May 2020, Vol. 247, No. 5



German Court Rejects Last Obstacle to Nord Stream 2 Construction

A remaining legal hurdle for the Nord Stream 2 pipeline has been cleared as the Higher Administrative Court of Berlin-Brandenburg has rejected a complaint regarding the environmental impact assessment (EIA) for a portion of land to be used for the pipeline. 

A complaint filed by private landowner Malte Haynen and reported by the Eurasia Review claimed that the EIA on which the planning approval for the EUGAL pipeline was based was incomplete.

The EUGAL pipeline is the land-based portion of the Nord Stream 2 pipeline that will run 310 miles (500 km) across Germany to the Czech Republic. The pipeline would cross 0.02 miles (0.03 km) of Haynen’s property.

Haynen claimed the changes in the climate directly and indirectly associated with the project due to greenhouse gas emissions were not adequately determined, described and evaluated by the EIA and that there is no need for the approved project in the energy sector.

The 11th Senate of the Higher Administrative Court dismissed the lawsuit, stating the EIA report contained the minimum information required and that the pipeline was “state of the art and safe.”

The court said that the greenhouse gas emissions associated with the production of the steel pipes and with the production and consumption of the transported gas are not the environmental impacts of the EUGAL project, which are included in the EIA obligation. 

The court also said it only has limited abilities to check the need assessment of the pipeline and that the complaint did not “reveal any legal deficiencies in the energy assessment of the project.”

Since the court has denied the chance for appeal of its decision, construction can continue immediately, and the project is estimated to begin flows in 2021.


Phillips 66 Says Red Oak, Liberty, ACE Pipelines Deferred by Cost Cuts 

Responding to market conditions with cost-cutting across its business lines, Phillips 66 postponed the Red Oak Pipeline, Liberty Pipeline and Sweeny Hub fractionation expansion.

The Houston company said that midstream-focused Phillips 66 Partners also has deferred a final investment decision on the ACE Pipeline project. Phillips 66 Partners is a master limited partnership formed by Phillips 66 in 2013.

“We are taking action to maintain our financial strength to ensure security of our dividend, execute capital growth projects that are near completion, and maintain our strong investment grade credit rating,” said Greg Garland, chairman and CEO of Phillips 66.

The company said it is reducing its 2020 consolidated capital spending by $700 million to $3.1 billion, reducing operating and administrative costs by $500 million and temporarily suspending share repurchases.  It also secured a new $1 billion, 364-day term loan facility. Phillips 66 already had a $5 billion revolving credit facility in place, while Phillips 66 Partners has a $750 million revolving credit facility.

Red Oak Pipeline, a 50/50 joint venture of Phillips 66 and Plains All American Pipeline, would be a system comprised of multiple pipeline projects to transport crude oil from Cushing, Okla., and the Permian Basin in West Texas to the Texas Gulf Coast. 

Liberty Pipeline, a joint venture of Phillips 66 Partners and Bridger Pipeline, would be a $1.6 billion, 700-mile (1,127-km), up to 24-inch (609.6-mm) pipeline transporting light crude oil from Guernsey, WY, to Cushing, Okla.

ACE Pipeline would transport crude oil from the market hub in St. James Parish, La., to downstream refining destinations in Belle Chasse, Meraux and Chalmette, La. The project is a joint venture of Phillips 66 Partners, Harvest Midstream and PBF Logistics.


CPC Pipeline Expansion in Doubt After Leadership Shakeup

The CPC pipeline, essential to ship 1.4 MMbpd of light Caspian to the Mediterranean markets, is facing a shareholder standoff after its board was dissolved, potentially hitting further expansion plans, three sources told Reuters. 

The Caspian Pipeline Consortium (CPC), the largest privately operated route connecting oil fields in Kazakhstan and Russia with the Black Sea, is co-owned by a number of shareholders with a history of failing to reach agreement.

Disagreements between Russia’s oil pipeline monopoly Transneft, Kazakhstan and other shareholders have capped expansion plans in the past. CPC needs to add another 150,000 bpd by 2024 to accommodate growing oil output in the region.

In early March, Transneft blocked election of the new board of directors, after failing to win support from other shareholders for its proposal to change a marine support company in the CPC terminal near Novorossiisk, sources familiar with the details said.

Transneft, which owns a 7% stake in CPC, proposed to replace a long-serving Smit Lamnalco marine operator with its own unit, Transneft-Service, which other shareholders believed lacked the proper experience, the sources said.

“Main concern was that Transneft-Service doesn’t have proper qualifications and vessels to serve the CPC terminal,” one of the sources said.


Reversed Capline Pipeline Set to Begin Light Crude Service in 2021

MPLX LP said the reversal of the Capline pipeline was on schedule, with the line expected to begin light crude service in mid-2021 and heavy crude service in 2022. Once the reversal is complete, the Capline will increase the flow of Canadian and Mid-Continent crude to the St. James, LA, market.  

During the fourth quarter, MPLX completed the purge of the mainline, a process during which contaminants are removed from the piping. 

The Wink-to-Webster Permian crude oil project is 15%-owned by the company. The 1.5-MMbpd pipeline system is expected to be in service in early 2021, with all the contractable capacity covered by minimum volume commitments, MPLX said. 

Overall, the pace of new projects has slowed as production growth is expected to ease due to an expected reduction in new drilling for a second year in a row in 2020. 


Enbridge-Annova LNG Make Deal to Expand Valley Crossing Pipeline

Enbridge’s Valley Crossing natural gas pipeline from Agua Dulce to Brownsville, Texas, will be expanded along with the construction of a 9-mile (14.5-km) lateral to Annova LNG’s Brownsville export facility. 

The precedent agreement provides for Valley Crossing Pipeline to transport 100% of the natural gas requirements at Annova’s 6.5-mmta LNG facility, now under development.  

“Annova LNG’s firm transportation arrangements will ensure security of supply and access to the most diversified, low-cost feed gas of any of the U.S. LNG facilities,” said Omar Khayum, CEO of Annova LNG. 

The agreement provides for the execution of a 20-year firm transportation service agreement that will access multiple receipt points with major pipelines in the Agua Dulce area, providing gas supply diversity for Annova’s feed gas requirements, the company said.

In October 2018, Annova LNG announced that Black & Veatch and Kiewit invested in the facility and were awarded the engineering, procurement and construction (EPC) contract on a joint basis. It is scheduled to commence commissioning in 2024 and commercial operations in early 2025, Annova said. 

The Brownsville facility will use electric-driven compressor engines and source its electricity from carbon-free, renewable energy resources, making it “the most sustainable and reliable provider of LNG from the United States,” according to Khayum. 

Canada’s Enbridge placed the 168-mile (270-km) Valley Crossing Pipeline into service in November 2018 to transport up to 2.6 Bcf/d (74 MMcm/d) of natural gas to the Comisión Federal de Electricidad (CFE), Mexico’s state-owned utility, which serves about 37 million customers.


US Court Rules Against Permit for Keystone XL, Work Continues

A Montana chief district judge ruled against the U.S. Army Corps of Engineers’ use of a permit that allows new energy pipelines to cross water bodies, in the most recent blow to TC Energy Corp’s plans to build the Keystone XL oil pipeline. The court determined that the Corps violated federal law by failing to adequately determine the risk of the project  to endangered species and habitat.

The ruling does not affect current work on a span of the $8-billion Keystone XL pipeline across the Canada-U.S. border, but prompts questions about the difficulty presented for gaining water-crossing permissions along the remainder of the route.

TC Energy told Reuters it is reviewing the court’s decision and was told by Terry Cunha, spokesman for the Calgary, Alberta-based company, said, “We remain committed to building this important energy infrastructure project.”

The Keystone XL would carry 830,000 bpd of crude from Alberta to the U.S. Midwest, but has been delayed for more than a decade by opposition from landowners, environmental groups and tribes.

In March, the Canadian province of Alberta announced it would invest $1.1 billion in the pipeline to back TC Energy’s $4.2 billion credit facility to get the project built.


TC Energy Starts US Prep Work for Keystone XL Pipeline

TC Energy said it started preliminary work along the route of the proposed Keystone XL oil sands pipeline through the U.S. in anticipation of starting construction in April, as opponents await a judge’s ruling on their request to block any work. 

TC Energy Spokeswoman Sara Rabern said the Calgary-based company was moving equipment this week and would begin mowing and felling trees in areas along the pipeline’s 1,200-mile (1,930-km) route.

The work is planned in Montana, South Dakota and Nebraska, Rabern said. She did not provide further location details.

The company planned to begin construction at the line’s border crossing in northern Montana. That would be a huge milestone for a project first proposed in 2008 that has since attracted bitter opposition from climate activists who say fossil fuel usage must be curbed to combat global warming.

The company also plans work next month on employee camps in Fallon County, MT, and Haakon County, SD.

Environmental groups in January asked U.S. District Judge Brian Morris to block any work. They said clearing and tree felling along the route would destroy bird and wildlife habitat. The judge in December had denied a request from environmentalists to block construction because no work was immediately planned.

The request by environmentalists came days after the Trump administration approved a right-of-way allowing the $8 billion line to be built across federal land.

“It is irresponsible for TC Energy to jump the gun before Judge Morris rules on our motion,” Stephan Volker, an attorney for the Indigenous Environmental Network and North Coast Rivers Alliance, said earlier this month.

Keystone XL was rejected twice under former President Barack Obama over worries it could make climate change worse.

The pipeline would transport up to 830,000 bpd of crude oil from western Canada to terminals on the U.S. Gulf Coast.

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