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SPRING 2020
TYPES OF GAS STORAGE SIZE RANGE PRESSURE RANGE DELIVERY MODE
Vertical Vessels (API-620 and ASME) 10,000 - 500,000 Gal. 5 - 2,000 psig A, B, C, & D
Horizontal Vessels (API-620 and ASME) 10,000 - 1MM Gal. 5 - 2,000 psig A, B, C, & D
Spheres (API-620 and ASME) 10,000 - 3MM Gal. 5 - 400 psig C & D
API-620 Steel/Concrete Tank Options 500,000 - 40MM Gal. 2 - 15 psig C & D
API-650 EFR, IFR, Cone & Dome Roofs 20,000 bbl - 750,000 BBL 0 - 2.5 psig D
In the emerging hydrocarbon market, a critical decision
is choosing the best storage solutions to meet a project’s
unique needs. AT&V’s in-house capacity supports the options in
the table below. If you would like more information, call or email for
support or a copy of our guide built to address gas storage options.
© 2019 AT&V
Delivery Modes: A = Truck, B = Rail, C = Water, D = Site Vessels and Spheres can be Single Walled or Double Walled.
AT&V Storage Options
American Tank & Vessel Offers Choices for Hydrocarbon Storage
Request a copy of our decision storage guide or ask us a question at [email protected]
AMERICAN TANK & VESSEL
SIZE RANGE PRESSURE RANGE DELIVERY MODE
10,000 - 500,000 Gal. 5 - 2,000 psig A, B, C, & D
10,000 - 1MM Gal. 5 - 2,000 psig A, B, C, & D
rket, a critical decision
utions to meet a project’s
capacity supports the options in
e more information, call or email for
uilt to address gas storage options.
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ONTHE FRONT COVER
Spring 2020 Volume 06 Number 01 ISSN 1468-9340
CONTENTS03 Comment05 World news10 Filling on up
Gordon Cope, Contributing Editor, outlines how expanding production in the US and Canada has storage and terminal operators scrambling to keep up.
16 Twinning the terminalWaqar Khan, Siemens Gas and Power GmbH & Co., Germany, highlights the benefi ts that digital twin technology can bring to terminal management operations.
21 Turning the light on dark dataRobin van der Mijl, CEA Systems, the Netherlands, asks what causes the creation or existence of obsolete and unused dark data and what criteria is required for a better and successful way to update and validate this dark data?
25 Connecting the downstream supply chainTim Hoffmeister, Implico Group, Germany, gives an outlook on a connected, cross-company downstream supply chain that links differing actors via an architecture of shared web services.
29 A high-defi nition experienceJoel Hurt Jr., Leica Geosystems, part of Hexagon, USA, alongside D’Arcy Trask and John Barrella, Gauge Point Calibration Inc., USA, explain how using 3D laser scanning to capture existing conditions on secondary containment is a basic preventive measure that can provide a signifi cant return on investment.
33 Protecting tank investmentsMiles Buckhurst, Jotun, Norway, explains why proper tank protection is an important part of every maintenance plan.
37 No entry?Camilla Marchi and Daniel Devò, Gerotto Federico S.r.l., Italy, look at robotic technologies for storage tank cleaning and imagine a future where unmanned technology is mandatory for high risk tank maintenance.
40 Holding terminals to a higher standardRobert Ferry and Harold Laurence, Trinity Consultants Inc., USA, review the EPA’s latest revisions to its recommended method for estimating air emissions from organic liquid storage tanks.
47 Challenging VOC emissionsRaul Tahoces, John Zink Hamworthy Combustion, Luxembourg, introduces new vapour control systems for ultra-low volatile organic compounds emissions.
51 Emission accomplishedMarco Puglisi, Aereon Europe, Italy, considers future developments and technological challenges of vapour control in the liquid storage industry.
55 Radar meets LNG challengesVictoria Lund Mattsson, Emerson, Sweden, explains how the latest non-contacting radar level gauges meet the challenges associated with the accurate and reliable measurement of LNG stored in cryogenic full containment tanks.
59 In case of emergencyBob Irving, AMETEK STC Business Unit, USA, provides an outline of regulations and recommended practices for overfi ll prevention, and explains the importance of ensuring safety devices are continuously working.
63 A light touchJerry Hines, Pepperl+Fuchs, USA, looks at the advantages which can be gained when tank farms switch to non-contact valve position sensors.
67 Fall protectionMichael R. Bailey, Flexible Lifeline Systems, USA, explains the importance of suitable fall protection in the storage tank industry.
69 In a dead heatDave TenEycke, Simon Chang, and Aaron Jeske, Thermon Heating Systems Inc., Canada, review different technologies that can be selected for tank heating operations.
73 Raising the temperatureCarles Ferrer and Daniel Pastor, Pirobloc, Spain, assess the benefi ts of heating storage tanks in port terminals via a thermal fl uid system.
77 Heating things upChelsey Kemper, Omega Thermo Products LLC, USA, looks at methods to heat storage tanks with viscous products.
Based in Houston, Texas, US, Purgit Vapor Control Systems offers a full suite of purging and degassing services for aboveground storage tanks. From nitrogen gas purges and vapour recovery skids to complete US Coast Guard certified equipment for loading inland barges, Purgit is an industry leader in efficient and effective vapour control. Contact Purgit for a detailed proposal on your next anhydrous ammonia, LPG, or LNG tank decom or re-commissioning.
Finite Element Analysis
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ASME VIII Div. 1 & 2 Eurocodes / EN 13445
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APPLICABLE ONLY TO USA & CANADAHydrocarbon Engineering (ISSN No: 1468-9340, USPS No: 020-998) 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 offi ces. POSTMASTER: send address changes to HYDROCARBON ENGINEERING, 701C Ashland Ave, Folcroft PA 19032
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COMMENTCALLUM O’REILLYSENIOR EDITOR
MANAGING EDITOR James [email protected]
SENIOR EDITOR Callum O’[email protected]
EDITORIAL ASSISTANT Tom [email protected]
SALES DIRECTOR Rod [email protected]
SALES MANAGER Chris [email protected]
SALES EXECUTIVE Sophie [email protected]
PRODUCTION Kyla [email protected]
WEB MANAGER Tom [email protected]
DIGITAL EDITORIAL ASSISTANT Sarah [email protected]
DIGITAL ADMINISTRATOR Imogen [email protected]
ADMIN MANAGER Laura [email protected]
CONTRIBUTING EDITORSNancy Yamaguchi Gordon Cope
B P’s recent announcement that it is setting out an ambitious new plan to become a net zero company by 2050 or sooner is another example of the energy transition
that is set to take place in the decades to come. The company’s new CEO, Bernard Looney, has set out 10 key aims for the future, fi ve of which are to get BP to net zero, and the other fi ve to help the world achieve net zero. Looney said: “Trillions of dollars will need to be invested in replumbing and rewiring the world’s energy system. It will require nothing short of reimagining energy as we know it.”
The storage sector will be at the heart of the transformation that Looney envisages. The Tank Storage Association (TSA) recently published a report outlining the key role that the bulk liquid storage sector and associated logistics will play in the energy transition as the UK government attempts to achieve its decarbonisation targets, including a 57% reduction in greenhouse gas emissions by 2030 and net zero emissions by 2050 (against a 1990 baseline). In the report, entitled ‘Enabling the energy transition – the role of the bulk liquid storage sector’, the TSA notes that in order to meet these ambitious targets, there will be changes in energy generation, industrial processes, transport, buildings and heat.1 This will require signifi cant investment in enabling infrastructure, as well as collaboration and partnership. Peter Davidson, Executive Director of TSA, writes: “As essential energy partners, we are determined to up the ante and ensure that our sector can support and facilitate access to the broad mix of energy solutions that will be necessary to succeed.”
The TSA outlines a number of ways that the bulk liquid storage sector can help with the energy transition, including: by supporting access and provision of traditional and alternative energy solutions using existing infrastructure; creating the fl exibility to manage change and accommodate the integration of new energy alternatives; ensuring that critical bulk liquid products continue to fl ow effi ciently to meet demand; helping to balance demand for legacy liquids; and providing expert advice, innovation and product testing.
The report concludes with fi ve key recommendations as the next phase of the energy transition approaches. Firstly, it outlines the importance of working together, in partnership with industry, to seize opportunities for a responsive, fl exible and robust bulk liquid storage sector. It also suggests that the energy transition should advance in parallel with required changes in bulk liquid infrastructure. Thirdly, it recommends setting clearly defi ned transition paths and realistic timelines to enable a stable landscape for long-term investments and avoiding delays caused by the lack of new transitional national infrastructure. It also stresses the importance of ensuring that policies are coherent and supportive of the broad range of solutions necessary to succeed, while adopting a technology neutral approach. Finally, the report recommends that industry is empowered by facilitating dialogue, cooperation and knowledge transfer in the area of safety, in the context of alternative energy solutions.
1. ‘Enabling the energy transition – the role of the bulk liquid storage sector’, Tank Storage Association, (January 2020), https://www.tankstorage.org.uk/assets/Enabling-the-energy-transition-the-role-of-the-bulk-liquid-storage-sector.pdf
5
WORLD NEWS
Spring 20205
Belgium | Yamal LNG uses LNG transshipment tank at Zeebrugge LNG Terminal
PAO Novatek has announced that OAO Yamal LNG has started using
a dedicated LNG transshipment tank at the Zeebrugge LNG terminal in Belgium.
This is part of a 20-year transshipment agreement between the project’s subsidiary Yamal Trade and Fluxys LNG NV/SA.
The dedicated LNG tank was built specifi cally for the transshipment needs of Yamal LNG with a capacity of 180 000 m3, allowing the project
to transship up to 8 million tpy of LNG.
Lev Feodosyev, Novatek’s First Deputy Chairman of the Management Board, said: “The use of a dedicated LNG tank increases the reliability of LNG supplies from Yamal LNG under long-term offtake agreements, as well as increases the number of LNG cargoes transshipped in Europe for delivery to other markets, and, primarily, the fastest growing markets in Asia.”
USA | McDermott awarded crude storage tank contract
McDermott International Inc. has announced that it has
been awarded a contract by a major oil and gas operator for six crude oil storage tanks in Texas, US.
The storage tanks will be part of an energy infrastructure project linking the Permian Basin in West Texas to the Texas Gulf Coast.
The scope of the project, which will be executed by CB&I Storage Solutions, includes the engineering, procurement, fabrication and construction (EPFC) of six fl oating roof crude oil tanks – four with a 500 000 bbl capacity each, and two with a 250 000 bbl capacity each. Engineering, procurement and fabrication will be performed at the company’s Houston Fairbanks offi ce and fabrication facility.
Cesar Canals, Senior Vice President of CB&I Storage Solutions, said of the deal: “This new award is a testament to our service offerings and capabilities, including our vast experience in engineering, fabricating and constructing complex, large-scale storage tanks.”
USA | Enterprise and Navigator ship first ethylene cargo from terminal
Enterprise Products Partners LP and Navigator Holdings Ltd have
announced that the fi rst cargo of ethylene has been exported from their 50/50 joint venture marine terminal located at Morgan’s Point, Texas, along the Houston Ship Channel.
The Navigator Europa recently departed the facility carrying 25 million lb of ethylene for Marubeni Corp.
The new terminal features two docks and the capacity to load 2.2 billion lb/yr of ethylene. A refrigerated storage tank for 66 million lb of ethylene is also being built on-site and will increase the capability to load ethylene up to a rate of 2.2 million lb/hr. Tank construction is expected to be completed in 4Q20.
The export terminal is pipeline-connected to Enterprise’s
Mont Belvieu, Texas complex, where the company is in the process of commissioning a high-capacity ethylene salt dome storage well with a capacity of 600 million lb. Enterprise has designed the system to serve as an open market storage and trading hub for the ethylene industry through storage, connections to multiple ethylene pipelines and high-capacity export capabilities.
UAE | BPGIC signs land lease agreement with Fujairah Oil Industrial Zone
Brooge Holdings Ltd and its wholly-owned subsidiary Brooge
Petroleum and Gas Investment Co. FZE (BPGIC), a Fujairah Free Zone Entity in the oil storage and services business, have announced that BPGIC has signed a land lease agreement with Fujairah Oil Industrial Zone (FOIZ) for a strategically located plot of land with a total area of approximately 450 000 m2 on which BPGIC plans to develop its Phase III facility.
BPGIC expects that Phase III alone could add storage and services
capacity of up to 3.5 times the size of BPGIC’s projected operations post-Phase II, which will be 1 million m3.
BPGIC’s initial studies indicate that the land could house up to approximately 3.5 million m3 of storage tanks and, potentially, a refi nery with a capacity of up to 180 000 bpd. BPGIC confi rmed that it is in discussions with potential collaborators for Phase III, including several global oil majors who expressed interest in collaborating on the Phase III facility.
WORLD NEWSIN BRIEF
6Spring 2020 6
Australia has officially become the world’s largest exporter of LNG on an annualised basis, according to EnergyQuest. In sending overseas an estimated record 77.514 million t of locally produced LNG in 2019, Australia edged out former number one LNG export titleholder, Qatar, which is expected to produce 75 million t in 2019.
Magellan Midstream Partners LP has announced an agreement to sell three marine terminals to Buckeye Partners LP for US$250 million. The terminals are located in New Haven, Connecticut, Wilmington, Delaware and Marrero, Louisiana, in the US.
LBC Tank Terminals has taken the final investment decision to expand the terminal at Rotterdam-Botlek with 70 000 m3 of additional capacity, bringing the total capacity of the terminal to 180 000 m3. This investment is part of a multi-year investment programme to revamp and expand the Rotterdam site. The additional capacity is intended to serve the growing market for the storage and transshipment of chemicals in the Port of Rotterdam.
HydroChemPSC recently announced the acquisition of TriStar Tank Services from TriStar Global Energy Solutions. The TriStar Tank Services divisions comprises the PetroServ tank cleaning and global vapour control degassing business units. The acquisition will strengthen HydroChemPSC’s speciality services group in North America.
Vopak has completed the divestment of its 49% equity share in the joint venture Vopak SDIC Yangpu Terminal in Hainan, China. The terminal has a storage capacity of 1 339 000 m3 for the storage of crude and petroleum products.
USA | Eco-Energy nears completion on its ethanol distribution terminal
Eco-Energy has announced that it has entered the fi nal stage of
construction on its ethanol distribution facility located in Phoenix, Arizona, US.
The facility will be Eco-Energy’s tenth ethanol distribution terminal and is scheduled to commence operations in 3Q20.
Once operational, the Eco-Energy site will be capable of offl oading ethanol from railcars to dedicated storage where it will then be
transferred via pipeline to every local blending terminal.
The Union Pacifi c Railroad will provide rail service to the Eco-Energy-Phoenix terminal with plans of handling over 250 million gal./yr.
Chad Conn, VP-Distribution at Eco, said: “Combining location and state-of the-art design, this ethanol terminal will deliver the most effi cient and attractive solution for suppliers and blenders in the Phoenix market.”
USA | Rio Grande LNG receives non-FTA export authorisation
NextDecade Corp. has announced that the US Department of
Energy (DOE) has issued an order granting authorisation to export LNG from its Rio Grande LNG facility to non-free trade agreement (non-FTA) countries.
In combination with a free trade agreement (FTA) order previously issued in August 2016, NextDecade is now authorised to export LNG equivalent to 1318 billion ft3/yr of natural gas from Rio Grande LNG to both FTA and non-FTA countries.
In a press release, DOE said: “Record levels of natural gas production in the US continue to enhance global energy security while providing domestic benefi ts, including infrastructure development and job creation. If built to capacity, the Rio Grande LNG project, including the connected Rio Bravo pipeline, is expected to create over 5000 jobs during peak construction and represents infrastructure investment in excess of US$15 billion.”
UK | Grays terminal receives upgrade
Amulti-million pound infrastructure upgrade programme has been
successfully completed at the Grays terminal on the River Thames, UK, which is part of Inter Terminals’ comprehensive bulk liquid storage network.
The optimisation project has increased throughput capacity, enabling the receipt and dispatch of increased volumes of fuels at signifi cantly faster rates than previously possible at the terminal.
As part of the major infrastructure improvements, the terminal’s two
existing jetties have been upgraded to accommodate larger vessels (up to 40 000 t).
In addition, new marine loading arms and mild steel pipelines have been installed which allow faster discharge of cargoes into storage. Road loading facilities at Grays have also been improved.
The Grays terminal specialises in the storage and handling of high and low fl ash fuels/petroleum products, including diesel, gas oil and kerosene. The facility has a total storage capacity of 310 489 m3 across 51 mild steel tanks.
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WORLD NEWS
8Spring 2020 8
DIARY DATES10 - 12 March 2020StocExpo EuropeRotterdam, the Netherlandswww.stocexpo.com
22 - 24 March 2020AFPM Annual MeetingAustin, Texas, USAwww.afpm.org/conferences
15 - 17 April 202022nd Annual International Aboveground Storage Tank Conference & Trade ShowOrlando, Florida, USAwww.nistm.org
23 - 24 April 2020Cryogenic Storage TanksMunich, Germanywww.tuvsud.com/de-de/store/academy/conference-management/tank-storage-systems/cryogenic-tanks
08 - 10 June 2020ILTA 2020 International Operating Conference & Trade ShowHouston, Texas, USAwww.ilta.org
09 - 11 June 2020Global Energy ShowCalgary, Canadawww.globalenergyshow.com
25 June 2020Refi nery of the Future 2020Online conferencewww.hydrocarbonengineering.com/refi nery2020
25 - 27 August 2020AFPM SummitSan Antonio, Texas, USAwww.afpm.org/conferences
08 - 10 September 2020Gastech 2020Singaporewww.gastechevent.com
25 - 26 September 2020Tank Storage AsiaSingaporewww.tankstorageasia.com
USA | Matrix awarded ExxonMobil contracts
Matrix Service Co. has announced that its subsidiary, Matrix
Service Inc., has been awarded multiple projects by ExxonMobil under a recently signed long-term master service agreement.
The projects, which are already in backlog, include the engineering, fabrication and construction of six 500 000 bbl tanks, four of which
will be located at ExxonMobil’s Webster Station in Webster, Texas, with the remaining two at its Baytown Complex in Baytown, Texas.
Matrix Applied Technologies will supply its FlowDomeTM geodesic domes for the tanks at Webster Station as well as floating roof seals for all six tanks.
France | Total sells interest in Fos Cavaou LNG terminal
Total has divested its 27.5% interest in Fosmax LNG, operator
of the Fos Cavaou LNG terminal, as a result of a competitive sale process to Elengy, Fosmax LNG’s shareholder with a 72.5% stake, which exercised its preemption right.
Elengy now owns 100% of its three LNG terminals: Fos Cavaou, Fos Tonkin and Montoir-de-Bretagne.
The consideration for the transaction is around US$260 million, including acquisition of a shareholder loan and excluding any earnouts.
This sale of non-strategic midstream infrastructure assets will
contribute to Total’s objective of divesting US$5 billion in 2019 – 2020.
Elengy’s acquisition of the shares is fi nanced mainly by an increase in Elengy’s capital reserved for the Société d’Infrastructures Gazières (SIG). The SIG now owns close to 18% of Elengy’s capital, with the balance being held by GRTgaz.
Total confi rmed that it will retain its regasifi cation capacity of around 5.5 million tpy at the terminal, which is equivalent to some 90% of its overall capacity. Total currently has regasifi cation capacity of around 18 million tpy in Europe.
India | AG&P and ADNOC L&S ink agreement
Atlantic Gulf & Pacifi c (AG&P) and ADNOC Logistics and Services
(ADNOC L&S) have signed an agreement for the conversion, supply, operations and maintenance of a fl oating storage unit (FSU) at AG&P’s new LNG import facility located within Karaikal Port in Puducherry, India.
The 137 756 m3 FSU owned by ADNOC L&S is being chartered for 15 years through an innovative commercial model enabling supply to be scaled to match demand. Construction on the terminal will begin in 1Q20 with commercial
operations expected to commence before the end of 2021.
The Karaikal FSU will be only the fourth FSU-based LNG import terminal in the world, after those in Malta, Malaysia and Bahrain. ADNOC L&S will provide a Moss-type containment vessel as FSU for the project from its fl eet of eight LNG carriers.
Owned and operated by AG&P, the LNG import facility at the Karaikal Port will have an initial capacity of 1 million tpy which will be expanded to 3 million tpy in the medium-term as demand increases.
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10Spring 2020
T he petroleum sector in North America has been growing at a rapid pace on all fronts – shale oil and gas, oil sands, refi ned fuels, LNG – and that has created a plethora of opportunities for tanks
and terminals.
USThe majority of US crude production increases have occurred in Texas. The US Energy Information Administration (EIA) noted that oil production for the Permian Basin had reached 4.74 million bpd at the end of 2019.
This has led to a scramble by regional midstream companies to build pipelines, storage and terminals to deliver Permian oil to market. Plain’s Cactus II pipeline and EPIC’s NGL pipeline (temporarily in crude service) began operating in mid-2019, transporting over 500 000 bpd from the Permian to Corpus Christi. Phillips 66’s Gray Oak pipeline began operating in late 2019, with a capacity to deliver up to 900 000 bpd to the port. As of late 2019, Corpus Christi had an estimated 27 million bbl of crude storage capacity, with approximately 19 million bbl of new tankage under construction.
In late 2019, Enbridge announced that it was expanding its Jones Creek Crude Oil Storage Terminal in Houston to 15 million bbl storage. The terminal will receive crude from the 950 000 bpd Seaway pipeline, which connects Cushing, Oklahoma, to the
Gordon Cope, Contributing Editor, outlines how expanding production in the US and Canada has storage and terminal
operators scrambling to keep up.
FILLINGON UP
11 Spring 2020
US Gulf Coast (USGC). Enbridge has also launched an open season to expand capacity on the Seaway and other regional pipelines by up to 250 000 bpd.
Refineries on the USGC are running full tilt, yet cannot deal with the deluge, and operators are exporting crude in ever increasing volumes. Rystad Energy, a consultancy, estimates that the US will be exporting 4.7 million bpd of crude by the end of 2020, and close to 6 million bpd by 2022.
Analysts calculate the US export infrastructure currently has the capacity to ship approximately 5 million bpd of crude. Refiners in Asia are especially interested in the light, sweet crude from Texas unconventional wells to meet the International Maritime Organization’s requirement for all ships to use very low sulfur fuel, which came into effect on 1 January 2020.
Companies are therefore scrambling to increase export capacity. EPIC Midstream recently brought its 200 000 bpd export terminal in Corpus Christi online, but much more is needed. In September 2019, Energy Transfer bought SemGroup for US$1.35 billion. The latter company has an extensive terminal network in the Houston Ship Channel. Energy Transfer will connect SemGroup’s assets to its own terminal in Nederland, Texas with a new pipeline in order to enhance export capabilities within the Houston area. In mid-2019, Energy Transfer also began discussing with producers its plans to build a very large crude carrier (VLCC) terminal at its existing facilities. If it proceeds, Energy Transfer expects to start construction within two to three years.
The proposed COLT offshore loading project, located near Freeport, Texas would be able to simultaneously load two VLCCs with capacities up to 2 million bbl each. The project is slated for completion by 2022.
In 2019, the US averaged well over 5 million bpd of refined products exports, primarily through the USGC. Distillate, used in transportation, manufacturing and agriculture, accounted for 1.3 million bpd. Gasoline accounted for almost 500 000 bpd, the vast majority (483 000 bpd) shipped to Mexico. The latter country was the leading destination for US refined products, receiving an average of 1.2 million bpd.
Natural gasThe Permian Basin (with reported gas production standing at 17 billion ft3/d by the end of 2019), also suffers from a severe gas infrastructure shortage. In early 2019, producers were forced to either take negative prices or flare the gas; at one point, enough gas to power every home in Texas was being burnt off.
In September 2019, Kinder Morgan brought its Gulf Coast Express (GCX) pipeline into service. The 2.2 billion ft3/d line is now moving gas from the Permian Basin to the Houston region, alleviating a bottleneck and returning local hub prices to profitability.
Much more infrastructure will be needed to meet the Permian’s expected output of 21 billion ft3/d by 2025. Kinder Morgan’s Permian Highway Pipeline is
expected to be finished in mid-2020, while the Whistler Pipeline project has been approved and their proposed Permian Pass is in development.
The Permian is not the only basin posting record gas production. The EIA noted that domestic shale basin output surpassed 85 billion ft3/d at the end of 2019. Although utilities and petrochemical plants have been absorbing some of the new gas, the huge amount being produced is encouraging the development of North American LNG export facilities.
In late 2019, Freeport LNG’s second train in its US$13 billion Texas facility came online, and train 3 is expected to enter service in May 2020. Each train has a capacity to produce 5 million tpy of LNG, for a total of 15 million tpy (the equivalent of approximately 2.1 billion ft3/d). The majority of the LNG is being sold under long-term contracts to Japanese utilities. Freeport expects to make a final investment decision (FID) on train 4 in mid-2020.
NextDecade is planning a major LNG plant and export terminal in Brownsville, Texas. The Rio Grande LNG facility is expected to produce 27 million tpy. The facility will include four 180 000 m3 LNG storage tanks and two marine jetties. The company recently announced that Enbridge has agreed to feed the project by building the Rio Bravo, a 4.5 billion ft3/d gas pipeline from Agua Dulce to Brownsville. An FID for the entire project is expected in 2020.
Venture Global’s Calcasieu Pass project, located in Louisiana, is an ambitious undertaking to build up to 60 million tpy LNG capacity. A contract to build the first 10 million tpy phase was awarded to Baker Hughes in mid-2019. The engineering company will begin delivering modules in 2020.
Cushing terminalOver the last decade, Cushing’s operational capacity has almost doubled, from 55 million bbl to almost 100 million bbl when current construction is finished. Various operators have approximately 12 million bbl of new capacity on the building slate. Keyera Energy is proposing a 4.5 million bbl Wildhorse terminal that could come online by 2020. Tallgrass Energy has plans for an additional 5.5 million bpd expansion. TC Energy and Magellan have a total of 2 million new bbl on their books.
A big factor in Cushing’s recent growth has been upcoming access to new crude pipelines. In mid-2019, the terminal was serviced by three incoming and two outgoing lines, handling 3 million bpd and 2 million bpd, respectively.
A total of eight new pipelines are under construction or consideration. Only one, the 350 000 bpd Phillips 66/Bridger line is incoming, while the other seven are heading south to the Gulf Coast. The US$2.5 billion Red Oak Pipeline, being built by PSX and Plains All American, will initially deliver 400 000 bpd from Cushing to Beaumont, Texas when it is completed in first half of 2021. Enbridge has entered an open season for a 200 000 bpd pipeline that would run from Cushing
12Spring 2020
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to the USGC and its proposed SPOT offshore terminal capable of loading VLCCs.
Cushing is also served by crude-by-rail. In 2014, USD Partners established a unit-train loading facility in Hardisty, Alberta, Canada, capable of loading entire trains with heavy oil. Since then, it has loaded more than 1000 trains with 60 million bbl of heavy crude for various destinations in the US. Among other terminals, it owns the Stroud Terminal adjacent to Cushing.
Canada
Oil sandsOver the last five years, output from the oil sands in northeast Alberta has grown from 2.4 million bpd to almost 3 million bpd. Due to environmental opposition to new pipeline capacity, operators have been subjected to pipeline apportionment, as well as deep discounts that forced the Alberta government to place restraints on production.
While the latter move has reduced discounts on Alberta oil, producers and storage companies have needed to adapt. In late 2019, Western Canada crude storage reached a record high of 39 million bbl. Even though producers resorted to rail loadings (driving it to a record high of 351 000 bpd), a strike by the Canadian National Railway Co. in late 2019 hampered efforts to ship more by rail.
In addition to major storage facilities in the Edmonton area, producers are served by the Hardisty terminal in southern Alberta, which sits astride several pipeline systems, including TC Energy’s Keystone, the Enbridge Mainline and Inter Pipeline’s Central Alberta network.
Gibson Energy is a major storage service company in Hardisty. In recent years, it has doubled its capacity to 11 million bbl. Gibson currently has three 500 000 bbl tanks under construction with another two being sanctioned; by the end of 2020, it expects to have 13.5 million bbl of storage capacity.
Expanding storage gives producers another alternative in their tool box to deal with current market challenges. “From a market access perspective, people lease our tanks in part for insurance,” says Gibson’s Senior Vice President Sean Wilson. “Our province’s current market access constraints are not good for our industry, it’s not good for us, but, due to the current and continuing egress uncertainty, people need insurance.”
Gibson Energy is also partnering with various oil sands producers to build a 100 000 bpd diluent recovery unit (DRU) in Hardisty. Normally, producers add up to one-third of light oil to heavy bitumen in order to make it sufficiently fluid to flow in pipelines. Crude-by-rail, however, easily handles untreated bitumen, and the removal of the diluent frees up more space. In late 2019, Cenovus applied to build its own DRU at its proprietary Alberta rail terminal that will be able to partially remove diluent from 190 000 bpd. The unit would require additional tankage to handle over 70 000 bpd of recycled diluent.
Altagas’s Ridley Island Propane Export Terminal (RIPET), located in the port of Prince Rupert, British Columbia, entered service in mid-2019. The CAN$500 million terminal is Canada’s first propane export project and has a capacity of 1.2 million tpy. Astomos Energy, based in Japan, has agreed to purchase 50% of annual shipments.
Production in the Montney shale, which holds almost 450 trillion ft3 of recoverable reserves, is approaching 10 billion ft3/d. Consultancy Wood Mackenzie estimates that, when liquids yields are included, the formation, located in a vast area covering northeast British Columbia and northwest Alberta, could be producing up to 20 billion ft3 equivalent per day within the decade.
Montney operators are looking to gain higher returns through LNG exports to Asia. In late 2019, Royal Dutch Shell and partners gave the green light to the first of over a dozen proposed LNG projects awaiting approval in Western Canada. The US$31 billion LNG Canada project began construction in the British Columbia port of Kitimat in 2019. When completed in 2025, it will consist of two 6.5 million tpy liquefaction trains, with the prospect of adding two more, for a total capacity of 26 million tpy.
ChallengesIn the oil sands, capital spending has dropped from CAN$34 billion in 2014 to CAN$12 billion in 2019. In response, major producers are reducing new investments and focusing on incremental increases at existing mines and subsurface operations. Operators are also concentrating on reducing costs in order to increase margins on existing production.
Shale producers in the Permian basin and adjacent regions in the Gulf Coast are facing financial constraints as banks tighten lending policies, and private investors seek greater returns in other plays. Rig counts in the Permian have been steadily dropping over the last year, lowering the rate of production increases.
In spite of cutbacks, oil sands production is expected to increase at a rate of approximately 100 000 bpd per year over the next decade, to almost 4 million bpd in 2030. The growth will come, primarily, through increases in output at existing facilities. If the lack of new export pipeline capacity continues to be a bottleneck, however, companies offering storage facilities and crude-by-rail terminals will prosper accordingly.
In the Permian, smaller operators are relying on fine-tuning drilling and completion technologies in order to lower costs per barrel, but financial constraints are likely to dictate bankruptcies through 2020. Production will accordingly shift away from independents towards players with deep pockets and integrated operations, such as Chevron and ExxonMobil. While the annual increases in US production are expected to dwindle, output is anticipated to remain high for several years to come, as are exports, creating greenfield and expansion opportunities for storage and terminals throughout the USGC.
14Spring 2020
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SPRING 2020 ISSUE
