March 2021, Vol. 248, No. 3
Projects
Projects March 2021
Double E Pipeline Project Attracts $175 Million in Commitments
Summit Permian Transmission received $175 million in commitments from three leading commercial banks to finance the development of its Double E Pipeline Project, the company said.
The lenders will provide senior secured credit facilities consisting of a $160 million delayed draw term loan and a $15 million working capital. The credit facilities mature seven years after the date of initial borrowing.
The company said it expects to close and fund on the credit facilities shortly and will post a $15 million letter of credit under its corporate revolving credit facility to support back-end equity contributions, if needed, upon first funding.
“This further advances the Double E project toward our expected in-service date during the fourth quarter of 2021,” said President and CEO Heath Deneke of Summit Midstream Partners. “With our previously announced notice to proceed with construction from FERC, we commenced construction activities.”
The pipeline will transport gas from the Delaware Basin in the Permian Shale in New Mexico and Texas to the Waha Hub in West Texas.
Supreme Court to Hear PennEast Bid to Seize New Jersey Land
The U.S. Supreme Court agreed to hear a bid by a consortium of energy companies seeking to seize land owned by the state of New Jersey to build a $1 billion natural gas pipeline.
The justices agreed to take up an appeal by PennEast Pipeline Company LLC, a joint venture backed by energy companies including Enbridge, of a lower court ruling in favor of New Jersey’s government, which opposed the land seizure.
Other companies in the consortium for the 120-mile (190-km) pipeline from Pennsylvania to New Jersey include South Jersey Industries, New Jersey Resources Corp. (NJR), Southern Co. and UGI Corp.
At issue in the case is a 1938 U.S. law called the Natural Gas Act that allows private energy companies to seize “necessary” parcels of land for a project if they have obtained a certificate from the Federal Energy Regulatory Commission (FERC).
FERC in 2018 approved PennEast’s request to build the pipeline. The company promptly sued in federal court under the Natural Gas Act to use the federal government’s eminent domain power to gain access to properties along the route.
New Jersey opposed construction of the pipeline and did not consent to PennEast’s seizure of properties the state owns or in which it has an interest.
PennEast wants the land to build the pipeline, which is designed to deliver 1.1 Bcf/d (31 MMcm/d) – enough to supply about 5 million homes – from the Marcellus Shale formation in Pennsylvania to customers in Pennsylvania and New Jersey.
The Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled in 2019 that PennEast could not use federal eminent domain to condemn land controlled by the state.
Consumer Energy Alliance applauded the Supreme Court’s decision to hear the arguments in a statement to the media.
“This is a major step toward settling whether states can arbitrarily override settled and established federal laws that govern energy infrastructure and, more importantly, interstate commerce,” Consumer Energy Alliance President David Holt said in a statement. “That principle has served our nation well in easing the constant tension between states and the federal government and ensuring that no single state can put its interests above those of its neighbors or the country.”
Government Approves Routes for Wyoming CO2 Pipelines
The U.S. government approved a route in Wyoming for a carbon dioxide (CO2) pipeline system that would be the largest such network in North America, if built.
The U.S. Bureau of Land Management designated 1,100 miles (1,770 km) of federal land for pipeline development through the Wyoming Pipeline Corridor Initiative, the Casper Star-Tribune reported.
The greenhouse gas would be captured from coal-fired power plants, then pumped underground to add pressure to and boost production from oil fields.
Outgoing Interior Secretary David Bernhardt signed the plans days before leaving office. The move permitted companies to submit pipeline construction proposals.
“The ability to have a CO2 delivery system, as made possible by the pipeline corridor initiative, helps make CO2 commercially viable,” Wyoming Gov. Mark Gordon said in a new release.
Canada’s Connacher Expects 2022 Completion of Pipeline Project
Connacher Oil and Gas expects to have a 18,000-bpd oil pipeline from its Great Divide oil sands leases near Fort McMurray, Alberta, Canada, completed by the second half of 2022.
Following a thorough assessment of the alternatives and commercial negotiation of transportation arrangements with third-party carriers, the company filed an application with the Alberta Energy Regulator for a 16.5-mile (26.5-km), 10-inch (254-mm) pipeline, with an initial capacity of 18,000 bpd.
Connacher received Alberta Energy Regulator (AER) regulatory approval Dec. 21 to build this sales oil pipeline lateral from its Great Divide project, the company said.
The pipeline is expected to be completed by the second half of 2022 and will provide Connacher with access to a liquid market hub for the sale of its product.
While the in-service date is dependent on the company’s financing efforts, this new pipeline will reduce Connacher’s transportation costs and increase market access. In addition to enhanced access for blended bitumen, Connacher is also pursuing alternatives to improve access and reduce costs of diluent.
Multiple Bids to Stop Enbridge’s Line 3 Replacement Rejected
A federal judge and the Minnesota Court of Appeals, both within the span of a week, rejected attempts by tribal and environmental groups to stop construction on Enbridge’s Line 3 oil pipeline replacement, the Associated Press reported.
U.S. District Judge Colleen Kollar-Kotelly on Sunday decided not to grant a preliminary injunction that would have halted construction on the pipeline, noting the groups failed to prove any permanent harm would come from the work, AP reported.
Earthjustice, an environmental organization, is suing the U.S. Army Corps of Engineers – on behalf of the Red Lake Band of Chippewa Indians, the White Earth Band of Ojibwe, Honor the Earth and the Sierra Club – arguing the federal agency illegally approved a water permit without considering environmental impacts, like the risk of oil spills, according to an Earthjustice news release.
The Minnesota Court of Appeals rejected another shutdown request from the tribes, which argued construction would destroy land protected by treaty agreements and violate cultural and religious rights, the AP report states.
Line 3 is a 1,097-mile (1,765-km) crude oil pipeline that stretches from Alberta to Wisconsin, according to Enbridge. It was built in the 1960s and Enbridge wants to replace it to maintain safety standards, reduce future maintenance and create fewer disruptions to the landowners and environment, the company said.
The $2.9 billion U.S. portion of the project would replace 337 miles (542 km) in Minnesota, 14 miles (23 km) in Wisconsin and 13 miles (21 km) in North Dakota, according to Enbridge. The Wisconsin and North Dakota portions are complete, and Enbridge began construction in Minnesota in December.
Tumbleweed Midstream Enters 10-Year Helium Sales Agreement
Colorado’s Tumbleweed Midstream announced it has executed a new 10-year helium sales agreement with a global tier one helium supplier. The new contract delivers a top-rated global customer for Tumbleweed’s Ladder Creek plant’s helium production capacity and provides the customer a steady supply of helium through Dec. 31, 2030.
Specific terms of the agreement are undisclosed, however. Tumbleweed estimates the value of the overall contract could exceed $500 million. Final contract value will depend on the volume of helium produced by the Ladder Creek plant, which will be delivered between now and year-end 2030.
“With much speculation in the helium market related to new supplies coming in from Russia and Qatar in 2021 and 2022, this new contract provides the stability we need to ensure our producers that their helium will be sold at fixed prices,” said Tumbleweed Midstream Founder and CEO Durell Johnson.
The agreement gives Tumbleweed the option to sell up to 10% of its helium production to third-party buyers who need to make non-scheduled purchases of helium on the open market.
“This is significant because every molecule of available helium anywhere in the world is under contract,” said Johnson. “We have reserved a portion of our annual production specifically to help suppliers who encounter a supply hiccup and suddenly need to buy helium to satisfy customer contracts. Because there is no established marketplace where you can buy helium, we want helium buyers to know they can fill a temporary supply interruption with a single phone call to Tumbleweed Midstream.”
After it acquired the Ladder Creek Helium Plant and Gathering System in December 2019, Tumbleweed revamped its natural gas producer agreements and added new gathering and processing customers.
Alaska Hopes to Build North Slope-to-Fairbanks Pipeline
Alaska wants to start on the first phase of the state’s LNG export plant and pipeline project by working with a private firm seeking to build a natural gas pipeline from the North Slope to Fairbanks.
The $5.9 billion gas pipe would span 500 miles (805 km) from Prudhoe Bay to Fairbanks and might be online in central Alaska in 2025, according to a report to the Alaska Gasline Development Corp. (AGDC).
According to Reuters, the board-supported report said federal stimulus or infrastructure funding would be sought by companies to assist in covering the cost of the first phase and attract investors.
Alaska signed an agreement with major oil and gas companies to build the project in 2014, but the state took over the project in 2016 after the North Slope oil companies backed out.
Since then, AGDC received federal authorization to build the project in May 2020 and signed agreements with BP PLC and Exxon Mobil Corp to help advance its development.
Canada’s Suncor Reviewing Mining Safety after 3 Workers Killed
Canada’s second-biggest oil company, Suncor Energy, began a third-party safety review, following the death of three contract workers in two separate mining accidents.
The incidents follow accidents during construction of the Trans Mountain oil pipeline expansion that required temporary work stoppages.
Suncor said it will review its mining operations, which is one of the methods currently used to produce crude oil in the oil sands region. Prior to the work delay, the company expected completion this quarter.
A man died last month when a bulldozer he was driving fell through the ice of a tailings pond at Suncor’s base mine near Fort McMurray, Alberta. According to Reuters, in December, a bulldozer hit a truck at the Fort Hills, Alberta, site, killing two workers.
Alberta’s occupational health and safety department is investigating both incidents.
Nord Stream 2 May Finish Construction in Danish Water in April
Construction of Nord Stream 2 undersea gas pipeline from Russia to Germany in Danish waters is scheduled for completion by the end of April, the Danish Maritime Authority told Reuters.
Construction was suspended in December 2019 after the United States sanctioned the project, but Germany stood by the project and work has resumed.
The pipeline lacks only 75 miles (120 km) to be laid in Danish waters and 18.5 miles (30 km) to be laid in German waters before it makes landfall in northern Germany, near Greifswald.
Pipe-laying work south and southwest of Bornholm Island is being done by pipe-laying vessel Fortuna, assisted by construction vessels Baltiyskiy Issledovatel and Murman, along with supply vessels.
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