July 2020, Vol. 247, No. 7
Global News
Global News
U.S. Supreme Court Turns Its Attention to Pipelines
The front lines of a battle over two major pipelines made their way to the U.S. Supreme Court as government and industry squared off against activists seeking to block construction of the projects.
Dominion Energy and President Donald Trump’s administration scored a victory over environmentalists in Round 1, as the Supreme Court ruled the federal government has the authority to allow the proposed $7.5 billion Atlantic Coast natural gas pipeline to cross under the Appalachian Trail in rural Virginia.
The 7-2 decision overturned a lower court ruling that halted construction of the 600-mile (965-km) pipeline, which would run from West Virginia to North Carolina. It also removed a barrier to continued construction of the 300-mile (480-km) Mountain Valley Pipeline, which was nearing completion when work was halted due to the earlier Atlantic Coast court decision.
The Trump administration has also asked the Supreme Court to revive the Army Corps of Engineers’ Nationwide Permit 12 program and allow construction to resume on water crossings for Keystone XL and other new oil and gas pipelines. Permit 12 allows pipelines to be built across streams and wetlands with minimal review if they meet certain criteria.
A Montana judge suspended the permitting program earlier this year after environmental groups argued it allows companies to skirt responsibility for damage to water bodies. Industry representatives said U.S. District Judge Brian Morris’ ruling could also delay more than 70 pipeline projects across the U.S. and add as much as $2 billion in costs.
In May, an appeals court denied an emergency request to block Morris’ ruling filed by the U.S. government, states and industry groups. In June, U.S. Solicitor General Noel Francisco asked the Supreme Court to do what the lower court wouldn’t: block Morris’ ruling and let the permit program operate again while the lawsuit plays out in court.
EQM Delays Mountain Valley Gas Pipeline to 2021
EQM Midstream Partners has delayed the expected completion of its Mountain Valley natural gas pipeline from West Virginia to Virginia to early 2021 and said it could boost the $5.4 billion project’s cost by 5% to around $5.7 billion.
EQM, which changed the projected in-service date in a statement issued mid-June, had previously said it expected Mountain Valley to enter service in late 2020.
When EQM started construction in February 2018, it estimated Mountain Valley would cost about $3.5 billion and be completed by the end of 2019.
India Steps up Bet on Gas With First Gas Trading Exchange
India launched its first gas trading exchange in June, enabling local and foreign players such as Shell, Vitol and Trafigura to sell directly to domestic customers.
India is expanding its gas infrastructure, including connecting households with expanding gas pipe network, as it aims to reduce carbon output by raising the share of gas in its energy mix to 15% by 2030 from the current 6.2%.
The nation’s current daily consumption of gas is about 165 million cubic meters, of which 47% is met through imported LNG.
IEA Expects Global Energy to Fall 20% in 2020
Global energy investment is expected to plunge by around 20% or $400 billion in 2020, its biggest fall on record, because of the new coronavirus outbreak, according to the International Energy Agency (IEA).
At the start of the year, global energy investment was on track for a 2% increase in 2020, its biggest growth in six years, the IEA said. A total of $1.8 trillion was invested in the sector in 2019.
The IEA said revenues for governments and industry are set to plummet by over $1 trillion in 2020 due to the fall in energy demand and lower prices.
Global energy companies have cut investments and shelved projects to shore up their finances due to the crisis. The IEA said higher debts after the crisis will pose lasting risks to investments.
Investment in oil and gas is expected to fall by almost one-third. The IEA said if investment in oil stays at 2020 levels, it would reduce the level of global supply in 2025 by almost 9 MMbpd, a clear risk of tighter markets if demand moves back to pre-crisis levels.
BP Turns Over Rights to Operate South Caucasus Pipeline
BP has turned over rights to operate the South Caucasus Pipeline (SCP), part of the network that is due to start carrying gas from Azerbaijan to Europe this year, to a unit of Azeri state energy firm SOCAR, the groups said.
SOCAR Midstream Operations will take over as technical operator of all dedicated SCP facilities in Azerbaijan and Georgia. The Sangachal terminal in Azerbaijan, Baku-Tbilisi-Ceyhan pipeline and the Western Route Export Pipeline will continue to be operated by BP.
SCP is part of the Southern Gas Corridor, which is expected to make first natural gas deliveries to Europe this year from Azerbaijan’s giant Shah Deniz field. The Southern Gas Corridor network also includes Trans-Anatolian Natural Gas Pipeline (TANAP) through Turkey and the Trans-Adriatic Pipeline (TAP) to Greece, Albania and Italy.
Greece Shortlists Six Investors in Gas Distribution Network Sale
Greece has shortlisted six investors in the sale of its state-controlled gas distribution network DEPA Infrastructure, the country’s privatization agency said.
Investors picked to make binding bids in the next phase of the sale are: a consortium of SINO-CEE Fund and China-based investment holding company Shanghai Dazhong Public Utilities; EP Investment Advisors; First State Investments; Italgas SpA; investment firm KKR and asset manager Macquarie.
Greece and its biggest oil refiner Hellenic Petroleum are jointly selling a 100% stake in the business to help open up the gas sector, part of an agreement between the country and its lenders after it exited its latest bailout in 2018.
“We are optimistic that the privatization of DEPA Infrastructure will be concluded successfully in the fourth quarter of the year,” Deputy Energy Minister Gerassimos Thomas said.
Ecopetrol Extends Subsidies, Increases Pipeline Financing Assistance
Cenit, a subsidiary of Colombia’s state-run oil company Ecopetrol, said oil transportation companies have agreed to extend reductions for pipeline charges to support producers who have been hit hard by the fall in oil prices.
Cenit said it and its transport subsidiaries will extend previously offered financing to reduce pipeline tariffs by 50% for a period of up to six months and agreed to tariff discounts and more flexibility in certain contracts with oil companies. Originally, it offered the reduction for a period of two months.
Discounts on pipeline tariffs of between 6% to 21% - depending partly on volumes - were included in 13 contracts in recent weeks, Cenit said.
Algeria’s Sonatrach Becomes Majority Shareholder in Medgaz Pipeline
Algeria’s Sonatrach has become the main shareholder in the Medgaz pipeline after acquiring an additional 19.10% stake from Spain’s Cepsa, the state-owned energy firm said.
Under the deal, Sonatrach will have 51% stake, with Spain’s Naturgy Energy Group SA holding the remaining 49% in the pipeline which carries natural gas from Algeria to Spain, Sonatrach said in a statement.
The 130-mile (210-km), 24-inch offshore pipeline has an annual transport capacity of 8.2 Bcm, which will be increased during the first quarter of 2021 to 10.2 Bcm by adding a fourth turbo-compressor at the Beni-Saf Compression Station in Algeria.
Poland May Fine Gazprom Over Nord Stream 2 Pipeline Case
Poland’s UOKiK watchdog said it may fine Russian gas producer Gazprom up to $56 million (50 million euros) due to a lack of cooperation in anti-monopoly proceedings related to the Nord Stream 2 gas pipeline project.
UOKiK said in 2018 it charged six companies, including one owned by Gazprom, with financing construction of the pipeline without a legally required permit. It said that in early 2020 Gazprom failed to provide documents relating to the case.
“Gazprom cannot operate above the law and, for that reason, I have initiated proceedings against the company to impose a fine for failure to provide information during the pending investigation,” UOKiK President Tomasz Chrostny said.
Poland sees Nord Stream 2, which would double Russia’s gas export capacity via the Baltic Sea, as a threat to Europe’s energy security.
U.S. EPA Moves to Curb State Powers to Deny Permits for Energy Projects
U.S. Environmental Protection Agency chief Andrew Wheeler signed a new rule limiting state powers to block energy infrastructure projects, setting up a fight with some Democratic governors who say Washington is stripping their ability to protect their states’ interests.
The move comes as the Trump administration grows increasingly frustrated with left-leaning states like California and Washington that it says have misused their authority under the U.S. Clean Water Act to halt fossil fuel projects like pipelines and coal terminals.
Under the rule, first proposed in August, the EPA will alter Section 401 of the federal water law to make it impossible for a state to block a water permit for a project for any reason other than direct pollution into state waters. It will also set a one-year deadline for states to approve projects.
In the past, states have weighed broader factors, such as climate change, to determine quality and have taken years to make decisions on projects. Wheeler said the change would prevent states from holding “our nation’s energy infrastructure projects hostage,” deterring investors.
Michigan Court Rules Enbridge Tunnel Deal Constitutional
The Michigan Court of Appeals ruled that legislators did not violate the state constitution by allowing construction of an oil pipeline tunnel beneath a channel linking two of the Great Lakes, clearing the way for the project to proceed unless the state appeals again.
The ruling upholds a law authorizing a deal between former Republican Gov. Rick Snyder and Canadian pipeline company Enbridge.
They had agreed on a plan to drill the tunnel through bedrock beneath the Straits of Mackinac, to house a pipeline that would replace an underwater segment of Enbridge’s Line 5.
Golden Pass Seeks to Boost Capacity at Texas LNG Plant
Golden Pass LNG sought permission from the U.S. Federal Energy Regulatory Commission (FERC) to boost the capacity of the company’s $10 billion export terminal under construction in Texas to 18.1 million tonnes per annum (MTPA) from 15.6 MTPA.
Golden Pass, which is owned by units of Exxon Mobil and Qatar Petroleum, said it would achieve the increase through production efficiencies without the need for any equipment changes or environmental permit adjustments.
The company started building the three-train project in mid-2019 and said it remains on schedule to start the first liquefaction train in 2024 with trains 2 and 3 to start in subsequent months.
Libya’s Sharara Oilfield Declares Force Majeure After New Shutdown
Libya’s National Oil Corporation (NOC) declared force majeure on exports from its Sharara oilfield after an armed group shut down production just days after it had resumed.
A major oil pipeline and two major oilfields in southwestern Libya were reopened in early June after months of a blockade that shut off most of the country’s crude production, costing billions of dollars in lost revenue. NOC said at the time that Sharara production had restarted “after lengthy negotiations ... to reopen the Hamada valve, which had been illegally closed last January.”
Within days, however, NOC declared force majeure after an armed group led by Mohamed Khalifa stormed the field and instructed employees at gunpoint to shut it down. Sharara field, one of Libya’s largest production areas, has regularly been a target since Libyan leader Muammar Gaddafi was toppled in 2011.
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