March 2018, Vol. 245, No. 3

In The News

World News

Saudi Funding Reported for TAPI

The Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI) has reportedly received a Saudi investment as construction begins on the difficult Afghan section to run abreast of the 346-mile Kandahar-Herat highway.

Maksat Babayev, the Turkmen deputy prime minister with the portfolio for energy issues, announced at a Jan. 19 government meeting that the construction funds have already been disbursed by the Saudi Fund for Development. The Saudi Fund has not confirmed the funding, and Turkmenistan has not revealed how much money was provided.

“Turkmenistan and Saudi Arabia are among those nations possessing huge reserves of natural resources, and that creates favorable conditions for expanding interstate cooperation in the field of fuel and energy as well as in other sectors,” Turkmen President Gurbanguly Berdymukhamedov said during the same January meeting. n

Hungary Says Gas Deal Would End Russian Monopoly

Hungary’s prime minister said a deal to import natural gas from neighboring Romania will mean the “age of the Russian gas monopoly in Hungary is ending.”

Speaking after a joint meeting with Serbian government representatives, Prime Minister Viktor Orban said Hungary plans to get more than 141 Bcf of natural gas a year from Romania, putting his country in a new and more favorable “geostrategic situation.”

Orban said the Romanian imports are expected to account for over half of Hungary’s imported gas by 2021-2022.  Hungary is now highly dependent on Russia for oil and gas imports. Russia is also expanding Hungary’s only nuclear power plant.

Avant Plans $200 Million Terminal Network in Mexico

Avant Energy plans to build a network of terminals to supply refined petroleum products from the United States to several cities in the Bajio region of Mexico. Named SUPERA for Suministro de Petroliferos Altamira-Bajio, the network will begin with simultaneous construction of a marine terminal and an inland terminal at a cost of $200 million.

Mexico City-based Avant said the marine terminal will be constructed at the Port of Altamira and operated by Savage Companies. The terminal will be capable of unloading Panamax-size vessels and storing up to 1.2 million barrels of refined products for delivery by Kansas City Southern de México. The initial inland terminal in Queretaro is being designed to receive unit trains with storage capacity of 450,000 barrels. Avant said construction will begin in the third quarter of this year and start-up is expected by the end of 2019.

“The energy reform has allowed new players such as Avant Energy to participate in open markets, which will allow increased efficiencies to the supply chain and ultimately benefit the consumer,” CEO Luis Farias said.

TransCanada to Proceed with $2.4 Billion Expansion

TransCanada Corporation has decided to move forward with a $2.4 billion expansion to connect incremental supply and expand natural gas export capacity of its NGTL System by 1 Bcf/d at the interconnection with its Canadian Mainline.

TransCanada said its recent open season for existing and export capacity at the Empress/McNeill Export Delivery Point was oversubscribed, and shippers have executed binding agreements for 1Bcf/d of expansion capacity with average contract terms of 28.6 years.  TransCanada also executed contracts to connect 620 mmcf/d of new supply in the Montney, Deep Basin and Duvernay plays to the NGTL System starting April 2021.

The expansion will include approximately 233 miles of large-diameter pipeline, compression facilities, meter stations and other associated facilities. TransCanada expects filing with the National Energy Board by mid-year and start construction in 2019, pending regulatory approval. UAE Imports Shale
Crude from Texas

In an example of how the U.S. export ban and growing shale production have disrupted global markets, a tanker load of Texas crude has been delivered to the United Arab Emirates.

The cargo of condensate was shipped from Enterprise Products Partners’ Houston terminal to the Port of Ruwais in Abu Dhabi on Jan. 31, according to Bloomberg, which cited an unnamed source as saying that “the very light crude was preferred to regional grades” because of its suitability for U.A.E. processing plants.

Since the U.S. export ban was lifted, oil shipments have grown to more than 1.5 MMbpd from just over 100,000 bpd in 2013, with deliveries as far as the U.K. and China.

Canadian Oil Sands to Grow Despite Less Investment

Oil sands production growth will continue through the next decade but a slowdown is anticipated with investment expected to remain lower than historical levels, according to a major research initiative by IHS Markit. The report foresees continued production growth across all oil scenarios, but warns reduced levels of investment will lower growth rates in the coming decade.

Entitled “Scenarios for Future Growth,” the Oil Sands Dialogue report says upstream investment in new oil sands production capacity has fallen by two-thirds since the 2014 collapse of oil prices – from more than $30 billion to just over $10 billion estimated for 2017. Investment may fall again this year before it starts to recover, according to the report, yet oil sands production is still expected to grow in each of the IHS Markit scenarios.

“Oil sands production is akin to base-load power generation, but for the oil market,” said Kevin Birn, executive director at IHS Markit, who heads the Oil Sands Dialogue. “Once operational, oil sands facilities are largely unresponsive to the oil price, with production neither ramping up nor ramping down materially. And since oil sands do not have to overcome production declines, every incremental investment in new capacity – no matter how small – can result in growth.”

In 2017, Canadian oil sands production is expected to have topped 2.6 MMbpd. Depending on the IHS Markit scenario and corresponding global oil price trajectory, oil sands production could rise between 700,000 bpd to 1.4 MMbpd by 2030 – with nearly 400,000 bpd of growth in all cases coming from projects in construction today or projects recently completed and ramping up.” P&GJ