June 2021, Vol. 248, No. 6

Global News

Global News June 2021

Colonial Pipeline Cyberattack Raises Alarm for Midstream Companies 

The ransomware attack last month against Colonial Pipeline has hammered home a message that cybersecurity experts have increasingly warned midstream companies about in recent years: You are no longer the outlier, but the target, and will continue to be for decades.  

“The age of digital warfare strictly being in the background between conflicting nations is over, said Niyo Little Thunder Pearson, Sr., who supervises the Cybersecurity/OT Cybersecurity team at Tulsa-based ONE Gas.    

“Critical infrastructure, regardless of sector, is in the crosshairs of geopolitical conflicts with foreign military units and the criminal organizations they allow to flourish,” Pearson said.  

The cyberattack and resulting closure of the 5,500-mile (8,900-km) Colonial system was the most disruptive cyberattack on record, preventing millions of barrels of gasoline, diesel and jet fuel from flowing to the East Coast from the Gulf Coast. More than 15,000 gas stations ran dry as drivers fearing a prolonged outage started panic-buying of gasoline.  

The problems persisted even after Alpharetta, Georgia-based Colonial resumed normal shipping, because it took some time for the supply chain to fully catch up, company spokesperson Eric Abercrombie said  

Colonial acknowledged paying $5 million in bitcoin to the ransomware group, which has been identified as DarkSide. That group also took credit for recently hacking four other companies.  

Pearson said it’s essential that companies establish protocols to protect themselves from future ransomware attacks.  Among his recommendations: Make sure to have 30 days of incremental or delta IT backups with a separate full backup taken once a month, and that they are in an out-of-band network (not accessible to any user or normal IT user). This offers the flexibility of two-month backup timeframe without the unnecessary overhead and cost to actually do that many backups.  

Also, be sure to validate that the backups can be restored successfully, and practice this process every quarter, he added.  

“Colonial paid $5 million in ransom only to find that restoring it themselves was faster than using the decryption process they paid the ransom for,” Pearson said.  

He also recommended that companies buy physical firewalls, switches and data domains between their SCADA environments and their corporate environments. Remove routable Internet and connectivity, look through proxying data or mirroring databases from a SCADA system to a corporate system if needing business intelligence insight, Pearson said.  

“Remember that while this might be a costly exercise, no one wants to defend why a critical infrastructure organization was not better protected,” he said. 

Permian Oil Pipelines Discounting as Production Fades 

Nearly half of all oil pipelines from the Permian basin, the biggest U.S. oilfield, are expected to be empty by the end of the year, analysts and executives said.  

Pipeline companies went on a construction spree throughout 2018 and 2019 to handle blistering growth in U.S. crude production to a record 13 million bpd. However, the coronavirus pandemic crushed both fuel demand and oil production, and neither have recovered fully.  

Major pipeline companies are exploring ways to ship other products in their lines and considering selling stakes in operations to raise cash.  The top three Permian pipeline companies are offering discounts to entice shippers and stem the fall in volumes.   

By the fourth quarter, total utilization of the largest oil pipelines from the Permian is expected to drop to 57%, consultancy Wood Mackenzie said. The nadir during the last market bust in 2016 was roughly 70%.  

U.S. crude output is currently about 11 MMbpd and is not expected to grow much until 2022. But more pipelines were already set to come online, growing the gap between production and capacity covered by long-term contracts to a record over 1 MMbpd in February, according to energy research firm East Daley Capital.  

Equinor, SSE Plan UK Hydrogen, Carbon Capture Projects  

Equinor and SSE Thermal have announced plans to jointly develop two power stations that comprise one of the first UK power stations with carbon capture and storage (CCS) technology as well as the world’s first major 100% hydrogen-fueled power station.  

The two decarbonized stations, Keadby 3 and Keadby Hydrogen, would replace older generation on the electricity grid and support intermittent renewable generation to “maintain security of supply through the net zero transition,” the companies said.  

The projects would utilize the parallel hydrogen and CO2 pipeline infrastructure being developed by the Zero Carbon Humber (ZCH) partnership – which includes Equinor and SSE Thermal – and offshore CO2 infrastructure developed by the six-member Northern Endurance Partnership (NEP), which includes Equinor. Both ZCH and NEP won public funding from the UK’s Industrial Strategy Challenge Fund in March.  

Keadby Hydrogen power station would have a peak demand of 1,800 MW of hydrogen, producing zero emissions at the point of combustion. It would be the first major 100% hydrogen-fired power station, securing at-scale demand for hydrogen in the region for decades to come.   

Forties Supply Drops on Pipeline Maintenance  

The North Sea Forties crude oil stream will load only two cargoes this month, reducing supply of the crude that underpins the global Brent benchmark.  

INEOS, which operates the Forties system, confirmed the Forties Pipeline System will be shut down for planned maintenance for three weeks.  The Hound Point terminal, where Forties cargoes load, was scheduled to closed for most of June.  

Forties is usually the largest or second-largest of five crude grades that underpin Brent, loading as many as 15 cargoes in a month. Dated Brent is based on Forties, Ekofisk, Oseberg, Troll and Brent crude streams. The benchmark is used to price oil in Europe, the Middle East and parts of Asia.  

The shutdown lends further support to Brent oil prices, adding to the impact of voluntary supply curbs by OPEC and its allies.  

Brazil’s Petrobras Sells Stake in NTS Gas Pipeline Network  

Brazil’s state-owned oil company Petroleo Brasileiro SA said it has approved the sale of its remaining 10% stake in the NTS gas pipeline network for $337 million (1.8 billion reais) to Brookfield and Itausa SA.  

In 2016, an investment-fund led by Canada’s Brookfield Asset Management Inc and Brazil’s Itausa S.A. purchased 90% of the more than 2,000-km pipeline network from Petrobras for $5.2 billion.  

Brookfield’s fund now will own 100% of Nova Transportadora do Sudeste SA, as NTS is formally known.  

Petrobras, as the Rio de Janeiro-based firm is known, will receive $281 million (1.5 billion reais), the company said, after dividend payments and contract adjustments.  

Venezuela Needs $58 Billion to Restore Crude Output 

Venezuelan state oil company PDVSA would need $58 billion in investment to revive its crude production to the levels of 1998, before ex-President Hugo Chavez came to power, equivalent to 3.4 MMbpd, a document seen by Reuters shows.  

In recent document entitled “Investment Opportunities,” Petroleos de Venezuela’s planning and engineering division said it was seeking capital investment from Venezuelan and foreign partners, mostly to recover and upgrade oil production infrastructure “under new business models.”  

PDVSA estimated that $7.65 billion is needed for reviving pipelines, projects for gas injection to oilfields, terminals and refineries that are idled or underperforming due to lack of maintenance.  

The proposal comes as President Nicolas Maduro is seeking to mend ties with the private sector to attract investment to rebuild the OPEC nation’s collapsing economy, in a reversal of tightening state control under Chavez’s socialist   

Venezuela produced just 578,000 bpd of crude in March, according to figures the country provided to OPEC, well below a 2021 goal of 1.28 MMbpd.  

Australia Commits $45 Million to Pipeline and Storage Capacity  

The Australian government announced that it will commit $45.3 million (A$58.6 million) to boost gas supply, storage and pipeline capacity in its 2021-22 budget.   

The funding is designed to help the projects reach final investment decisions more quickly so they can be built in time to address potential gas shortages.  

Those government-backed projects include two gas storage projects in the state of Victoria and an expansion of the South West Victorian gas pipeline. Also included is a gas-fired power station tied to Squadron Energy’s planned gas import terminal in New South Wales.  

“Without action to address supply, industry and households will be faced with higher prices, disruptions in supply and unplanned outages,” Taylor said.  

EQT Acquires Alta’s Midstream Businesses 

EQT Corporation announced it has agreed to buy all of the membership interests in Alta Resources Development’s upstream and midstream subsidiaries in a cash and stock deal valued at about $2.9 billion.    

The transaction, which is expected to close in the third quarter of 2021, consists of $1 billion in cash and $1.925 billion in EQT common stock issued directly to Alta’s shareholders.  

“The acquisition of Alta’s assets represents an attractive entry into the Northeast Marcellus while accelerating our deleveraging path, providing attractive free cash flow per share accretion for our shareholders and adding highly economic inventory to EQT’s already robust portfolio,” said EQT President and CEO Toby Rice.  

Transition ‘Can’t Come Fast Enough’ for Canadian Pipeline Companies 

The chief executives of Canada’s largest pipeline companies are upbeat about the transition to cleaner energy, telling a symposium that there will continue to be opportunities for midstream success as technologies and energy sources evolve.  

Storage and transportation assets will be key as the energy transition moves forward and new technologies aimed at reducing greenhouse gas emissions like carbon capture and storage and hydrogen are developed, TC Energy CEO François Poirier said at the online symposium sponsored by Scotiabank CAPP Energy.  

“Transition can’t come fast enough from our perspective, but we have to pace it appropriately. I believe natural gas and liquids will continue to play a prominent role in the energy economy for decades to come,” Poirier said. “I believe our existing assets will continue to be used and be useful for quite a long time and generate a tremendous amount of cash flow that we will be able to deploy into the energy transition.”  

Enbridge CEO Al Monaco, speaking at the same conference, said he sees gas as the “great enabler” for the energy transition, providing a reliable source of power to backstop renewables.