May 2015, Vol 242, No. 5

Advertisers from the print edition of<em> Pipeline & Gas Journal </em>May 2015, Vol. 242, No. 5

I was driving to work this morning on Kamikaze Highway, officially known as I-10, and switched on the 9 a.m. news when a story so outlandish grabbed my attention, nearly forcing me into another lane of traffic, in which case I could not have written this column. The story, reported by Fox News, cited an increase in President Obama’s popularity that it attributed to lower gasoline prices. Say what? He being responsible for lower gas prices is like saying the API is non-political. It’s just not so, am I right, Jack Gerard?

The job began as a relatively straightforward directionally drilled creek crossing to install 600 feet of steel gas pipe. However, a change in the size of pipe, unexpected site restrictions, difficult soil conditions, and limited hours to work made this project far from routine. It was exactly the type of project suited for California contractor Accu-Bore Directional Drilling, a horizontal directional drilling contractor that also provides engineering services and complete turnkey and design-build capabilities.

On Aug. 5, 2008, the 1,099-mile-long Baku-Tbilisi-Ceyhan (BTC) pipeline, which is frequently used by many of the world’s largest oil and gas companies to transport crude oil across Europe, exploded outside of Refahiye, Turkey. Shortly after the incident, the ethnic group, known in Western Asia as Kurdish separatists, claimed responsibility for the explosion.

It’s trite but true: The only thing constant is change. Especially in our industry, it seems. There’s always a new technology or tool to consider or a proposed regulation to ponder. Access to capital restricts and relaxes. Individual rig or well performance can vary widely. Even the location of our best prospects can confound us: North Dakota?

Canada’s National Energy Board (NEB) has been inundated by 1,800 applications from those interested in participating in hearings on the proposed Energy East oil pipeline that would carry over MMbpd from Western Canada to export terminals on the country’s Atlantic coast.

The changing oil production and consumption landscape in North America has led to new developments in the infrastructure that brings oil to market – the pipelines, gathering systems, storage facilities, rail networks and marine-based transport networks that comprise the industry’s midstream oil infrastructure.

As global oil prices were still falling and various parts of the U.S. oil/natural gas space were reassessing plans for 2015, the American Petroleum Institute (API) was reorganizing to better service one of the industry’s growth sectors – midstream. API said it was going to provide more attention to “pipelines and processing facilities” that connect oil and gas production with markets. The key is infrastructure, according to the globally recognized Washington, DC-based trade and standards-setting group.

Natural gas trade in the Asia is growing 5.6% per year, and while the region is currently dominated by LNG, pipeline natural gas is set to grow at a CAGR of 23% between 2012 and 2020. Moreover, a new wave of LNG is expected from Australia and the United States, depending on how factors such as Asian demand, oil prices, and North American and Australia exports play out.

Process principles governing the exploration, midstream and downstream operations in the oil and gas arena are by no means new. As with any process that has evolved through years of experiential knowledge, engineering took a backseat to first-hand experience. This is no longer the case in today’s midstream facilities. While the overall purpose of the industry has not changed, the process has been fine-tuned to suit shale type, more stringent product specifications and modified regulatory policies.

Quality is critical and the most important factor for completion of a project on time and within the allocated budget. If proper quality checks are not in place, defective materials or work may cause damage to equipment and facilities, and potentially resulting in health and safety hazards. Successful projects are those that meet business requirements and are delivered on schedule. Many factors contribute to a project’s success such as project planning, resource allocation, risk management and governance criteria, but effective quality management is critical for any project success.

A study by a team from Washington State University (WSU) showed emissions throughout the United States coming from of natural gas distribution systems have decreased in the past 20 years, falling to levels 36-70% below current estimates. The reduction were attributed to significant upgrades at metering and regulating stations, improvements in leak detection and maintenance activities and replacement of older pipeline materials.

Without a doubt, the biggest factor impacting the U.S. gas market is the development of shale gas in the Marcellus Shale play, located in northern Appalachia and the Alleghenies. The shale gas revolution in the U.S. – specifically in Pennsylvania and West Virginia – is nothing short of a revolution for the entire country.

India, the second-most populous country in the world and fourth-largest energy consumer after China, the United States and Russia, is home to abundant supplies of coal, oil and natural gas. Nevertheless, according to the International Energy Administration, India’s per capita energy consumption remains about one-third of the global average as it becomes increasingly dependent on energy imports to support average annual economic growth of about 8%, population increase and rapid urbanization.

Bob Keiller, CEO of Wood Group, knows that merely speaking of an organization’s core values is not even worth talking or writing about it unless you put it into practice. Even before he was named to head the global energy service company in November 2012 the native Scotsman has always made sure that any who works for him knows that THE core value in the energy industry starts with one word: safety. After all, if you’re a real people person, what is more important than ensuring that your employees work in the safest environment possible?

Hazardous liquid pipelines are unhappy with how the Pipeline and Hazardous Materials Safety Administration (PHMSA) wants to implement a provision of the 2011 pipeline safety law requiring companies to go back and test old steel pipelines for integrity.

California Public Utilities Commission voted April 9 to penalize Pacific Gas & Electric Co. (PG&E) $1.6 billion for a 2010 gas pipeline explosion that killed eight people and destroyed more than three dozen homes in suburban San Francisco. The penalty comes as the state’s top regulator, Commission President Michael Picker, has called for a larger review that suggests the energy giant could be broken up.

The Department of the Interior’s Bureau of Ocean Energy Management (BOEM) held the Central Gulf oil and gas lease sale 235 on March 18 which drew $538,780,056 in high bids for tracts on the U.S. Outer Continental Shelf offshore Louisiana, Mississippi and Alabama. A total of 42 offshore energy companies submitted 195 bids on 169 tracts, covering about 923,700 acres. The sum of all bids received totaled $583,201,520.

The Columbia Pipeline Group has embarked upon a strategic program to build pipeline infrastructure and compression equipment to deliver natural gas from production areas to homes and businesses throughout the Midwest and eastern U.S. The proposed Leach XPress project involves 160 miles of natural gas pipeline and compression facilities in southeastern Ohio and West Virginia’s northern panhandle. The $1.4 billion investment will transport 1.5 Bcf from the heart of the Appalachian supply basin to consumers served by the Columbia Gas and Columbia Gulf pipeline systems.

Marine Well Containment Company (MWCC) recently delivered its Expanded Containment System (ECS), designed for well-containment capabilities and response readiness for operators in the deepwater U.S. Gulf of Mexico. The enhanced system builds on the equipment and technology put into place with MWCC’s Interim Containment System, made available in February 2011.

Enable Midstream Partners subsidiary, Enable Gas Transmission, held an open season for interested parties to obtain firm interstate natural gas transportation capacity resulting from an expansion of EGT’s Line AD in Oklahoma. The Oklahoma Expansion capacity will provide enhanced transportation options from receipt points in the South Central Oklahoma Oil Province (SCOOP) region, as well as the Woodford and Cana Basins, the Granite Wash and the Colony Wash supply basins in Oklahoma.

ExxonMobil began production in the deepwater Gulf of Mexico at Hadrian South with facilities tied back to the nearby Lucius project, reducing additional infrastructure requirements.

Statoil Petroleum and Gassco recently awarded the 2015 annual pipeline inspection contract to Fugro. The contract covers inspection of defined sections of subsea pipelines between Norway and continental Europe: Europipe 1, Europipe 2, Franpipe, Zeepipe and Norpipe.

ONEOK Partners, L.P. has a 50-50 joint venture with a subsidiary of Fermaca Infrastructure B.V., a Mexico City-based natural gas infrastructure company, to build a pipeline transporting gas from the Permian Basin in West Texas to Mexico. The Roadrunner Gas Transmission project extends from ONEOK Partners' ONEOK WesTex Transmission gas pipeline system at Coyanosa, TX, west to a new international border-crossing connection at the U.S. and Mexico border near San Elizario, TX, where it will connect with Fermaca's Tarahumara Gas Pipeline.

Petroleos Mexicanos (Pemex) and First Reserve announced a US$1 billion agreement to mutually invest in energy infrastructure for Mexico. The first of the investments includes the 744-km natural gas Los Ramones pipeline that is comprised of three sections and is being implemented in two phases. Construction of the projects has already begun with full commercial operations expected in mid-2016. The companies are also planning large-scale infrastructure opportunities.

Plains All American Pipeline, L.P. and Delek Logistics Partners LP have formed Caddo Pipeline LLC, a 50/50 joint venture to develop the Caddo Pipeline. The 80-mile, 12-inch pipeline will run between Longview, TX and Shreveport, LA.

Flames engulfed a Petroleos Mexicanos (Pemex) platform in the Bay of Campeche on April 1, killing four workers and forcing others to leap into the waters below.

Rangeland Energy has executed a long-term agreement with a subsidiary of Delek US Holdings, Inc. to be an anchor shipper of crude oil on the Rangeland Integrated Oil Pipeline (RIO Pipeline). The pipeline will connect production from the Delaware Basin to the crude oil market center in Midland, TX. Delek Logistics Partners LP, Delek US’s logistics arm, will own 33% of the RIO Pipeline and supporting terminals.

Williams announced that Transco has filed an application with FERC for its Dalton Expansion project, which would support providing Marcellus gas to the Southeast for electricity generation and local natural gas distribution.

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