November 2013, Vol. 240 No. 11

Advertisers from the print edition of <em>Pipeline & Gas Journal</em>, November 2013, Vol. 240, No. 11.

Say, did you hear the one about the oil pipeline crew that was digging a trench when they spotted the dinosaur tail? No tall tale here. This is one of the stories that makes you appreciate being in the pipeline business. It proves that whether you’re the operator or the contractor, you care about something more than just money. You care the about the world around you as well as those that came before us, even if it was 70 million years ago.

Doug Evans, outgoing president of IPLOCA and CEO of Gulf Interstate Engineering, welcomed 651 delegates to Washington, DC for the 47th annual convention of the International Pipeline and Offshore Contractors Association. Contractors and suppliers to pipeline construction companies gathered in the nation’s capital for five days of technical presentations, meetings, social events and tours.

One of the best ways of gauging the strength of an industrial economy is watching the return of the steel industry. As the shale revolution continues to evolve in the U.S. and eventually Canada, owners of steel mills are restarting furnaces, expanding and building new facilities to fashion the new pipelines that will carry oil and natural gas to market.

Conventional oil production in Western Canada has experienced a resurgence in the past few years due largely to new drilling and completion methods, according to a report from the independent Canadian Energy Research Group (CERI).

You might say Craig Meier started at the ground level on the road to becoming president of Sunland Construction, Inc., working as a roustabout for several small contractors, while earning his mechanical engineering degree from the University of Oklahoma.

Fracking in the Marcellus Shale has markedly increased the supply of natural gas produced in the Appalachian Basin, which is typically of higher quality than gas produced from the Gulf. This increased supply has resulted in a shift in the historical pattern of gas flow.

The Keystone XL pipeline would cause “no material impact” on greenhouse gas (GHG) emissions in the U.S., according to a new IHS study.

“Our business remains a technical business that still has to be based and driven on sound science.” --Lee Tillman, new CEO, Marathon Oil Corp.

Kinder Morgan is the largest midstream and the third-largest energy company (based on combined enterprise value) in North America. Kinder Morgan owns an interest in or operates approximately 80,000 miles of pipelines and 180 terminals. The company’s pipelines transport primarily natural gas, refined petroleum products, CO-2 and crude oil and its terminals store, transfer and handle such products as gasoline, ethanol, coal, petroleum coke and steel. Combined, Kinder Morgan has an enterprise value of approximately $110 billion.

As oil and gas pipeline companies struggle to do more with less, the industry must rely on technology to squeak out efficiencies. Geographic information systems (GIS) have been a part of pipeline operations for decades. However, when outdated methods and resource-intensive data collection processes are used in an integrity management program, the results can become overly expensive, highly inaccurate or even non-compliant.

Outside the U.S., the lack of a large-scale pipeline network and related infrastructure makes getting oil and gas to market difficult, and sometimes cost-prohibitive. A recent McKinsey & Company report estimates it will take up to $1.4 trillion in infrastructure investment to complete the necessary pipelines, rail networks, and drilling and gathering infrastructure necessary to fully capture the potential of the shale revolution in the U.S. The investment required to take advantage of a global shale revolution will certainly be even greater.

DNV’s latest revision to Offshore Standard for Submarine Pipeline Systems, DNV-OS-F101, will be the pilot for a new approach to rule development, competence management, communication and application.

There’s little debate that switching from fuel oil to natural gas, with its lower emissions, domestic abundance and low and stable price point, represents an opportunity for fuel-intensive businesses in North America. There’s also no argument that pipelines are the best method for delivering gas. But for businesses located off a pipeline route, the tumble in natural gas prices hasn’t benefited them nearly as much as it has their competition. For some, pipeline projects may come eventually; for others, there is no construction even being discussed.

<em>Pipeline & Gas Journal</em>’s 33rd Annual 500 Report offers the industry’s most comprehensive statistical review of U.S. energy pipeline systems. As in past years, the report ranks the nation’s top gas distribution, liquids and gas transmission systems. Transmission companies are ranked by mileage, while the rank of each liquids pipeline company is based on yearly crude deliveries. The gas distribution rankings are based on number of customers.

Growth in production of domestic light crude and increased exportation of heavy crude led to substantial additional investments in pipelines and other midstream infrastructure during the year, according to data from the federal Energy Information Administration (EIA).

Conventional wisdom tells us that pipelines operating at a sufficiently low hoop stress are immune to failing in a rupture mode and can only fail in a leak mode. In general, that’s true. However, a recent study found that some pipelines that are operating below 30% specified minimum yield stress (SMYS) have an increased chance of low-stress ruptures and subsequent failures under certain conditions – namely select low- and high-frequency electric resistance welded (ERW) pipes with seam weld corrosion.

Massive shale-driven production growth in the Northeast and soaring demand from the Southeast will turn the nation’s traditional south-to-north and west-to-east pipeline natural gas flows and price spreads upside down, according to a report by market analysts at BENTEK Energy.

Philip Luna is a man on the go, and if you work for him at Houston-based UniversalPegasus International (UPI), you’d better be as well, even if it means getting to work for the 7 a.m. team meeting.

In today’s fast-paced business world, there is a certain class of individuals who seem capable of running nearly any type of company. They combine academic prowess, problem-solving and people skills to a level few others achieve. Whether that unique skill set is recognized is often another question.

Liquefied natural gas, LNG, as a product is cold – minus 162 degrees centigrade. Commercially, it is hotter than a 4th of July firecracker! In mid-September the federal government issued a conditional license to a fourth company, Richmond, VA-based Dominion Resources, to sell up to 770 MMcf/d of natural gas for 20 years to any buyers abroad including those without Free Trade Agreements. The gas will go mainly to Asian markets.

Withdrawal of the nominee for the FERC chairmanship reflects the intensity of the political wars between the Democrats and Republicans in Washington, the ham-handedness of the Obama administration and miscues by Ron Binz, a former Colorado Public Utility Commission chairman.

Paula Gant, Ph.D., a former senior executive with the American Gas Association, was appointed Deputy Assistant Secretary of Energy for Oil and Natural Gas, Office of Fossil Energy, U.S. Department of Energy. Gant served as AGA’s senior vice president for Policy and Planning. She joined the team of U.S. Secretary of Energy, Dr. Ernest Moniz in the Obama administration Sept. 9.

This year, according to a survey of American Gas Association (AGA) member companies, the number of customers disconnected from their utility service fell by more than 8%, indicating that the low price of natural gas is allowing more people to access the energy they need. Additionally, the total amount owed by customers fell nearly 15%.

Approach Resources, with its partner in Wildcat Permian Services LLC, entered into an Equity Purchase Agreement with affiliates of JP Energy Development LP, in which JP Energy will acquire all of the equity interests in Wildcat.

Aux Sable Midstream LLC (ASM) and Summit Midstream Partners LP (SMLP) have executed a long-term gas purchase agreement for liquids-rich natural gas gathered on SMLP's Bison gathering system.

Buckeye Partners, L.P. has signed a definitive agreement with Hess Corporation and its subsidiaries to acquire 20 liquid petroleum products terminals with total storage capacity of 39 million barrels for $850 million.

Clean Energy Fuels Corp., Ferus Natural Gas Fuels, GE Ventures and GE Energy Financial Services announced at the High Horsepower Summit in Chicago a consortium to jointly deliver LNG in the U.S.

Initial investigations following a 20,600-barrel leak on Tesoro Logistics LP pipeline in North Dakota point to corrosion on the 20-year-old pipeline, state regulators said Nov. 11, Reuters reported.

The energy service company (ESCO) market in the United States has gone through a difficult period in recent years. Customers have grown concerned about the impact of energy performance contracts on their financial positions, and many of the resources, including policy measures, that drove growth prior to 2011 have been exhausted.

ExxonMobil’s Point Thomson project has completed several infrastructure milestones as part of an ongoing commitment to Alaska’s energy future.

Kinder Morgan Energy Partners (KMP) LP announced commercial operations are underway for phase one at the 185-acre Battleground Oil Specialty Terminal Co. LLC (BOSTCO) project on the Houston Ship Channel.

David J. Devine, president of central regional natural gas pipelines for Kinder Morgan, was elected chairman of the Interstate Natural Gas Association of America for 2014.

Millennium Pipeline Co. LLC has approval from the FERC to construct the proposed Hancock Compressor project in the town of Hancock, Delaware County, NY with service to start April 1.

Plains All American (PAA) Pipeline LP and Enterprise Products Partners LP have agreed to expand their Eagle Ford Joint Venture (JV) crude oil pipeline.

The boards of Regency Energy Partners LP and PVR Partners LP unanimously approved a definitive merger agreement pursuant to which Dallas, TX-based Regency will acquire PVR.

Seminole Energy Services LLC has acquired the crude oil transportation and logistics business of Native American Marketing LLC. Native American provides a variety of services in the oil industry including purchasing, transportation and marketing of crude oil.

Tallgrass Interstate Gas Transmission has received the Pony Express Abandonment Order from the Federal Energy Regulatory Commission (FERC).

UOP LLC, a Honeywell company, has formed an alliance with Black & Veatch to help natural gas producers and fuel providers meet growing demand for LNG as a transportation fuel and for off-road, high-horsepower applications.

Enterprise Products Partners L.P. announced an additional expansion of its LPG export terminal located on the Houston Ship Channel that will increase its capability to load fully refrigerated, low-ethane propane.

Explorer Pipeline’s Board of Directors has approved full funding for the second and final phase of the Manhattan Diluent Extension project.

Kinder Morgan Energy Partners, L.P. has entered into an agreement with a large Eagle Ford Shale producer to extend the Kinder Morgan Crude and Condensate (KMCC) pipeline farther into the Eagle Ford Shale in South Texas.

Magellan Midstream Partners plans to construct a new origin at Barnhart, TX to accept crude oil shipments on the Longhorn pipeline.

Applied Natural Gas Fuels, Inc. (ANGF) plans to build a multi-liquefier LNG production platform in Midlothian, TX.

Navigator Energy Services, LLC recently held a binding open season for long-term shipper volume commitments of crude oil from non-affiliated shippers for capacity on a new crude oil pipeline system -- Big Spring Gateway or BSG System -- originating near Big Spring, TX, for deliveries to the Colorado City, TX Tank Farm.

Nuevo Midstream recently completed a major expansion of its amine treating capacity and has begun construction of the Phase III expansion of the company’s natural gas processing system in the Delaware Basin near Orla, TX.

NuStar Energy’s affiliate, NuStar Crude Oil Pipeline, L.P., has received binding commitments from shippers filling all of the space available on Phase 1 of the partnership’s South Texas Crude Oil Pipeline System project. NuStar is receiving interest in Phase 2.

Methanol and monoethylene glycol (MEG) are thermodynamic hydrate inhibitors used to prevent the formation of gas hydrates in oil and gas pipelines. As hydrates can block pipelines and remediation is often costly and potentially dangerous, hydrate formation is a large risk to offshore projects.

Rosneft and ExxonMobil selected CB&I UK and Foster Wheeler Energy as contractors for initial phase front end engineering and design (FEED) for a proposed Russian Far East LNG project.

Louisiana Gov. Bobby Jindal and Shell announced the selection of Ascension Parish as the location for a potential natural gas-to-liquids (GTL) facility.

ExxonMobil, BP, ConocoPhillips and TransCanada have selected a site in the Nikiski area on the Kenai Peninsula as the lead site for the proposed Alaska LNG project’s natural gas liquefaction plant and terminal.

Williams Partners’ Transco natural gas pipeline has filed an application with the FERC to expand its existing Leidy Line in northern Pennsylvania and its mainline from New Jersey through Alabama by 525,000 Dth/d of natural gas to serve growing natural gas markets along the system.

Williams and Boardwalk Pipeline Partners, LP have executed joint venture agreements to continue developing an LPG export facility in the Lake Charles, LA area.

Pennant Midstream, LLC announced construction of a 12-inch, 38-mile NGL pipeline, a $60 million investment.

Recently the Center for Climate and Energy Solutions (“C2ES”) released a comprehensive report entitled “Leveraging Natural Gas To Reduce Greenhouse Gas Emissions” that lays out in a thoughtful manner the promising future of natural gas. Its timeliness, coming as the shale revolution continues to build in the United States and which President Obama made a centerpiece of his Climate Action Plan (CAP), make this document essential reading.

Regular evaluations, effective integrity management solutions and proper monitoring are all key factors in successful pipeline integrity management and maintenance programs.

Specifying and consulting engineers, engineering houses, original equipment manufacturers (OEMs) and end users depend on valves to control the flow of compressed air or other fluids, and on cylinders to control motion. But the cold truth is that low temperatures can cause problems for these fluid automation devices all along the line – from selection and delivery to operation and maintenance.

Rotork Gears, the valve gearbox and valve accessory division of Rotork, has completed an important contract in China, working closely with Chinese valvemakers involved with subsea valve production.

New products from Detechtion Technologies, Coastal Flow, Mathey Dearman, Pipeline Hugger, Microfinish Valves and more.