August 2018, Vol. 245, No. 8



Tunnel, Trench Offer Options for Replacing Pipeline


A 65-year-old pipeline that carries crude oil beneath a waterway connecting two of the Great Lakes could be replaced with pipes buried in a tunnel or partially enclosed in trenches that would pose virtually no risk of leakage but require years and hundreds of millions of dollars to build, according to a report.

Enbridge, the Canadian company whose Line 5 runs 645 miles (1,038 km) between Superior, Wisc., and Sarnia, Ont., produced the analysis of possible alternatives for replacing the 4.5-mile-long (7-km-long) segment at the bottom of the Straits of Mackinac between Lakes Huron and Michigan.


The study was required under an agreement between the company and Michigan Gov. Rick Snyder amid rising concern about the safety of Line 5, which recently sustained slight damage from a suspected ship anchor strike and has been the target of a campaign by environmentalists asking that it be shut down.


The report is the first of four agreed to by Enbridge. It estimated the tunnel option would take up to six years to complete and cost $350 million to $500 million.


Corps to Wrap up Dakota Access Work


The U.S. Army Corps of Engineers expects to soon wrap up an environmental study of the Dakota Access oil pipeline after meeting in mid-June with four American Indian tribes battling the pipeline in court.


The tribe leading the lawsuit said it hasn’t had a meaningful role in the study, and Standing Rock Sioux attorney Jan Hasselman said the tribe is “not giving up this fight.”  This comes two years after the suit was filed and a year after oil began flowing.


Last year, U.S. District Judge James Boasberg in Washington, D.C., allowed the $3.8 billion pipeline to begin pumping oil from western North Dakota through South Dakota and Iowa to a shipping point in Illinois.


However, he also ordered the Corps to further review the pipeline’s impact on tribal interests, including how a spill under the Missouri River in the Dakotas would affect water rights for the Standing Rock, Cheyenne, Yankton and Oglala Sioux tribes.


The work has gone beyond the Corps’ initial completion estimate of April 2 because of what the agency maintained were difficulties in obtaining needed information from the tribes. The Justice Department said the Corps met with representatives of each tribe, between May 22 and June 1, and “has made substantial progress in its evaluation of the (study) issues.”


South Dakota High Court Dismisses Appeal Against Keystone XL


The South Dakota Supreme Court threw out an appeal from opponents of the Keystone XL oil pipeline, saying a lower court lacked jurisdiction to hear such cases.


Groups fighting TransCanada Corp.’s pipeline appealed a decision last year upholding regulators’ approval for the pipeline to cross the state. But the high court said justices didn’t “reach the merits of the case” because the lower court didn’t have jurisdiction to weigh the appeal of the Public Utilities Commission’s (PUC) decision.


TransCanada said the it is pleased with the court’s decision. The company hopes to begin construction in early 2019.


The 1,179-mile Keystone XL would cost $8 billion and transport up to 830,000 bpd of Canadian crude through Montana and South Dakota to Nebraska, where it would connect with lines to carry oil to Gulf Coast refineries.


The PUC initially authorized TransCanada’s project in 2010, but the permit had to be revisited because construction didn’t start within the required four years. The panel voted in 2016 to accept TransCanada’s guarantee that it would meet all conditions laid out by the commission when it first approved that state’s portion of the project.


Erosion Temporarily Halts Mountain Valley Construction


Construction of the Mountain Valley Pipeline in Virginia has been halted to address some soil erosion problems.


Officials said the suspension is expected to be temporary for the natural gas pipeline’s installation. Construction will resume with approval from Virginia’s Department of Environmental Quality (DEQ).


DEQ officials said in a statement that the pipeline will direct crews to enhance and restore erosion and sediment controls along the route.


Pipeline officials said in a statement that recent heavy rainfall affected crews’ abilities to control erosion. Pipeline officials said the company takes “environmental stewardship responsibilities very seriously.”


The construction delay comes just after a stay issued by the 4th U.S. Circuit Court of Appeals that placed a hold on pipeline stream crossings in West Virginia, so the court could consider a challenge to a key federal permit.


Other phases of construction in the state,  including the blasting of bedrock and digging of trenches, are not affected by the stay or the temporary suspension of work in Virginia, Mountain Valley said.


The  300-mile, 42-inch pipeline will run through West Virginia and Virginia. It’s scheduled to be in service by the end of the year. A number of legal challenges against it are pending.


Magellan Mulls Further Expansion of Products System


On the heels of saying it would expand its refined petroleum products pipeline system in Texas, Magellan Midstream Partners announced it might increase capacity more than originally planned.


In late May, Magellan said it would increase the capacity of the western leg of its Texas refined products pipeline system to 150,000 bpd from the current capacity of 100,000 bpd. In early June, Magellan began a supplemental open season for an additional 35,000 bpd of capacity, adding it was continuing to review the potential construction of a new refined products terminal in Midland, Texas.


The partnership is expanding the system to handle incremental shipments of gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa, El Paso and New Mexico, with access to Arizona and Mexico markets via connections to other pipelines.


The initial 50,000-bpd expansion is expected to cost $300 million and begin service in mid-2020. Magellan said that project is supported by long-term customer commitments.


Wood Awarded FEED Contract for Lokichar Pipeline


Wood has been awarded the initial phase of a front-end engineering design contract (FEED) by Tullow Kenya BV for the design of the proposed Lokichar-to-Lamu crude oil pipeline project located in Kenya.


The proposed pipeline will export waxy crude oil from oil field developments in the South Lokichar Basin to the Lamu port on Kenya’s coast.


Wood will provide the first phase of FEED services, setting the technical requirements and estimating the installed cost for the pipeline system. The project is being led by the subsea & export systems team with support from capital projects teams.


The Lokichar-to-Lamu project is being developed by the Pipeline Project Management Team, a consortium that includes Tullow Oil, Africa Oil and Total in partnership with the government of Kenya.


Rover Pipeline’s Full Mainline B Goes into Full Service


Energy Transfer Partners said Rover Pipeline received approval from the Federal Energy Regulatory Commission (FERC) to begin service of the Supply Connector B and full Mainline B pipeline segments.


Service to the Market Zone north segment of the pipeline with deliveries into the Union Gas Dawn Storage Hub in Ontario, Canada, will begin by way of the Vector Pipeline Connection in Michigan.


This latest approval allows for 100% of Rover’s mainline capacity, 3.25 Bcf/d of natural gas, to be placed into service. The FERC decision, however, did not allow gas to flow on two key laterals – the Burgettstown and the Majorsville – connecting to supply areas.


Rover transports natural gas from the Marcellus and Utica Shale production areas to markets across the United States, as well as into the Union Gas Dawn Storage Hub for redistribution back into the United States or into the Canadian market.


Epic Completes Phase 2 of NGL Pipeline from Delaware Basin


Epic Midstream Holdings completed Phase 2 of the Epic Natural Gas Liquids Pipeline and said product is running from DLK Black River Midstream to Benedum, Texas.


The completion of 205 miles of the total 700-mile pipeline comes less than three months after Epic finished construction on Phase 1. Work continues on Phase 3, which will run from Benedum to Corpus Christi, Texas.


The NGL pipeline is now connected to five processing complexes that have a capacity of Bcf. When complete, the EPIC NGL pipeline will have a throughput capacity of over 440,000 bpd with multiple origin points in the Delaware and Midland Basins.


Minnesota PUC Approves Enbridge Line 3 Pipeline Replacement


Minnesota regulators approved Enbridge Energy’s proposal to replace its aging Line 3 oil pipeline, angering opponents who say the project threatens the environment.


All five members of the PUC backed the project, though some cited “heavy trepidation,” and a narrow majority later approved the company’s preferred route despite opposition from American Indian tribes and climate change activists. Several commissioners cited the deteriorating condition of the existing line, which was built in the 1960s, as a major factor in their decision.


After commissioners agreed the pipeline upgrade was needed, the commission voted 3-2 in favor of a slightly modified version of Enbridge’s preferred route. The company wanted to depart from the existing pipeline to largely avoid two American Indian reservations currently crossed.


Calgary, Alberta-based Enbridge built the current Line 3 in the 1960s. It carries light crude oil from Alberta across North Dakota and Minnesota to the company’s terminal in Superior, Wisc.


Enbridge said it needs replacing because it’s increasingly subject to corrosion and cracking and is operating at only about half its original capacity. Tribal and climate change activists oppose the project because the replacement would carry Canadian tar sands oil, which contributes more to climate change than lighter oils, and because it would run through pristine areas in the Mississippi River headwaters area.


Plains-ExxonMobil JV to Build Permian Pipeline


ExxonMobil and Plains All American Pipeline (PAA) plan to build a pipeline to add 1 MMbpd of takeaway capacity for Permian Basin crude oil and condensate.


A letter of intent has been signed to form a joint venture for the project, which would transport oil to from various locations in the Permian Basin to the Texas Gulf Coast.


The pipeline would originate in both Wink and Midland, Texas, with delivery points in Webster, Baytown and Beaumont, Texas. A priority would be placed on using existing pipeline corridors to help limit potential community and environmental disruptions, PAA said.


After sitting out much of the early shale boom, ExxonMobil expanded aggressively into the Permian.  The company announced plans earlier this year to triple total daily production to more than 600,000 boe by 2025 from its operations in the Permian Basin in West Texas and New Mexico. It projects tight oil production will increase fivefold during that period.


Matador Signs GCX Project Firm Sales Agreement


Matador executed a firm sales agreement for about 115,000 MMBtu with Kinder Morgan beginning on the in-service date of the Gulf Coast Express (GCX) pipeline project.


The GCX Project should be online in October 2019, transporting natural gas from the Permian Basin to Agua Dulce, Texas, near the Texas Gulf Coast.


The GCX project’s proximity to the Gulf Coast and Gulf Coast natural gas pricing, including Houston Ship Channel, are attractive because of the access to industrial users such as refineries, petrochemical facilities utilities and natural LNG exporters.


During the first quarter and early in the second quarter, Matador also entered into agreements with third-party natural gas transportation companies, including El Paso Natural Gas, to secure firm takeaway capacity for all of its anticipated natural gas volumes in both the Wolf and Rustler Breaks asset areas, which represented about 93% of Matador’s Delaware Basin natural gas production of 82.8 MMcf/d in the first quarter of 2018. P&GJ






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