August 2014, Vol. 241, No. 8

Features

TransCanadas David Penning Discusses Challenges Involved In Constructing The Gulf Coast Pipeline

U.S. crude oil production has been growing significantly in Oklahoma, North Dakota, Montana and Texas. Prior to completion of TransCanada’s Gulf Coast Pipeline, producers did not have access to enough pipeline capacity to move this production to the large refining market along the Gulf Coast. The 485-mile, 36-inch Gulf Coast Pipeline that begins in Cushing, OK and extends south to Nederland, TX addresses this constraint, as will the company’s 48-mile Houston Lateral pipeline project.

To learn more about the challenges involved in the pipeline’s construction, Pipeline & Gas Journal talked with David Penning, manager, Keystone Pipelines South, who has overall project management accountability for the implementation of pipeline projects in the southern section of the Keystone system.

P&GJ: Now that the Gulf Coast Project has been operating for almost six months, what do you consider the most challenging aspect of the entire project?
Penning: While under construction, the Gulf Coast Project employed more than 4,800 American workers. From a project management perspective, the most challenging aspect of getting the pipeline built was sustaining the project with the large number of required resources needed over a long period of time with unanticipated delays.

P&GJ: What is the current capacity of the pipeline?
Penning: The Gulf Coast Project has the capacity to transport 700,000 bpd with the potential to increase transportation to 830,000 bpd to Gulf Coast markets.

P&GJ: TransCanada had to obtain three key permits in order to construct the Gulf Coast Project. How difficult was this and how long did it take?
Penning: Under Nationwide Permit (NWP) 12, TransCanada filed preconstruction notification applications with the United States Army Corps of Engineers’ district offices in Galveston and Fort Worth, TX and Tulsa, OK. Each district office verified the applications and permits were granted.

Once each application was filed and deemed complete, it was about three months to receipt of a permit. Each permit contains special conditions that were added to each NWP authorization, which is typical practice.

A permit was also received from the U.S. Fish and Wildlife Service (USFWS) to address an endangered species, the America burying beetle, in certain counties that the pipeline crosses in Oklahoma. A Habitat Conservation Plan (HCP) was prepared in support of the permit application. In order to meet the construction schedule, TransCanada and the USFWS had to work very diligently over a number of months to create and finalize a Habitat Conservation Plan that specifies the conservation measures that must be implemented to minimize and mitigate impacts to the beetles in Oklahoma.

The plan includes creation of a conservation mechanism, the Keystone McAlester Conservation Area (KMCA), which is 876 acres of land that has been set aside in Oklahoma for the long-term conservation of the beetle. The KMCA and its planned activities have been designed to achieve a net conservation benefit to the species. This type of mitigation solution was one of the first of its kind to address the American burying beetle.

P&GJ: This project was constructed to help relieve the glut of crude oil in places like Cushing and to transport growing supplies of crude to refiners on the Gulf Coast. Has this proven to be sufficient or are additional pipelines needed?
Penning: With the construction of Gulf Coast Project as well as other pipeline projects, the glut of oil in Cushing has eased. The completion of the Gulf Coast Project represents more than just a means to relieve oil stockpiles in Cushing. It also completed a transmission system to transport Canadian oil to the Gulf Coast market via a single system with or without temporarily storing it in tanks. This pipeline system is a step closer for North American energy independence as the Canadian oil will supplant comparable foreign oils now transported to the Gulf Coast on vessels.

P&GJ: The Gulf Coast Project was constructed using three distinct spreads. Can you overview the work that was carried out on each of the spreads and some of the specific challenges that crews encountered?
Penning: The pipeline was constructed in three spreads of more than 100 miles each. With a construction project of that size, supply logistics was the overall challenge faced by each spread. With that said, each spread had its own particular challenges.

Spread 1, which started in Cushing and ended in Northeast Texas, had the expansive Threatened and Endangered Species habitat. Spread 2, through East Texas, had rolling hills, thick pine forests and sandy soils that had its own particular issues. Spread 3 near the coast had the challenge of dealing with extended wetlands and urban construction.

P&GJ: What was the trench depth and did you have to deviate from that to accommodate permits that required deeper depths or special considerations?
Penning: As part of the 57 special conditions agreed to construct the project, the pipe was installed deeper than required by code. The full conditions agreed to construct the project can be found in the original environmental impact statement for Keystone XL. This is part of extra measures undertaken to ensure the Gulf Coast Project was built to the highest standards for pipeline safety in the United States.

P&GJ: Did crews encounter anything along the route that required special attention or visits from the EPA or other enforcement agencies?
Penning: Throughout construction, we worked closely with the appropriate agencies. Our contact with agencies ranged from frequent visits from the Pipeline and Hazardous Materials Safety Administration (PHMSA) to periodic visits from the U.S. Army Corps of Engineers and other agencies. Any and all issues identified along the project were voluntarily reported to the appropriate agency and addressed in accordance with the requests from that agency.

P&GJ: There are several water crossings along the pipeline route. What were some of the challenges crews encountered on one or two of the more difficult horizontal crossings?
Penning: There were 35 directional drills and 65 guided bores on the project, each of which presented its own challenges from depth of cover, length of the drill itself, foreign lines to be crossed and tightness of work space. Each of these HDD events were successfully completed through careful engineering and sound quality execution.

P&GJ: A high number of safety features were incorporated into the design of this pipeline. What are some of the safety features that we should be aware of?
Penning: The Gulf Coast Project is one of the newest and most technologically advanced pipelines built in the United States with several safety measures in place to ensure safe transport. This includes:
• a higher number of remotely controlled pipeline shutoff valves to increase safety during operations;
• more frequent and stringent construction inspections by TransCanada as well as regulators;
• higher construction quality standards;
• increased standards for pipeline integrity and maintenance during operations; and
• burying the pipe deeper in the ground to provide an extra measure of protection.

The result is that the measures and monitoring implemented on the Gulf Coast Project, in addition to the work by regulators such as PHMSA, has created one of the safest constructed pipelines as well as set a new bar for safety, design and regulation for modern oil pipelines.

P&GJ: TransCanada reported that construction of the pipeline involved more than 11 million hours of labor and was completed by 4,844 workers in U.S. Did you encounter any difficulty in finding skilled crews?
Penning: As the project was located in the Oklahoma and Texas regions, we were able to find the necessary qualified workforce as this area is professionally steeped in the oil and gas industry. These individuals proved to be highly skilled and experienced pipeline construction workers ready to get back to work to construct the pipeline.

In addition, the company embarked on a successful program to put U.S. military veterans to work. Our project team initiated an effort to identify suitable positions to be filled by recently retired veterans. TransCanada trained these individuals in the skills needed to perform the required tasks, followed their progress in the role, and expanded their responsibilities as their skills improved.

Through these initiatives, these individuals can translate their skill sets for future employment in additional construction projects, either with TransCanada or other pipeline operators.

P&GJ: What proved the most challenging in dealing with this number of workers?
Penning: The logistics of employing this magnitude of people across a 500-mile pipeline construction project takes a significant level of planning and coordination. TransCanada, along with our construction contractors, worked extensively with the local communities to address the logistics of long distance spread construction. These logistics ranged from establishment of multiple construction offices and pipe yards across each spread to transportation of work and inspection staff down the right-of-way.

Not only did we do our best to ensure that the local communities benefited from this project, our contractors benefited as well. For instance, as 600 highly paid pipeline workers visited the area, there was a substantial increase in local businesses, such as hotels, camp sites and restaurants.

P&GJ: There were also some 50 contracts with manufacturers and companies building the pipeline and supplying equipment from across the U.S. How hard was it to coordinate deliveries so that equipment and supplies arrived when needed?
Penning: Thanks to the extra efforts of all our manufacturing partners, equipment suppliers and material producers, no major issues were experienced in getting the needed construction equipment and materials to the job on time and in ready–to-work condition. This demonstrates how the American economy is ready and poised to fulfill requirements for large, job-creating infrastructure projects.

P&GJ: Work was also carried out to add 2.25 MMbbls of new oil storage capacity at Cushing. Can you describe the construction of these facilities?
Penning: The Cushing terminal was constructed as part of the project to include a new tank terminal in addition to the original pump station. As part of this development, seven new tanks have been constructed and will be operational in Q3 2014. This allows shippers using the Gulf Coast Project to originate volumes in Canada with delivery to the Cushing and Gulf Coast markets as well as originate volumes at Cushing to deliver to the Gulf Coast markets.

TransCanada continues to work hard to ensure connectivity is completed with the existing terminals at the Cushing Hub. This ensures that customers using neighboring terminals such as Plains, Enbridge and NGL are able to access our pipeline system to receive Canadian volumes as well as originate and deliver volumes to the Gulf Coast.

P&GJ: What is the status of the 48-mile Houston Lateral and Terminal project?
Penning: The Houston Lateral project commenced construction last September at Moore Road, Houston where a state-of-the-art oil terminal is being developed that that enables our customers to reach major delivery points in the Houston market. The pipeline construction will be completed in late 2014 with the terminal slated for an in-service in mid-2015. The Houston Lateral extension will allow customers shipping on the Gulf Coast Project to access an additional Gulf Coast market hub.

TransCanada is also well-poised and excited to be developing projects such as Keystone XL and new infrastructure opportunities within the United States to help transport the growing U.S. domestic production to refining markets. New oil and gas infrastructure projects, like the Gulf Coast Project and Keystone XL, help put Americans to work and improve North American energy independence.

David Penning, manager, Keystone Pipelines South, has overall project management accountability for the implementation of pipeline projects in the southern section of the Keystone system.

Penning joined TransCanada in 2008 as a member of the leadership team assembled to manage the Gulf Coast Project. Prior to that, he spent 25 years in the oil and gas industry working both in the United States and internationally on projects including refined products facilities, major pipeline infrastructure, development stages of power plants and representing the interests of a foreign government in contract discussions.

Penning received his Bachelor’s of Science degree in Construction Engineering Technologies from Pittsburg State University in Pittsburg, KS before moving to Texas in 1989. He has maintained his Project Management Professional designation since 2003.