January 2011 Vol. 238 No. 1
Features
2011 Worldwide Pipeline Construction Report
Despite a global economic downturn, new oil and gas pipelines are being planned and built. P&GJ’s worldwide survey figures indicate 119,938 miles of pipelines are planned and under construction. Of these, 83,634 represent projects in the planning and design phase while 36,304 miles reflect pipelines in various stages of construction.
Construction Overview
Following is a breakdown identifying regions by levels of new and planned pipeline miles in seven basic country groupings in the report, (see area map): North America – 28,099; South/Central America – 9,869; Africa – 7,759 ; Asia Pacific Region – 41,525; Former Soviet Union and Eastern Europe – 18,896 ; Middle East – 9,345; and Western Europe and European Union – 4,445. For information on these and other pipeline projects, see P&GJ’s sister publication, Pipeline News.
North America
North American pipeline construction is expected to remain strong. Shifts in supply from traditional to unconventional sources are projected to continue to be the key driver of future pipeline construction.
The Natural Gas Pipeline and Storage Infrastructure Projections Through 2030 study, prepared for INGAA by ICF International, analyzes future natural gas infrastructure requirements under various market scenarios and anticipates a range of investments over the next 20 years, primarily to handle increased domestic production from unconventional shale basins and tight sands to the existing network. (P&GJ, Jan. 2010, Pg. 26)
The study finds the U.S. and Canada will need 28,900-61,600 miles of additional natural gas pipelines through 2030. New infrastructure will be needed throughout the U.S. and Canada and not just to move natural gas across long distances between regions. According to the study, all regions will need natural gas infrastructure to serve growing demand and/or shifts in demand. Even regions with mature production basins will continuously need additional development.
North America accounts for 19,260 miles of planned pipeline miles and 8,839 miles of pipelines under construction. More than 4,600 miles of the planned pipelines represent projects in Alaska and Canada. They include the 364-mile Beluga to Fairbanks (B2F) gas pipeline that calls for a 24-inch line extending from Cook Inlet to Delta Junction and a 12-inch line from Delta Junction to Fairbanks. The project will be a spur pipeline to a major Alaska natural gas pipeline, when one is built, to move gas into south-central Alaska markets, with a connection at Delta Junction or Glenmallen.
Although both of the Alaska natural gas pipeline projects planned by TransCanada and ExxonMobil and BP/Conoco Phillips (Denali) have held open seasons, neither is expected to begin service until around 2020.
Another project involves a 700-mile NGL pipeline planned in Texas by DCP Midstream. The route of the DCP Sandhill Pipeline runs from West Texas fractionation and storage sites along the Texas Gulf Coast including Mont Belvieu.
DCP says this system should relieve capacity constraints affecting producers in these regions. The DCP Sandhills Pipeline, with an estimated 2013 in-service date, will have a target capacity of 130,000 bpd.
As to construction activity, the most significant North American construction project is TransCanada’s U.S.-Canada cross border Keystone XL Gulf Coast Expansion Project. The route of the 1,661-mile, 36-inch crude oil pipeline begins at Hardisty, Alberta and extends southeast through Saskatchewan, Montana, South Dakota and Nebraska. It incorporates a portion of the Keystone Pipeline (Phase II) through Nebraska and Kansas to serve markets at Cushing, OK before continuing through Oklahoma to a delivery point near existing terminals in Nederland, TX to serve the Port Arthur, TX marketplace.
The $7 billion Keystone XL Expansion is scheduled to begin operations in 2012.
Asia Pacific
Several countries are undertaking massive construction projects to meet growing energy demand. Not surprisingly, the region accounts for the highest number of new and planned pipeline miles. Of the 41,525 miles of new and planned pipelines, 29,072 miles represent pipelines in the engineering and design phase, while 12,453 miles reflect projects in various stages of construction with China, India and Australia remain the most active.
State-owned China National Petroleum Corp. (CNPC), China’s largest natural gas company in the upstream and downstream sectors, is responsible for much of the activity. Plans are also in place to expand the oil and gas pipelines owned and operated by CNPC by more than 24,850 miles, or 80%, between 2011-2015.
CNPC is building the 285-mile Rizhao-Dongming oil pipeline that will carry crude from the Lanshan port of Rizhao, Shandong, to the Dongming refinery in Heze. The first phase has a designed transmission capacity of 10 MMt/a of crude. A second phase calls for expanding capacity to 20 MMt/a. Once completed, the area’s independent refineries will receive 10 MMt/a of crude from the Middle East, easing a feedstock storage in the production of fuel oil.
Pipelines are also being completed here. The Russia-China Crude Pipeline that extends from the Skovorodino off-take station of Russia’s Far East Pipeline, through Galinda at the Russian border, Heilongjiang province and Inner Mongolia, to Daqing terminal station, is complete. With designed deliverability of 15 MMt/y, the pipeline is 640 miles with 40 miles in Russia and 600 miles in China. The pipeline became operation at the end of 2010 and allows Rosneft to begin supplying 15 metric tons of crude to China annually for the next 20 years.
One of China’s most ambitious projects is a 1,970-mile pipeline network to supply gas to 21 cities in the province of Guangdong by 2020. A joint venture of China National Offshore Oil Corp., Sinopec and the provincial power firm, Guangdong Yuedian Group, construction began in early 2010. Phase one of the pipeline grid, totaling 290 miles and linking seven cities, should be operational by July.
In India, Gail (India) Ltd. is working to complete several major projects. One involves the 790-mile Jagdishpur-Haldia pipeline that will carry natural gas from the Mahanadi and KG basins to the four states of Uttar Pradesh, West Bengal, Jharkhand and Bihar. The first phase calls for construction of 497 miles of 36-inch mainline while the second phase will mainly include construction of spur lines. Completion of the entire project is set for 2013.
Construction of Gail’s 510-mile Dabhol to Bangalore gas pipeline is scheduled for completion in early 2012.
Australia
In Australia, LNG action is heating up where eight new LNG terminals are scheduled to be completed by 2015. One project is by Australia Pacific LNG (APLNG), a 50/50 joint venture between Origin Energy and ConocoPhillips, to deliver coal seam gas (CSG) to an LNG plant at Gladstone that will have a processing capacity of up to 18 MMt/a. The 280-mile pipeline from the CSG field to the LNG plant will be built by a McConnell Dowell and Consolidated Contractors joint venture. Construction of the pipeline will start this year with completion at the end of 2013.
BG Group subsidiary, Queensland Gas Company, is developing the Queensland Curtis (QCLNG) project that involves an onshore CSG and LNG production and export facility on the Queensland coast. The supply of CSG from QGC’s Surat basin tenements will be carried via a 212-mile, 42-inch pipeline to processing facilities on Curtis Island, near Gladstone.
QGC officials say the project is well under way and, pending approvals, first delivery of LNG will be in 2014.
In western Australia, Chevron Australia and its joint venture partners ExxonMobil, Shell, Osaka Gas, Tokyo Gas and Chubu Electric Power recently began work on the multibillion-dollar Gorgon Project.
The project will develop the Greater Gorgon area gas fields, located 80 miles off the northwest coast of western Australia. It includes construction of a 15 MMt/a LNG plant on Barrow Island and a domestic gas plant with the capacity to provide 300 Tj/d of gas to western Australia.
The project is expected to have the world’s largest CO2 injection system and be a global leader in underground carbon dioxide injection technology. First gas is planned for 2014.
In Malaysia, work is winding down on the country’s largest pipeline project. Valued at US$500 million, the Sabah Sarawak Gas Pipeline is being built for Petronas Cargali Sdn Bdh, a subsidiary of the state oil and gas major. The 318-mile, 36-inch pipeline will link the proposed Sabah oil and gas terminal to the Petronas LNG complex in Sarawak. Project completion is scheduled in March.
FSU-Eastern Europe
Russia, along with several other FSU and Eastern European nations, continues to work on extensive export pipeline networks to reach Europe and the Asia Pacific region.
Nord Stream is a major project aimed at delivering natural gas to Europe. It consists of two parallel pipelines which will be laid across the Baltic Sea from Vyborg, Russia to Greifswald, Germany. The pipeline will be built and operated by Nord Stream AG. The first, with a transmission capacity of 27.5 Bcm/a, is due for completion in 2011. A second parallel line is due to be completed in 2012, doubling capacity to around 55 Bcm/a.
When fully complete, Nord Stream will supply the energy needs of 26 million European households. The total investment amounts to EUR 7.4 billion. The Nord Stream joint venture consists of Gazprom, Germany’s E.ON and BASF/Wintershall and the Dutch company Gasunie.
The multimillion-dollar Azerbaijan-Georgia-Romania Interconnection (AGRI) is being undertaken by the governments of Azerbaijan, Georgia, and Romania to develop a transport corridor running via the Caucasus and the Black Sea.
The project calls for construction of LNG terminals in Georgia and on the Romanian Black Sea coast. The terminals would allow gas from Azerbaijan to flow via pipeline across the Caucasus to Georgia where it would be liquefied at a planned terminal at Kulevi, then shipped in tankers across the Black Sea to the Romanian coast. There, the LNG would be regasified, pumped into the Romanian gas grid, and delivered into the wider European market.
Preliminary estimates for construction of the two LNG terminals put the cost at US$5.4-8.1 billion. The AGRI project would be expected to transport up to 7 Bcm/y of gas in about three years.
South Stream is yet another pipeline scheduled to be built across the Black Sea that will extend to southern and central Europe to deliver Russian gas, bypassing transit states such as Ukraine. Gazprom and Eni SpA plan to construct the 560-mile pipeline. Gazprom has defined locations for key facilities of the new pipeline, obtained all the permits required from executive authorities in the specified Russian regions and the approvals from land users in the municipalities. All preparations and design work are to be completed by September 2012. Construction operations are to begin no later than October. The first leg of the gas pipeline is scheduled for commissioning in late 2015.
In Turkmenistan, construction is under way on the $2 billion East-West pipeline that will ultimately connect all the major gas fields of Turkmenistan to a single network. Two state corporations – Turkmengaz and Turkmen Oil and Gas Construction – have undertaken the project. The 620-mile, 56-inch pipeline will have capacity of 30 Bcm/a.
Middle East
With the Middle East accounting for four countries that are among the world’s top ten oil producers, they are also heavily dependent on oil export revenues. For this reason, pipelines are being planned and built. Of the 9,345 miles of new and planned pipelines, 5,837 miles represent projects in various stages of design and development, while 3,508 miles reflect actual construction.
In the UAE, Abu Dhabi Company for Onshore Oil Operations (ADCO) awarded a contract valued at US$683 million to state-owned National Petroleum Construction Company (NPCC) for a 595-mile pipeline. NPCC will handle the engineering, procurement and construction (EPC) as well as production well tie-ins and flowlines to connect the field to four new production sites. The project is expected to take 30 months to increase capacity of the Bab field from 1.4 MMbpd to 1.8 MMbpd. Southwest of Abu Dhabi City, the Bab oil field holds more than 500 MMbbls of proven oil reserves and is pumping 300,000 bopd.
In Iraq, Foster Wheeler’s Global Engineering and Construction Group was awarded a project management consultancy (PMC) services contract by South Oil Company (SOC) for the Iraq Crude Oil Export Expansion Project onshore in southern Iraq and offshore in Iraqi waters. SOC is under the Ministry of Oil of Iraq.
The project includes installation of two onshore and offshore pipelines plus three single- point moorings and a central manifold and metering platform. Scheduled for completion in 2013, the project is expected to boost Iraq’s Basra export capacity from 1.8 MMbpd to 4.5 MMbpd by 2014. Work should be completed by July 2013.
Khatam Ol Anbia Construction will build the second phase of the remaining 167-mile section of the Iranian portion of the Iran-Pakistan (IP) Pipeline project for the National Iranian Gas Company. Reports say Iranian gas will be delivered to Pakistan in 2014. The 560-mile line will extend from the Assaluyen field in southern Iran to Pakistan.
Western Europe/European Union
As reported by P&GJ in August, pipeline construction continues to lag in many EU nations; this is expected to change with a decision by the European Commission to provide US$1.9 billion in grants to ensure that some 30 gas projects are not delayed. Those to receive grants include the 500-mile Interconnector Turkey-Greece-Italy (ITGI) project, 130-mile Poseidon Pipeline, 281-mile Skanled Pipeline, 2,050-mile Nabucco Pipeline and the 130-mile Slovakia- Hungary Interconnector, plus upgrades to Slovenia’s transmission system.
Italy’s power and gas company Edison SpA announced a major step to move the Southern Gas Corridor forward when Edison, Depa, the Greek Public Gas Corporation, IGI Poseidon S.A. (equally owned by Edison and Depa and responsible for construction of the offshore pipeline between Greece and Italy) and Bulgarian Energy Holding EAD, agreed to establish Natural Gas Interconnector Greece Bulgaria EAD (IGB EAD). This company is responsible for the new gas pipeline between Greece and Bulgaria (the IGB pipeline) which will be part of the ITGI project connecting Turkey, Greece and Italy.
Africa
Although its countries are vital to world energy markets, strikes, attacks on pipelines, civil unrest and hostage-taking continue to hamper oil and gas producers in most of the region. Despite these challenges, pipeline are being planned and constructed.
Saipem was awarded a subcontract for a critical crude pipeline replacement project in Nigeria. The project involves replacement of six 10–24-inch pipelines with a combined length of 53 miles which will connect six platforms in an offshore field. The scope of work includes fabrication, transportation, installation and testing of the new pipelines as well as a shore approach and bridges. Saipem will carry out the offshore activities, predominantly with the Crawler pipelay vessel, into the second quarter of 2011.
One of the most ambitious projects is the Trans-Saharan Gas Pipeline (TSGP) planned by the Nigerian National Petroleum Company and Algeria’s Sonatrach. Nigeria, Niger and Algeria signed an agreement to move forward with construction of the project. Energy ministers from the three nations indicate there is no need to bring international companies into the project although France’s Total, Russia’s Gazprom and the European Union have displayed an interest in providing assistance. EU officials say the pipeline could supply 20 Bcm/y of gas to Europe by 2016.
As proposed, the 2,565-mile project will take gas from fields in the Niger Delta north through Nigeria to Algeria and then to the coast. It could be on line in 2015 if all goes according to plan. Estimated cost of the project is in the $10 billion range with $3 billion for upstream gas development.
South/Central America & Caribbean
New and planned pipeline projects continue to grow with several South, Central America and Caribbean countries implementing new construction projects.
Petrobras, which typically maintains an aggressive pipeline construction program, plans to join five partners and invest $3 billion to build three pipelines to transport ethanol from Brazilian sugarcane fields to local markets and for export.
The planned pipelines will have a total length of 750 miles and carry up to 20 MMcm/y by 2020.
The shareholders in the new company will be Petrobras, with 20%; Cosan SA Industria e Comercio SA, 20%; Copersucar SA, 20%; Odebrecht Transport Participacoes SA, 20%; Camargo Correa Oleo e Gas SA, 10% and Uniduto Logistica SA, 10%.
The first of the three pipelines will run from Senador Canedo in Goias state, center-west Brazil, through Minas Gerais and Sao Paulo states to Sao Sebastiao port in Sao Paulo state.
Another system will link the states of Goias, Sao Paulo and Parana, ending at Foz do Iguacu, using river transport on the Parana and Tiete rivers, with a pipeline link to the first pipeline.
A third pipeline will link the first pipeline with Ilha d’Agua port in Rio de Janeiro state.
In Boliva, Transredes S.A. is building the Carrasco-Cohabamba gas pipeline for YPFB Transport. YPFB inaugurated the first stretch of the $172 million pipeline that increases supply to the west of the country to 130 MMcf/d. The first stretch runs 67 miles and the third stretch – completed last year – runs 40 miles. The second and final 48-mile leg is due for completion in 2011. The company expects additional expansions to pipeline capacity through compression.
In Peru, construction is under way on the 136-mile Humay–Marcona Pipeline in the Ica region. The pipeline will transport natural gas to the cities of Ica, Nasca and San Juan de Marcona and is part of a larger distribution project which includes construction of the 23-mile Humay–Pisco Pipeline. Congas, a consortium comprised of Colombian companies EEB and TGI, was contracted to design, build, operate and maintain the system by Peru in 2008. The project is expected to be online mid-2012.
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