January 2017, Vol. 244, No. 1



Stakeholder Midstream Holds Open Season for Gathering System

Stakeholder Midstream Crude Oil Pipeline, a wholly owned subsidiary of Stakeholder Midstream, closed a binding open season Jan. 4 for the planned San Andres Crude Gathering system. As proposed, the project will primarily serve wells producing from the San Andres formation in Yoakum County, TX and Lea County, NM and will provide transportation service to multiple takeaway pipelines near Denver City, TX. Construction is expected to begin shortly with the gathering system becoming operational in May.

Medallion Midstream Announces Southern Delaware Basin Crude Oil Pipeline

Texas-based Medallion Midstream, LLC and its affiliate, Medallion Midstream Services, LLC, announced Dec. 7 a letter of intent to construct a Delaware Basin crude oil pipeline system to provide crude oil gathering and transportation services for Parsley Energy. The new pipeline will be anchored by Parsley’s long-term dedication to Medallion of 35,000 acres held under lease and/or mineral interest in Pecos and Reeves counties, TX.

Medallion’s Delaware Basin pipeline system will initially consist of 45 miles of 16-inch mainline and 25 miles of smaller diameter gathering pipelines along with a crude oil station in Pecos County consisting of crude oil storage and truck unloading facilities. The pipeline, which is expected to have an initial capacity of 100,000 bpd, will originate within the Parsley leases and will end in Crane County, TX at an interconnection into Medallion Pipeline Company’s existing 600-mile Midland Basin header system, accessing multiple Permian Basin long-haul take away pipelines. The parties expect to finalize and sign a definitive agreement in the first quarter. The new crude oil pipeline is expected to start initial service in June.

CB&I Awarded LNG Storage/Fueling Terminal Contract

Puget Sound Energy awarded CB&I a $200 million contract for the engineering, procurement, fabrication and construction of a multi-purpose LNG storage and fueling terminal in Tacoma, WA. The work includes a 30,000-cubic-meter, full- containment storage tank, liquefier and vaporizer. The facility will provide peak shaving, marine bunkering and truck loading capabilities. 

Nueva Era Pipeline Finalizes Financing for Texas/Mexico Pipeline Project 

Howard Midstream Energy Partners (HEP) subsidiary, Nueva Era Pipeline, closed on $353.3 million in project financing for the construction of the Nueva Era pipeline project. A 50-50 joint venture between HEP and Mexico-based energy and services firm Grupo CLISA, the Nueva Era pipeline will connect HEP’s existing Webb County Hub in South Texas directly to Monterrey, Nuevo León, Mexico.

Construction began last year on the 200-mile, 36- and 30-inch Nueva Era pipeline, which will provide seamless transportation for about 600 MMcf/d of natural gas (expandable to 900 MMcf/d), connecting producers in South Texas directly with end-users in northern Mexico.

The Comision Federal de Electricidad, Mexico’s state-owned electric utility, is the anchor shipper on the Nueva Era project, having committed to transport 504 MMcf/d of natural gas on the system for 25 years, to help fuel combined-cycle power plants in Escobedo and Huinalá, near Monterrey. The Nueva Era pipeline also offers natural gas transportation services to private shippers on an open access basis. The project is expected to be completed and in-service in the second half of 2017.

Union Gas Completes 2nd Phase of Dawn-Parkway Expansion

The second stage of the Dawn-Parkway System expansion by Union Gas began commercial service in November. The CA$391 million effort is comprised of a 48-inch, 20-km pipeline between Hamilton and Milton, Ontario and an additional compressor facility at the Lobo Compressor Station near London.

These facilities represent the second phase of a planned CA$1.5 billion investment in the Union Gas Dawn-Parkway System between 2015 and 2017. When all three phases of the expansion initiative are completed in 2017, Dawn-Parkway System capacity will have increased by 1.2 Bcf/d to 7.6 Bcf/d, making it one of the most robust pipeline systems in North America.

“Our investments, in conjunction with related infrastructure projects by Enbridge Gas Distribution and TransCanada Pipelines east of Parkway, provide eastern Canadian and U.S. markets with increased access to the Dawn Hub and Appalachian supply,” said Steve Baker, president of Union Gas.

TransCanada Wins Approval for 2017 NGTL Expansion

The Canadian government approved TransCanada’s $1.3 billion NGTL system expansion project for 2017. The project includes five new pipeline sections totaling 230 km and the addition of two compression facilities. The first facilities are expected to be ready for service in the second quarter of 2017, with the entire project expected to be completed by the second quarter of 2018.

Chevron’s North Sea Gas Field Begins Production

Chevron North Sea Limited has started production at Alder, a high-pressure, high-temperature (HPHT) gas condensate field in the Central North Sea. Alder is a single subsea well tied back, via a 28-km pipeline, to the existing ConocoPhillips-operated Britannia platform, in which Chevron holds a 32.38% non-operated working interest. The project has a planned design capacity of 110 MMcf/d of natural gas and 14,000 bpd of condensate. Production is expected to ramp up over the coming months.

JGC Wins FEED Contract for Woodfibre LNG Project

JGC America, a wholly owned subsidiary of the JGC Group, won a contract to provide front-end engineering and design (FEED) services for the 2.1 mtpa Woodfibre LNG project in Squamish, BC, Canada.

The project is a mid-scale natural gas liquefaction facility located on a brownfield site on the shores of Howe Sound in the District of Squamish. The proposed facility will receive natural gas from a Fortis BC natural gas pipeline and will be powered with electricity from BC Hydro. Construction is expected to begin this year and operation of the plant is planned to start in 2020. 

Gail Awards Contracts for 345-Km Pipeline Section

GAIL initiated a major step toward the construction of the Jagadishpur-Haldia-Bokaro-Dhamra Natural Gas Pipeline (JHBDPL), by approving placement of orders for the 345-km section from Phulpur to Dobhi to be constructed simultaneously by JSIW Infrastructure and IL&FS Engineering & Construction Co. Work under phase-IB began in November and should wrap up in December 2018. Pipe is being supplied by Jindal Saw, MAN Industries (India) Ltd., Essar Steel India Ltd. and China’s Zhongyou BSS (Qinhuangdao) Petropipe.

Xodus Group Wins Contract off Romania

Black Sea Oil & Gas and its co-venture partners have awarded the FEED contract for development of the Midia Gas Development, off Romania, to the Xodus Group. Xodus will provide a wellhead platform (jacket) in the Ana well area and supporting production from a subsea tie-back from Doina subsea well controlled through an umbilical, an in-field pipeline from the Doina subsea well to the Ana wellhead platform and an offshore export pipeline from the Ana wellhead platform to shore.

Saipem Wins $1 Billion Saudi Contracts

Saipem won new contracts and change orders in the E&C Offshore segment, valued at about $1 billion. The most significant are the notification of award by Saudi Aramco of two EPIC contracts under the long-term agreement in force and renewed in 2015 until 2021 for activities in Saudi Arabia.

These two contracts refer to development of fields in Marjan, Zuluf and Safaniya, located in the Arabian Gulf, which are among the most important offshore fields in the region. They include design, engineering, procurement, construction, installation and implementation of subsea systems in addition to the laying of pipelines, subsea cables and umbilicals, platform decks and jackets. The two contracts will include maintenance and dismantling works on the existing platforms already operating in the fields.

Port Arthur LNG Seeks Permits for Texas-Based Facility

Sempra Energy subsidiaries filed an application with the Federal Energy Regulatory Commission to site, construct and operate the Port Arthur LNG facility along the Sabine-Neches Waterway in Southeast Texas.

The project includes two natural gas liquefaction trains capable of producing, under optimal conditions, 698 Bcf of natural gas per year, three LNG storage tanks, natural gas liquids and refrigerant storage, feed gas pre-treatment facilities, two berths and associated marine and loading facilities. A separate application was filed with FERC seeking authorization to construct pipelines to deliver natural gas to the project.

Sempra LNG & Midstream and Woodside Energy (USA) signed a project development agreement in February that provides a framework for the sharing costs related to the development, technical design, permitting and marketing of the proposed liquefaction project.

Canadian Study Suggests Early Consultations with First Nations

Proponents of natural gas and LNG projects in British Columbia should help pave the way for environmental and First Nations’ approval through early consultation and negotiation with all parties, especially First Nations groups, said a recent study by the Canadian Energy Research Institute. The study, reported by Platts, evaluated 29 gas infrastructure and LNG projects in various stages of the environmental and regulatory process in the Western Canadian province.

Some of the LNG export projects have received their environmental assessment approval as well as an export license, but several “are still caught in this opposition,” chiefly from First Nations bands whose lands are impacted by the proposed projects, said Dinara Millington, CERI vice president of research. “The legal matters are resolved, yet there is still strong opposition from First Nations.”

The study considered as successful those consultation processes in which the parties can work out their issues without having to resort to the courts. Developers should engage with indigenous communities to learn what issues are of most concern to them, the report said. “You want to start engaging with indigenous people right at the start, when you’re considering the project,” Millington said. “Even before you start marking where the land will be impacted, just start introducing yourself in the communities.”

Gas Pipeline Delays Most Notable 2016 Trend

Pipeline project delays were the dominant trend in 2016 for the U.S. Northeast natural gas market – from the large Constitution pipeline to smaller incremental projects designed to serve gas utility customers, according to an annual report from the Northeast Gas Association (NGA).

An increase in public opposition to oil and natural gas infrastructure, regulatory delays and, in some cases, a lack of customer interest led to delays and cancellations of a few regional natural gas pipeline expansions. In 2016 the Constitution pipeline was denied a key water permit by the state of New York, and Kinder Morgan canceled its 1.3 Bcf/d Northeast Energy Direct pipeline because it had not received enough contracts from power plants to make the project viable.

The industry group’s 2016 Statistical Guide, released last month and published by Argus, cited Dominion Transmission’s New Market project and Tennessee Gas pipeline’s Connecticut expansion as projects that, like Constitution, received federal certificates but encountered delays at the state level. Possible delays and cancellations of northeast projects have worked to discourage producers and constrain Northeast production growth, BTU Analytics said in October. “No projects can be taken for granted these days,” the energy analysis and consulting firm said.

Only a few system enhancements were placed into service this year, including Spectra Energy’s Algonquin Incremental Market project and its Salem lateral.

Vermont Gas System’s Addison Natural Gas project to extend its service for 41 miles southward was originally expected to be completed last year, but that project has been delayed as the company awaits a state supreme court ruling on the last remaining parcel of land, a company spokeswoman said.

The region remains constrained at several points on its natural gas system, especially into New England and southern New York and Long Island. Two gas utilities in Massachusetts are not allowing new customers on certain parts of their systems because of inadequate pipeline capacity, the NGA report said. Securing contract commitments in New England also remains a challenging market issue as the largest consuming sector, power generation, is constrained by the complex economic structure of its wholesale electricity market.

New England’s six state governors in late 2013 began exploring how to solve this issue, but the states later abandoned a plan to pay for pipelines through the electric grid because of legal concerns. In August a top court in Massachusetts found that a plan that would allow local electric utilities to sign contracts for pipeline capacity conflicted with a law that deregulated that state’s electric market. The court ruling leaves few options for other states in the region hoping to spur pipeline expansions.

The NEA expects the Northeast to continue to rely on LNG as a stopgap during times of extreme cold weather and pipeline restrictions. The Boston area received an LNG cargo on Dec. 5, equivalent to 2.8 Bcf of gas, likely because of forecasts for below-normal temperatures.

UGI in Pennsylvania has LNG storage facilities that are able to respond to high load and an LNG tanker truck-loading terminal. South Jersey Gas just added liquefaction capability in 2016, the report said. The state of Maine recently solicited bids for proposals to provide additional LNG storage in the state. Some businesses and institutions in New England have opted for natural gas delivered by truck, the report said

Liquid Gas Carriers Delivered to India’s Reliance Industries 

The ABS-classed Ethane Crystal, the world’s first Very Large Ethane Carrier (VLEC), has been delivered to India’s Reliance Industries Ltd. by Samsung Heavy Industries (SHI) of South Korea.

The Ethane Crystal is the first of six VLECs set to arrive with ABS Class through 2017. The liquefied gas carrier can carry cargoes such as ethane and LPG, and with an 87,000-cubic-meter cargo carrying capacity, the vessel is the first of its kind to be constructed with a GTT Mark III membrane cargo containment system.

ABS said the VLEC is comparable in size to today’s Very Large Gas Carrier (VLGC) and supports a more efficient operation that helps make large-scale ethane transportation more economically viable. Demand for this vessel type is driven by the surplus of ethane produced as a byproduct of shale oil and gas in North America. The Ethane Crystal is intended for trade routes between North America and India, carrying ethane that will be used as feedstock for petrochemical production.

Petrojet Awarded Oman Pipeline Project

Oman Gas Company (OGC) contracted Petrojet to construct the 221-km Duqm Pipeline for $90 million. The 36-inch pipeline will supply gas from Saih Nihayda in central Oman, to the Special Economic Zone (SEZ) under development on the Wusta coast.

The first consumer of natural gas from Saih Nihayda is expected to be the Duqm Refinery, which will commence commercial operations in 2020. Petrojet is also undertaking OGC’s Salalah Gas Loop Line project, which will ramp up gas supply to Dhofar where a combination of infrastructure and industrial investment is fueling demand growth. The 85-km loop line ties in with an existing pipeline at Marmul and runs south to Salalah.


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