May 2020, Vol. 247, No. 5

Ramifications of COVID-19

Wrap Up

Italy’s Snam Takes Steps to Guarantee Gas Flows During Outbreak

Italian gas grid operator Snam has put in place emergency measures to ensure it can keep gas flowing during the coronavirus outbreak. 

The state-controlled group, which manages the national grid from a center in Milan, told Reuters it had put into action a maximum security protocol to run its operation in two-week shifts.

“Before the start of the shift, the whole team is tested to ensure they are COVID-19 negative, and then placed into isolated accommodation near the dispatching center, where they work and live safely 24/7 for 14 days before being relieved by another shift,” Alvera said.

Snam, Europe’s biggest gas pipeline company, said it had halted work at around half its construction sites in Italy and delayed investments. Italy is in the midst of the worst COVID-19 outbreak in Europe, and there has been concern about the risks for key energy facilities should the crisis persist.

“We remain broadly on track on our main (construction) milestones, but we may need to cut the number further down as we progress,” Snam CEO Marco Alvera said in a conference call.

Snam, which makes most of its revenue from its regulated gas transport business in Italy, has pledged to spend $7 billion (6.5 billion euros) to 2023, most of it on its transmission grid.

The group, which runs almost 26,000 miles (42,000 km) of grid, also owns gas storage operations, LNG terminals and pipeline assets abroad including a 20% stake in the giant TAP pipeline that will bring Azeri gas to Europe.

Italy imports around 90% of its gas demand and relies on imports from Russia to help fire its power plants.

 

Coronavirus, Oil Price War Put Canada’s Crude Sector ‘On Life Support’

Canadian oil producers, already under stress, now face deeper spending cuts and possibly a wave of consolidation due to the twin shocks of the global spread of coronavirus and the Saudi-Russia oil price war. 

The TSX energy index has dropped 57%, showing the strain on producers in the world’s fourth-biggest oil supplying country since the price war began and the coronavirus pandemic slashed global energy demand.

 “We have never experienced anything like this in the history of our energy industry, layered on top of five years of economic and social fragility,” Alberta Premier Jason Kenney told Reuters. “We have an industry that’s on life support.”

The Canadian government announced broad economic supports and is in discussions  with oil and gas company about possibly taking separate actions for those sectors.

Canadian producers have cut some $3 billion in capital spending, according to Reuters, led by deep reductions by Canadian Natural Resources, Husky Energy and Cenovus Energy. 

 

INEOS to Postpone Forties Pipeline System Shutdown

U.K. pipeline operator INEOS FPS has delayed its planned shutdown of the Forties Pipeline System (FPS) until Spring 2021.

The decision has been taken in the face of the ongoing government restrictions due to the Coronavirus pandemic and in the interests of providing clarity to its customers and the UK Oil and Gas Industry, it said, adding that a majority of customers favored.  The shutdown was originally planned for June 16.

“INEOS FPS has written to all its customers saying that there will be a delay to the FPS Summer Shutdown that was planned for June 2020. The shutdown will now be scheduled for Spring 2021,” the company said in a statement. It said it will announce the date of the shutdown to its customers as soon as possible. 

The FPS is a 100% INEOS-owned integrated oil and gas liquid transportation and processing system with a nominal capacity of over 600,000 bpd serving the central area of the North Sea in both the UK and Norway.

FPS transports crude oil and gas liquids from offshore and onshore entry points, processes the liquids at Kinneil and redelivers Forties Blend crude oil at Hound Point and either raw gas or fractionated gas products at Grangemouth.

 

Coronavirus Shutdown Encompasses Mariner East Construction

Construction on the Mariner East pipeline appears to be halted by Pennsylvania Gov. Tom Wolf’s recent order that shuts down all “non-life-sustaining” operations and businesses, including construction projects and “sub-utility” construction.

The company, as well as the, had said construction would continue during the Coronavirus outbreak. 

A statement from the Pennsylvania Public Utility Commission (PUC) issued before Wolf’s latest order explained that since the commission had designated the natural gas liquids pipeline a public utility, and construction sites had not been included as part of Wolf’s list of “non-essential” businesses, construction on the line could continue.

 The PUC said staff is coordinating with federal pipeline safety regulators, who have not directed pipeline builders to halt construction. The commission approved public utility status for the line when Sunoco, now owned by Energy Transfer, asked to reverse flow, shipping natural gas liquids through the line. 

 

API Says US Oil and Gas Industry Sees No Supply Chain Threat 

The American Petroleum Institute (API) said it does not foresee a major threat to the U.S. energy supply chain from the COVID-19 outbreak. 

Oil and gas companies are implementing contingency plans focused on ensuring continuity of supplies to market and preventing the spread of the virus to workers and the public, Suzanne Lemieux, API’s head of operations security, told the media during a conference call.

“The supply chain is operating as normal now and you’re going to see that continuing unless there is any additional ... shelter-in-place restrictions or larger outbreaks,” Lemieux said. 

John Stoody, a vice president at the Association of Oil Pipelines (AOPL), said companies were working with PHMSA on whether waivers would be necessary for work rules on pipeline control rooms.