July 2018, Vol. 245, No. 7

Projects

Projects

Coastal GasLink Pipeline Construction Planned for 2019

A TransCanada official said the company will start building the Coastal GasLink pipeline early next year, pending a positive final investment decision (FID) on the linked LNG Canada project.

“We would be looking at constructing in the early part of 2019,” Coastal Gaslink President Richard Gateman told Reuters, after the head of LNG Canada said construction of its $31 billion (C$40 billion) LNG export terminal should begin this year.  “We could be doing a little bit of field work in the fall (of 2018), if there’s an FID decision.”

LNG Canada is a joint venture among Royal Dutch Shell, PetroChina Co, Mitsubishi and Korea Gas.  An FID is expected from the project partners this year.

The $3.75 billion (C$4.8 billion) Coastal GasLink is a 670-km (415-mile) pipeline that would cross two mountain ranges to connect rich shale fields in Alberta and northeast British Columbia with the proposed LNG Canada export terminal on British Columbia’s Northwest Coast.

TransCanada, which will own and operate the pipeline, expects to award contracts for the construction to four consortiums within the next two months, Gateman said. Those contractors will be a mix of local and international players with experience building in mountainous terrain, he said.

Kingfisher, Ergon to Build Cimarron Express Pipeline

Kingfisher Midstream, Blueknight Energy Partners and affiliates of Ergon have executed definitive agreements to form Cimarron Express Pipeline. The joint venture will include the construction and operation of a new crude oil pipeline serving STACK producers in central Oklahoma.

The 65-mile, 16-inch pipeline, which will extend from northeastern Kingfisher County, Okla., to Blueknight’s crude oil terminal in Cushing, will provide direct market access for producers and will have an initial capacity of 90,000 bpd, expandable to over 175,000 bpd. It is expected to be completed in mid-2019.

Under the terms of the agreement, Blueknight will construct and operate the pipeline, which will connect to Kingfisher’s crude oil gathering system in northeastern Kingfisher County.

Kingfisher and Ergon will each own 50% of Cimarron Express Pipeline. Concurrent with the formation of the joint venture, Alta Mesa executed a long-term acreage dedication and transportation agreement which incorporates about 120,000 net acres in Kingfisher and Garfield counties.

TransCanada Places Section of NGTL Program into Service

TransCanada placed its Northwest Mainline Loop-Boundary Lake pipeline in service, completing the final section of its 2017 Expansion Program on the NOVA Gas Transmission (NGTL) System.  The natural gas pipeline system in Western Canada includes 15,110 miles (24,320 km) of pipeline and associated facilities.

With the completion of winter construction activities, the expansion program represents a $1.7 billion investment in Canadian natural gas infrastructure and connects natural gas production from northwest Alberta and northeast British Columbia to the NGTL System.

The expansion added 143 miles (230 km) of new pipeline and additional compression facilities, increasing NGTL System capacity by 500 MMcf/d. The project generated about $800 million in labor income during its construction phase and will add an estimated $1.2 billion in gross domestic product in Canada.

The 2017 expansion program is part of TransCanada’s commitment of more than $7 billion in near-term growth capital to add 2.5 Bcf/d in delivery capacity to the NGTL System by 2021.

Targa to Expand Grand Prix NGL Pipeline, Delaware Basin Capacity

Targa Resources has entered long-term, fee-based agreements for natural gas gathering and processing services in the Delaware Basin and for downstream transportation, fractionation and other related services.

Targa said it will construct 220 miles of 12 to 24-inch, high-pressure, rich gas gathering pipelines across the Delaware Basin. The Falcon Plant, a new 250 MMcf/d cryogenic natural gas processing plant, is expected to begin operations in the fourth quarter of 2019, and the Peregrine Plant – a second 250 MMcf/d cryogenic natural gas processing plant – should be online in the second quarter of 2020.

The company also announced an extension of the Grand Prix NGL Pipeline, a new common carrier NGL pipeline currently under construction, into southern Oklahoma.  Once completed, Grand Prix will run from North Texas, where Permian and Oklahoma volumes will be connected to a 30-inch segment, to Mont Belvieu, Texas.

Initially, the pipeline it will be able to transport 450,000 bpd, with the ability to expand to 950,000 bpd. Capacity on the 24-inch pipeline from the Permian Basin to North Texas will be about 300,000 bpd, with the ability to expand to 950,000 bpd. The capacity from southern Oklahoma to North Texas will vary based on telescoping pipe size.

Outrigger II Enters DJ Basin with Gathering System

Outrigger Energy II began development of a tri-stream system in Weld County, Colo., that will include wellhead natural gas gathering, a 60 MMcf/d cryogenic processing plant, field compressor stations, crude oil gathering and produced water gathering.

Outrigger will construct and operate the system, which is anchored by long-term acreage dedications from Mallard Exploration. Outrigger said it is also in advanced discussions with several other area producers and has formulated plans to expand the initial system.

The company has purchased a new cryogenic plant and has begun the permitting process with Weld County and the state of Colorado, with an in-service date targeted for early 2019. The processing plant will deliver residue gas to Cheyenne Plains Pipeline, a 36-inch line that offers abundant access to both the Cheyenne Hub and to Mid-Continent markets, providing price and delivery advantages over other pipeline choices.

NGLs will be delivered to the Overland Pass Pipeline operated by the Williams Companies and co-owned by ONEOK, Inc. Multiple outlet opportunities exist for crude oil delivery, including Tallgrass’ Pony Express Pipeline system and NGL Energy’s Grand Mesa Pipeline system.

Enterprise, ETP Form JV to Restore Old Ocean Service

Enterprise Products Partners and Energy Transfer Partners (ETP) formed a 50/50 joint venture to resume service on the Old Ocean natural gas pipeline.  The 24-inch pipeline, which has been idled since 2012, originates at Maypearl, Texas, and extends south approximately 240 miles to Sweeny, Texas.  Service is expected to resume in the second quarter of 2018 with ETP as the operator.

Additionally, both parties are in the process of expanding their jointly owned North Texas 36-inch pipeline to increase capacity from West Texas for deliveries into the Old Ocean pipeline. The North Texas pipeline expansion is expected to be completed near the end of 2018.

Nord Stream 2 Prep Begins Along German Coast

A consortium of western companies and Russia’s Gazprom said it has started preparatory work in Greifswald Bay off Germany’s Baltic coast for construction of the subsea Nord Stream 2 gas pipeline to Germany.

“Five dredgers are now working on the trench for the two pipeline strings,” the consortium, based in Switzerland’s Zug, said in a news release. “Preparatory works are in accordance with the Stralsund mining authority’s planning approval.”

The regulatory authority granted the consortium a permit in January to build the pipeline in German territorial waters. Gazprom’s Western partners are energy companies Uniper, Wintershall, Engie, Austria’s OMV, and Anglo-Dutch group Shell.

The Nord Stream 2 project has said it will tap banks for financing in the fourth quarter of 2018 or early next year.

Apache, Salt Creek to Build SCM Alpine Header System

Apache Midstream and Salt Creek Midstream, an affiliate of ARM Energy, are developing SCM Alpine, a 445,000 bpd header system comprised of two pipeline segments originating at the companies’ processing facilities in Reeves County, Texas.  SCM Alpine will transport NGLs to Waha, Texas, where the system will interconnect to downstream pipelines providing access to fractionation facilities at Mont Belvieu and Corpus Christi, Texas.

Construction has begun, and the system is expected to be operational in first quarter of 2019, according to the companies. In addition, Apache Midstream has signed an option to acquire a 50% stake in the $100 million project, which is supported by 10-year commitments from both Salt Creek and Apache.

ARM Midstream, an affiliate of ARM Energy, will construct, manage and operate the system.

Portion of White Cliffs Converting to LNG

SemGroup Corporation will convert a portion of the White Cliffs Pipeline system to NGL service and expand the system to reach markets in Texas. The project is supported by 10-year agreements with DCP Midstream and its affiliate, DCP Southern Hills Pipeline.

 

“We are excited to execute this opportunity with DCP and provide a much-needed market solution to the DJ Basin, while at the same time optimizing White Cliffs to include both crude and NGL capabilities,” said David Minielly, Vice President of SemGroup’s crude operations. “This project provides producers and natural gas processors with a cost-effective and reliable solution to move valuable NGLs from Colorado to Mont Belvieu via Southern Hills Pipeline for processing and sale into the Gulf Coast marketplace.”

SemGroup will convert one of White Cliffs’ 12-inch pipelines from crude service to NGL Y-grade service. The pipeline will have an initial capacity of 90,000 bpd and be expandable up to 120,000 bpd. It will be taken out of service late in the first quarter of 2019 and is expected to resume operations by the end of the year.

In addition, the company will construct a 12-mile extension south of Cushing to interconnect with DCP’s Southern Hills Pipeline and move NGLs to Mont Belvieu. The project is expected to cost between $60 million and $66 million.

Centennial Plant Expanding to Accommodate Producers

Sterling Energy Investments will expand the processing capacity and associated natural gas gathering pipeline infrastructure of its Centennial System in the northeastern DJ Basin to 220 MMcf/d to accommodate growing producer demand.

In addition, the company said it will expand the capacity at its existing Centennial Gas Processing Plant by up to 120 MMcf/d. The permitting process is under way, and the project is expected begin service in the second half of 2019.

Sterling’s Centennial System consists of more than 450 miles of low-pressure gathering pipeline, spanning Weld, Morgan, and Logan Counties in Colorado and Cheyenne County in Nebraska. It includes three interconnected natural gas processing plants, with each plant connected to a different downstream residue gas market to provide flow assurance for area producers. Residue gas takeaway is provided by Cheyenne Plains, Tallgrass Interstate Gas Transmission and Southern Star pipelines. NGL takeaway is provided by Overland Pass Pipeline.

As part of its investment in natural gas gathering and processing infrastructure in the DJ Basin, Sterling also recently completed the first phase of its Jackson Lake Processing Plant expansion and expects to complete the entire project during the fourth quarter of 2018.

Lilis Energy, Salt Creek Midstream Enter into Gathering Agreement

Lilis Energy, an exploration and development company operating in the Permian Basin, entered into a crude oil gathering agreement with Salt Creek Midstream.

The agreement supports Lilis’ efforts to secure long-term infrastructure solutions to move its oil production out of the Delaware Basin. Construction of the project is expected to commence immediately with service to begin in 2019.

Salt Creek is building a new regional pipeline system and will provide gathering and transportation service for Lilis’ oil production in Texas and New Mexico to the terminal in Winkler County, Texas. The Winkler terminal will allow Lilis to directly access long-haul downstream pipelines that are connected to Midland, Texas, and the Gulf Coast region.

The project is supported by all of Lilis’ current acreage in Lea County, N.M., and Winkler and Loving counties in Texas. Lilis will provide its acreage dedication with no volume or capex commitments and Salt Creek will provide all capital for the oil gathering system.

In addition to the crude oil gathering agreement, Lilis and Salt Creek also entered into an agreement whereby Lilis received cash consideration in exchange for granting Salt Creek options to provide certain natural gas midstream services for Lilis’ gas produced within an area of mutual interest.

Salt Creek’s system will be constructed, managed and operated by ARM Midstream Management, an affiliate of ARM Energy. PGJ