals.
Ravindra Puranik, Oil and Gas Analyst at GlobalData, comments: “Oil majors, especially Total, ExxonMobil, Chevron, Equinor and Shell, were involved in a number of deals as they acquired companies and assets at attractive valuations, while also offloaded the ones that could impact profitability.”
GlobalData’s thematic research identifies upstream companies such as Felix Energy, Endeavor Energy Resources and Laredo Energy; and midstream players namely American Midstream Partners and WhiteWater Midstream as potential acquisition targets in the oil and gas industry over the next two years.
Oil and gas companies executed around 10 000 M&A deals in the five years to November 2018. More than 60% of the deals that were completed were in the upstream sector.
ACE Pipeline System to be developed
Phillips 66 Partners, Harvest Midstream Company and PBF Logistics LP have entered into an agreement to jointly develop the ACE Pipeline System.
The ACE Pipeline System will provide crude oil transportation service from the market hub in St. James, Louisiana, to downstream refining destinations in Belle Chasse, Meraux and Chalmette, Louisiana. The pipeline system is expected to have an initial throughput capacity of 400 000 bpd, with the ability to expand further depending on shipper interest.
The parties may elect to add a delivery destination in Clovelly, Louisiana, subject to market demand. Subject to customary and regulatory approvals, the pipeline system is expected to be placed in service in the second half of 2020.
The ACE Pipeline System will include a new‑build segment to connect the St. James market centre to the CAM Pipeline. Harvest Midstream will contribute its existing CAM Pipeline to the ACE Pipeline System.
Clock Spring and NRI acquired
Wind Point Partners, a leading Chicago‑based private equity firm, has announced it has entered into definitive agreements to simultaneously acquire and merge Clock Spring Company, Inc. (Clock Spring) and Neptune Research, LLC (NRI), two leading providers of high‑performance repair and rehabilitation products for global critical infrastructure. The combined business will be named ClockSpring|NRI.
Clock Spring and NRI, headquartered in Houston and Riviera Beach, Florida, respectively, are manufacturers of composite materials, insertion valves and gaskets used in the transmission pipeline, refinery and petrochemical, water, utility, and civil infrastructure industries. Customers use the composite products to combat the effects of ageing and corrosion, including permanently reinforcing and strengthening pipe works, extending the life of deteriorating concrete columns and civil structures, and temporarily restoring leaking lines. Recently introduced fugitive emission‑free flange gaskets are used in high‑risk applications to avoid potentially harmful, microscopic gas leaks. ClockSpring|NRI supports its products with best‑in‑class design, engineering, testing and training services to ensure proper installation and optimal performance.
10 World Pipelines / FEBRUARY 2019
Contract News
Siemens to supply gas turbines in Alberta
Siemens was recently selected to supply two SGT‑300 industrial gas turbines for an established Montney producer in Alberta, Canada. The equipment order, placed by the customer’s engineering, procurement, and construction (EPC) firm, marks the first application of an SGT‑300 turbine in Canada.
The gas processing plant will help support production growth for the customer in the Grande Prairie Region, located northeast of Edmonton, and will be built alongside the company’s existing dehydration and compression facility. When completed in 2020, the plant will provide the customer with an additional 50 million ft3/d of natural gas processing capacity and 30 000 bpd of condensate stabilisation capacity.
Airborne Oil & Gas awarded contract by Total
Airborne Oil & Gas B.V. announced it has been awarded a contract from Total to supply a thermoplastic composite pipe (TCP) jumper for a deepwater project in West Africa. The field is located approximately 150 km offshore in water depths of up to 1600 m. This contract follows the successful completion of a rigorous testing programme, in which Total qualified Airborne Oil & Gas’ TCP water injection jumper for permanent subsea applications.
“This contract award, from supermajor Total, demonstrates our success in the subsea market with our TCP technology on the basis of a compelling business case, field proven and robust materials, and a thorough qualification programme,” said Paul McCafferty, Vice President Europe & Africa at Airborne Oil & Gas. “We are delighted with this contract award from Total, who has extensive and deep understanding of composite materials and TCP, and with whom we completed a qualification programme in accordance with the standard DNVGL‑ST‑F119.”
Under this contract, Airborne Oil & Gas will provide Total with a 5.2 in. ID, 370 bar design pressure TCP jumper for water injection. The TCP jumper is intended to be terminated in country and installed using a subsea pallet, deployed from a small vessel. The TCP jumper is non‑corrosive, lightweight, flexible, spoolable with a small minimum bend radius and can be terminated at any location along the pipe. This provides the end user with project value in lower total installed cost through cost‑effective transportation, and removing the need for metrology, while de‑risking the project schedule. The TCP jumper can be manufactured and shipped in long continuous lengths, stored onsite and when required for the project, cut to length and terminated within hours, ready to be deployed.
TechnipFMC awarded EPCI in Gulf of Mexico
TechnipFMC has been awarded a significant integrated engineering, procurement, construction and installation (iEPCITM) contract by BP for the Atlantis Phase 3 project.
Following final investment decisions from all partners, TechnipFMC will manufacture, deliver and install subsea equipment, including subsea tree systems, manifolds, flowline, umbilicals and subsea tree jumpers, pipeline end terminations, subsea distribution and topside control equipment.
This contract also includes provisional services for tooling and personnel required to install the hardware.
Arnaud Pieton, President Subsea, commented: “We are very pleased TechnipFMC has been awarded an iEPCI contract for the Phase 3 development of the BP Atlantis project. This award reinforces TechnipFMC’s position as the market and technology leader for subsea equipment and demonstrates the added value of iEPCI – our unique integrated offering. We look forward to extending our successful relationship with BP on the Atlantis project in the Gulf of Mexico.”
Subsea Integration Alliance awarded EPCIC contracts
Subsea Integration Alliance have announced the award of integrated subsea engineering, procurement, construction, installation and commissioning (EPCIC) contracts. These awards, by Esso Australia Pty Ltd, represent the first integrated subsea project for Subsea Integration Alliance in Australia combining OneSubsea and Subsea 7 expertise in subsea production systems (SPS) and subsea umbilical, riser and flowline (SURF) systems.
Subsea Integration Alliance work scope includes engineering, procurement, construction and installation of two production wells. The wells are in a water depth of approximately 45 m and will be tied‑back to the Longford onshore gas plants. Project management and engineering will be provided by OneSubsea and Subsea 7 from local offices in Perth and Melbourne, Australia. Offshore installation activities are scheduled for 2020.
The Subsea 7 scope includes project management, engineering, procurement, construction and installation of two production wells and a single electrohydraulic umbilical from the Barracouta Platform to the West Barracouta drill centre.
The OneSubsea scope includes the provision of two
vertical monobore on‑wellhead production trees, wellheads, controls and installation and commissioning services.
“By adopting our supplier‑led approach, Esso Australia will leverage our technical specifications as well as standardised configurable products that will allow for shorter lead times, overall lower system costs, and accelerated first gas production. Further, Subsea Integration Alliance’s execution strategy will enable Esso to achieve cost and schedule certainty and reduce interface risk,” said Don Sweet, President, OneSubsea, Schlumberger.
Andy Woolgar, Subsea 7 Vice President for Australia & New Zealand, said, “This award builds on our relationship with Esso and on the reputation of Subsea Integration Alliance to offer clients a quality‑focused project execution, with optimised production and improved cost efficiency. By bringing together complementary technology and expertise, we are able to provide our clients with greater certainty of return on investment and enhanced asset profit potential. This project serves as a step‑change of how we work in the region and demonstrates our ability to deliver superior value to the industry.”
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Gordon Cope investigates how the US oilpatch is firing along on all fronts and why it needs the midstream sector now more than ever.
The US oil and gas sector is going gangbusters. According to the Energy Information Administration (EIA), gas production averaged 83.2 billion ft3/d in 2018, and crude production exceeded 11 million bpd late in 2018.
While some of the new production occurs in mature basins, much is in new regions that require extensive pipeline infrastructure to deliver to market. The Interstate Natural Gas Association of America (INGAA) estimates that North American midstream operators will spend an average of US$27.5 billion annually on oil, gas and NGL infrastructure over the next 20 years.
Natural gasShale drillers in the Appalachia have been able to boost output to a record high of almost 30 billion ft3/d in late 2018. The amount now represents over one‑third of the US output.
In late 2018, TransCanada’s WP Xpress (WPX) natural gas pipeline expansion project came into service with the completion of the Eastern Build portion. The US$900 million project is an upgrade to an existing pipeline that has been servicing Mid‑Atlantic markets for over six decades. The upgrade included 48 km of looping and incremental power to seven compressor stations. Along with the completed Western Build, the system now has an additional 1.3 billion ft3/d capacity.
Also in late 2018, the US Federal Energy Regulatory Commission (FERC) approved further expansion of Enbridge’s Nexus natural gas pipeline system. The US$2.6 billion system – which runs from Ohio to Michigan – is designed to collect output from the Marcellus and Utica
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shales in Pennsylvania, West Virginia and Ohio. When finally completed, the 410 km system will move up to 1.5 billion ft3/d of gas to markets in the US Midwest and to Ontario.
In the southern US, Kinder Morgan is partnering with EagleClaw Midstream to build the Permian Highway Pipeline (PHP) natural gas project. The US$2 billion system will deliver up to 2 billion ft3/d from Waha, Texas, to the US Gulf Coast (USGC) and Mexico. Assuming timely approval, the 430 mile, 42 in. pipeline is expected to enter service in late 2020.
Kinder Morgan and DCP Midstream are proceeding with the Gulf Coast Express Pipeline project (GCX). The US$1.7 billion line will transport up to 1.92 billion ft3/d of gas from the Permian basin to Agua Dulce, Texas. The 720 km line will be a mix of 36 in. and 43 in. pipe, and enter service in late 2019.
Gas lines are also being built to route product to Mexico. The country’s energy ministry (SENER) has estimated that natural gas demand will grow from approximately 8.2 billion ft3/d in 2017 to 11.6 billion ft3/d by 2027. Increased consumption will be driven by a switch from oil to natural gas as the fuel for electricity production, as well as strong growth in the automotive, manufacturing and aerospace sectors.
In late 2018, Enbridge’s Valley Crossing pipeline project entered service. The US$1.6 billion system can carry up to 2.6 billion ft3/d from Texas to Mexico. The 266 km line carries shale gas to the Texas‑Tuxpan pipeline system in the Gulf of Mexico. There is now approximately 11 billion ft3/d capacity from Texas to Mexico.
CrudeOver the last decade, shale drilling in the Permian basin in Texas has caused oil output to more than triple – to 3 million bpd. The growth has surpassed pipeline takeaway capacity, and midstream companies are scrambling to supply new lines.
In mid 2018, Plains All American announced that its Sunrise expansion project in the Permian basin was ahead of schedule. The expansion, which entered partial service, adds 500 000 bpd to the line running from Midland, Michigan to Colorado City, Arizona and Wichita Falls, Texas. In addition, the company is expediting work on the Cactus II line from the Permian basin to Corpus Christi, Texas. When completed, it will have 670 000 bpd capacity. In the meantime, the line is in partial service between Wind and McCamey, Texas.
In mid 2018, Tallgrass Energy, of Kansas, announced plans to build the Seahorse Pipeline – a 950 km, 30 in. oil line linking the Cushing storage hub with the 2.5 million bpd refinery complex near St. James, Louisiana. The 800 000 bpd system will also include a new, 20 million bbl storage facility: the Plaquemines Liquids Terminal. The terminal will have the ability to service Post Panamex tankers (up to 1 million bbl capacity) and VLCC tankers (up to 2 million bbl capacity).
Marathon Petroleum, BP and Plains All American continue to explore opportunities to reverse flow on its Capline crude system. The 1.2 million bpd, 42 in. line was built to move
imported crude from St. James, Louisiana to the US Midwest. The shale boom in Texas has rendered the line obsolete, however. The reversal, which does not have a published cost, would be able to handle up to 300 000 bpd of Canadian crude to the USGC for export. Operators estimate the line could be operational by 2020.
Exports of crude are surging. The EIA reported that oil exports had surged to 3.2 million bpd in early December 2018, and are expected to climb further in 2019. To that end, Jupiter Energy Group launched an open season for a pipeline that will move crude from the Permian to all three deepwater ports in Texas: Houston, Corpus Christi and Brownsville. The 36 in. line would originate near Crane, Texas and run for 650 miles. The company expects the line to be operational by late 2020.
Crimson Midstream extended its open system on the proposed Swordfish pipeline. The line and associated storage infrastructure is designed to connect existing terminal facilities in the St. James region to the Louisiana Offshore Oil Port (LOOP) terminal in Clovelly, Louisiana. The system, which is expected to be operational by mid 2020, will have the ability to transport as much as 600 000 bpd.
In the meantime, the shortage of pipeline capacity in the Permian has created arbitrage opportunities. In late 2018, shippers started to transport barrels on the recently expanded Sunrise pipeline running from West Texas to Cushing, Oklahoma and then to the USGC. The activity is driven by the Midland and Houston spread (MEH), which widened from a normal US$13/bbl to US$23/bbl.
Natural gas liquidsLone Star continues to expand its Lone Star Express Pipeline NGL system in Texas. In late 2018, the ETP subsidiary announced its seventh fractionation facility in Mont Belvieu, Texas. The 150 000 bpd plant will bring Lone Star’s capacity to 900 000 bpd. The expansion obliges the company to add 352 miles of 24 in. OD extending from Wink, Texas to its existing line near Fort Worth. The expansion is expected to enter service early in 2020.
Enterprise Products Partners (EPP) is building its fourth NGL line from the Permian to its NGL fractionation and storage complex near Mont Belvieu, Texas. The 571 mile Shin Oak line, which is expected to enter service in 2019, will have an initial capacity of 250 000 bpd. As long‑term commitments warrant, EPP can expand the capacity to 600 000 bpd. (EPP is also looking at re‑purposing some of its NGL assets to transport crude).
Energy Transfer Partners is finally nearing completion of its Mariner 2 East NGL expansion. When commissioned, the Mariner East system will have the capacity to move up to 345 000 bpd of NGLs from the Marcellus and Utica shale plays in Pennsylvania to customers in the Philadelphia area. The project had been plagued by federal and state permit violations and court actions that have delayed its projected commissioning by over one year.
DCP Midstream is expanding its NGL takeaway capacity in the DJ basin. The company will add 100 000 bpd to the Front
14 World Pipelines / FEBRUARY 2019
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Range Pipeline – bringing capacity to 250 000 bpd. It will also expand its Southern Hills system by up to 120 000 bpd. The projects are expected to be completed by late 2019.
LNGLNG for export has been expanding rapidly in the US. Cheniere now has four, 700 million ft3/d trains operating in Sabine Pass, Louisiana, and has been shipping LNG to various consumers in Europe and Asia. In late 2018, Kinder Morgan completed its Louisiana gas pipeline. The US$122 million system will deliver up to 600 million ft3/d to service Cheniere Energy’s fifth LNG train at its Sabine Pass terminal. The commissioning of the fifth train will give the Sabine Pass terminal a capacity of 3.5 billion ft3/d.
Houston‑based Tellurian continues to pursue its US$15.2 billion Driftwood LNG plant in Calcasieu Parish, Louisiana. The company recently announced that it had lined up 25 customers/partners that had expressed interest in the project. The LNG facility will be supplied up to 4 billion ft3/d by the 625 mile Permian Global Access Pipeline (PGAP) and the shorter Haynesville Global Access Pipeline (HGAP). The project would include up to 20 LNG trains, three storage tanks and three marine berths. Tellurian aims to begin construction of the plants and pipelines in mid 2019, and deliver first LNG for export in 2023.
TroublesThe Keystone XL project continues to grind through the courts. Originally proposed over a decade ago, the 1900 km line – designed to carry up to 830 000 bpd of crude from Canada to the Gulf Coast – was eventually refused the right to enter the US by President Obama. Even though the Trump administration subsequently gave TransCanada approval in early 2017, it still faces opposition.
In late 2018, construction on the Keystone XL was halted by a federal judge in Montana. US District Court Judge Brian Morris ruled that the US State Department environmental analysis “fell far short of a good look” at the cumulative effects of GHG emissions and the impact on Native American land resources. The lawsuit was filed by environmentalists after the Trump administration approved a construction permit. The State Department announced that it would conduct an additional review. In late 2018, TransCanada sought permission to resume some US‑based pre‑construction activities, which was granted by Judge Morris. TransCanada has resumed engineering, contracting and meetings with regional stakeholders.
For the last year, EQT Midstream and partners have been building the Mountain Valley natural gas pipeline in Virginia and West Virginia. The US$3.5 billion system is designed to deliver up to 2 billion ft3/d from the Marcellus and Utica shale formation in Pennsylvania to customers in the US Southeast and Mid‑Atlantic. The operators expected the 488 km line to enter service in late 2018, but a series of court orders in regards to environmental concerns along the ROW resulted in temporary suspension of activities in August. At the time of writing, construction is proceeding at certain sections to mitigate long‑term environmental impacts, while
the Army Corps of Engineers and other federal agencies address court instructions.
In mid 2018, Enbridge received approval to replace its ageing Line 3 oil pipeline. The 1660 km line runs from Hardisty, Alberta, to Superior, Wisconsin, with several hundred kilometres of the ROW passing through the state of Minnesota. It is designed to carry 760 000 bpd, but concerns about corrosion and integrity have obliged the company to operate the line at half capacity. Most portions outside of Minnesota have already been replaced. Native American groups, which harvest wild rice on reservations in northern Minnesota, vow to fight the construction in a manner similar to the Standing Rock protests that delayed Energy Transfer Partners’ DAPL oil pipeline in North Dakota.
In early 2018, the New Jersey Resources Corp. and partners received approval from FERC to construct the PennEast natural gas pipeline that would move gas from the Marcellus and Utica shales in Pennsylvania to market in New Jersey. The US$1 billion, 190 km line was expected to be in service by 2019, but the project has hit significant opposition in New Jersey. Landowners in the state have blocked ROW surveyors, and the company has been forced to file 185 eminent domain lawsuits in order to gain access. Governor Phil Murphy has announced his opposition; the New Jersey Department of Environmental Protection has rejected applications for water permits.
The Trump administration’s 25% tariff on imported steel is having an impact on some pipeline projects. Plains All American Pipeline had ordered pipe from Corinth Pipeworks in Greece for its Cactus II line, prior to instigation of the tariff. It requested an exclusion, but was denied in mid 2018. The Commerce Department ruled that suitable material was available from domestic suppliers.
Mergers and acquisitions within the sector continue apace. Anadarko Petroleum is divesting US$4 billion of midstream assets. Western Gas Partners will acquire oil and gas services in the Delaware basin and oil services in Colorado’s DJ basin. The deal is expected to close in early 2019.
FutureThe price of oil will largely dictate much of what happens with unconventionals over the next several years. Too much US production, for instance, could undermine the agreement between OPEC and Russia to reduce output and cause the price to plunge. But operators in all unconventional basins have been working hard to reduce their breakeven points, with many major plays now sitting within the US$30 ‑ 40/bbl range. The EIA expects US production to approach 12 million bpd by the end of 2019, and for gas production to reach 100 billion ft3/d in the next few years.
The US production growth has already displaced imports, but new domestic sources (and the expansion of existing ones) require ever greater carrying capacity to deliver them economically to consumers. The North American midstream sector will indeed need to invest billions of dollars to meet that demand in the coming years.
16 World Pipelines / FEBRUARY 2019
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