March 2012, Vol. 239 No. 3

Advertisers from the print edition of <em>Pipeline & Gas Journal</em>, March 2012, Vol. 239 No. 3.

Life is so filled with ironies, isn’t it? Every major election year it seems that gasoline prices skyrocket and every politician has the solution. Of course they make little sense since they prefer to pander instead of considering that oil is a commodity and is treated as such by the marketplace. Anything that may affect supply moves the marketplace. That’s how it is in a free market economy.

When George Mercer’s great-grandfather started hauling pipe with teams of mules in 1910, he put a lot of thought into the business that has become T.G. Mercer. But it’s a safe bet that developing software wasn’t among the things that weighed on him.

Cathodic protection has come a long way from its manual beginnings. Operators in industrial markets are seeking the most effective and efficient ways to protect assets and infrastructure from corrosion. Many are finding that automated solutions can provide the reliable, real-time monitoring they seek. New technologies and options are continually being introduced to the marketplace.

Millions of dollars are spent annually to maintain hydrocarbon pipelines free from any operational breakdowns. In most cases of such breakdowns, the cause is internal corrosion (Figure 1).

Jordy Ensio is President of Universal Minerals International, Inc., which is based in Tucson, Arizona. Universal Minerals International, Inc. and its affiliated companies (UM Limited, Ballast Technologies, Inc., and Minerals Research & Recovery, Inc.) have served the Oil and Gas Industry for over 40 years, providing iron ore and heavy aggregates for concrete weight coatings, fixed ballast for ships and deepwater platforms, and crystalline silica-free abrasives for sandblasting.

A number of U.S. firms have joined TransCanada Corp. in stating how they will create thousands of American jobs building the Keystone XL pipeline, the largest privately financed infrastructure project now on the books. The companies sought to reinforce the fact that construction of the privately financed $7 billion oil pipeline means work for their employees during a period when the American economy needs jobs - 20,000 jobs in construction and manufacturing.

The U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations.

Risk identification and assessment are essential for effective pipeline safety and integrity management. Using risk and/or likelihood of failure evaluation, pipelines are prioritized for physical assessment and for implementation of preventive and mitigative measures. From a facility operations perspective, risk quantification can provide important information for effectively allocating limited resources.

<em>“At a time when national economic and employment indictors are uncertain at best, shale gas producers and their vast and dynamic supply chain are providing families and communities jobs and economic development. The Marcellus Shale is a case study in the transformative impact of the natural gas industry.” --Kathryn Klaber, President, Marcellus Shale Coalition </em> Before 2010 no one would use the word “transformative” to characterize the natural gas industry. And in the wake of the 2008 global financial meltdown, no one would have viewed natural gas as the fuel for national economic recovery. Nevertheless, in this presidential election year, both jobs and the gas industry should be on everyone’s radar.

After four years of intermittent operation, a pipeline transferring condensate to an export tank experienced a leak at one of its elbows. Circumferential welds had no relation to the problem elbow.

Today, the use of a durable external coating system in combination with cathodic protection is well-accepted as the most effective means of corrosion prevention for oil and gas pipelines.

NACE International—The Corrosion Society --holds its annual conference each spring, attracting 6,000 attendees and 350 exhibiting companies from around the worldwho represent every industry and technology for corrosion control. The five-day conference features an extensive technical program, meetings, lectures, forums, courses, networking activities, special events, and the largest corrosion exposition in the world.

It is truly a very exciting time for NAPCA and our industry. There have been numerous accomplishments over the past few years. Our NAPCA website has totally been revamped. The website is now an authentic technical resource for all of our members to view. Our Board of Directors for the first time has voted to award a scholarship to Kilgore College in the Field of Corrosion Control.

Currently, gas operators with pipelines in High Consequence Areas (HCAs) are struggling with how to best respond to pipeline integrity inspection requirements where the carrier pipe passes through a casing. The annular space of a cased pipe represents a unique engineering environment.

Surge is defined as the operating point at which centrifugal compressor peak head capability and minimum flow limits are reached. Actually, the working principle of a centrifugal compressor is increasing the kinetic energy of the fluid with a rotating impeller. The fluid is then slowed down in a volume called the plenum, where the kinetic energy is converted into potential energy in form of a pressure rise.

While much of the contiguous U.S. enjoyed a mild winter this year, Alaska suffered through its worst in decades. A 30-day stretch when the thermometer bottomed out below -30° F provided special challenges for Richard Schok, President of Flowline Alaska Inc., based in the interior town of Fairbanks, Alaska.

Soil resistivity, corrosivity and steel native potentials in soils are interrelated. A chart was developed in this work to quantitatively map the rule-of-thumb relationship between steel native or rest potentials and soil resistivity.

<em>From the National Association of Pipe Coating Applicators' March 2012 supplement to <em>Pipeline & Gas Journal</em></em> Member companies of the National Association of Pipe Coating Applicators (NAPCA) were extraordinarily active during 2011 as the group continued to concentrate its efforts on developing actionable technical information and quickly disseminating it to the industry. Based on several important measures, the association grew at a deliberate pace as its leaders laid the groundwork for its future success.

Two House committees passed a jumbo infrastructure bill in February and a third was likely to follow suit, meaning the American Energy and Infrastructure Jobs Act will probably pass the House quickly. How quickly the Senate will follow suit is unclear.

With Congress having passed a pipeline safety bill last December, you'd think the Pipeline and Hazardous Materials Safety Administration (PHMSA) has plenty to do implementing that law during 2012.

Executives at U.S. middle market energy companies are bullish on their outlook for 2012. This optimism among executives is fueling growth, as 85% expect to seek financing this year, according to Mike Lorusso, Group Head of CIT Energy (cit.com/energy). These are some of the findings detailed in CIT’s latest research study, “2012 U.S. Energy Sector Outlook” (<a href="http://www.cit.com/about-cit/thought-leadership/cit-outlook-series/energy-outlook-2012/index.htm">www.cit.com/energyoutlook</a>).

The Energy Information Administration (EIA) has released a report showing drastically lower estimates of natural gas resources in the U.S. The agency estimated there are 482 Tcf of shale gas in the U.S., a decrease of more than 40%. The report also estimated the Marcellus region of New York, Ohio, Pennsylvania and West Virginia contained only 141 Tcf of gas. This is a decrease of 66% from earlier estimates of 410 Tcf.

Boardwalk Pipeline Partners’ subsidiary, Boardwalk Field Services, LLC, will expand its gathering system and construct a cryogenic gas processing plant to serve producers in the Eagle Ford Shale.

CenterPoint Energy Field Services has started initial routing activities for a proposed gas gathering and processing system in the heart of the Mississippi Lime area of north central Oklahoma and south central Kansas.

CRC-Evans Pipeline International, Inc. has finalized a distributor agreement with Laurini Officine Meccaniche (Laurini), of Busseto, Italy.

Explorer Pipeline Company plans to construct a 24-inch diluent pipeline extension from its existing Peotone Station, which is located on its 24-inch mainline between Wood River, IL and Hammond, IN in order to allow shippers to transport diluent directly from Explorer to the Enbridge Southern Lights pipeline origin at Manhattan, IL. From Manhattan, the diluent delivered by Explorer will be transported via Southern Lights into Western Canada.

ExxonMobil, ConocoPhillips, BP and TransCanada, through its participation in the Alaska Pipeline Project, announced March 30 that they are working together on the next generation of resource development in Alaska.

Foster Wheeler AG’s India subsidiary, Foster Wheeler India Private Limited, part of its Global Engineering and Construction Group, has been awarded a contract for an LNG-receiving terminal to be built in Ennore, in the state of Tamil Nadu, India.

Inergy Midstream, L.P., a subsidiary of Inergy, L.P. plans to jointly market and develop a new interstate natural gas pipeline known as the Commonwealth Pipeline with affiliates of UGI Corporation (UGI) and WGL Holdings, Inc. (WGL).

Enterprise Products Partners, Enbridge Energy Partners and Anadarko Petroleum announced that shippers have executed long-term contracts for capacity on the Texas Express Pipeline (TEP) being developed by the joint venture.

<strong>Editorial Correction</strong> In the February issue of Pipeline & Gas Journal, page 10, the incorrect map was shown for the article titled “Joint Venture To Build Double Eagle Pipeline”. The correct map and article are shown here.

Element Markets, LLC is constructing a biomethane project at the APEX Sanitary Landfill in Amsterdam, OH.

Midstream Partners has launched two separate binding open seasons to solicit capacity commitments from shippers to transport crude oil from West Texas to the partnership's East Houston terminal for further delivery to the Houston and Texas City-area refineries through Magellan's distribution system.

The National Energy Board has approved the Vantage Pipeline Project submitted by Vantage Pipeline Canada ULC, formerly Vantage Pipeline Canada Inc.

NiSource Gas Transmission and Storage’s Midstream Services announced a major midstream initiative in the Utica play in eastern Ohio.

Spectra Energy Corporation’s non-binding open season for its Renaissance Gas Transmission project closes March 31. The pipeline system will link growing natural gas supplies to high-demand power generation and distribution markets in Georgia, Alabama and Tennessee.

Spectra Energy Corp.’s Texas Eastern Transmission has reached binding agreements with two anchor shippers for its TEAM 2014 project, an expansion of its existing Texas Eastern system to deliver additional emerging Appalachian shale natural gas supplies to diverse markets in the Northeast, Midwest and South.

TEAK Midstream, L.L.C. is planning to construct more than 200 miles of natural gas gathering and residue delivery pipelines and an adjoining 200 MMcf/d cryogenic gas processing plant in south Texas to better serve gas producers operating in the Eagle Ford Shale play.

TexStar Midstream Services, LP extended the binding open season for the TexStar Crude Oil Pipeline, LP to deliver Eagle Ford crude from various points in Texas to NuStar’s North Beach terminal in Corpus Christi.

TransCanada announced it will build, own and operate the Tamazunchale Pipeline extension in Mexico. Construction of the pipeline is supported by the award of a 25-year natural gas transportation service contract by the Comisión Federal de Electricidad (CFE), Mexico's state-owned power company.

Williams Partners announced March 19 that it will acquire Caiman Eastern Midstream LLC in the natural gas liquids-rich portion of the Marcellus Shale for approximately $2.5 billion.

Williams Partners L.P. is seeking binding commitments for the remaining capacity on Atlantic Access, a proposed expansion of its Transco interstate pipeline.

Discovery Producer Services LLC, jointly owned by Williams Partners (60%) and DCP Midstream (40%), plan to expand the Discovery Natural Gas Gathering system in the Gulf of Mexico.

Though unconventional plays are remaking the face of the North American oil and gas industry, we dare not overlook our neighbors to the south. Although activity in Latin America varies from country to country because of political situations, economics and resources, oil and gas development is the essential ingredient needed to improve the standard of living of their citizens – both in terms of the comforts they provide and the revenues they earn.