September 2023, Vol. 250, No. 9


Projects September 2023

Pembina Pipeline Delays Cedar LNG FID to 4th Quarter

Pembina Pipeline has been granted the permit for its proposed LNG facility by the BC Energy Regulator. This marks a significant advancement for the 3-mtpa Cedar LNG plant, as reported in Pembina’s second quarter earnings release on August 3. 

The final investment decision (FID) timeline has been revised to the fourth quarter of 2023, due to ongoing discussions and negotiations involving LNG Canada and Coastal GasLink. In March, the project received its Environmental Assessment Certificate for a 5.3-mile (8.5-km) pipeline connecting Cedar LNG to the Coastal GasLink pipeline. 

In the same report, Pembina announced that Cedar LNG secured non-binding MOUs with investment grade counterparties for long-term liquefaction services. The company is actively working towards finalizing definitive commercial agreements. Additionally, Cedar LNG initiated a second front end engineering design (FEED) process for a floating LNG vessel in late 2022, which is progressing alongside the original FEED work. 

Cedar LNG is poised to provide a strategic outlet for Western Canadian Sedimentary Basin (WCSB) natural gas to access global markets, potentially raising prices for Canadian producers. Beyond financial benefits, the project is expected to contribute to emissions reduction, global energy security, and environmental sustainability. 

Notably, the Cedar LNG facility's unique design as a floating vessel, manufactured within a shipyard's controlled environment, minimizes construction risks and underscores the project's commitment to eco-friendly practices. BC Hydro will power the facility, enhancing its reputation as one of the world's most environmentally conscious LNG facilities. 

The Cedar LNG project is a collaborative effort between the Haisla Nation and Pembina Pipeline, planned for the Douglas Channel in Kitimat, B.C. 

Furthermore, the Cedar LNG initiative aligns with Alberta's lower-carbon economy vision. Pembina and TC Energy are leading the Alberta Carbon Grid (ACG), a transformative carbon transportation and sequestration platform. The Industrial Heartland project, the ACG's first hub, is set to transport and store up to 10 million tons of CO2 annually, significantly contributing to emissions reduction. 

The collaboration between Pembina and TC Energy continues to progress with the Alberta Carbon Grid project. This pioneering effort aims to revolutionize carbon management, allowing industries to thrive while minimizing environmental impact. Multiple hubs are envisioned throughout Alberta, starting with the Industrial Heartland project. This partnership reflects the commitment of both companies to drive positive change in the energy sector. 

Surface and subsurface engineering and planning are well underway, supported by data acquisition and integration. Important milestones in 2023 include seismic data licensing and procurement, guiding the location of an appraisal well planned for drilling this year. – Mary Holcomb, P&GJ digital editor 

US Appeals Court Rejects Challenge to MVP 

A U.S. appeals court shot down a challenge to federal approvals for the Mountain Valley Pipeline (MVP), in a ruling that analysts say probably ends legal fights over construction of the that likely ends legal fights over the construction of the 303-mile (488-km) natural gas pipeline. 

In its decision, a three-judge panel of the 4th U.S. Circuit Court in Richmond, Virginia, said, “There is no longer a live controversy” to consider after Congress in May passed a law ratifying approvals. 

“I think this is the end of the potential legal challenges, really, when it comes down to it,” said attorney Jared Margolis told Reuters. He represented the Center for Biological Diversity, one of the groups fighting the project. 

The $6.6 billion MVP project, which runs through West Virginia, is owned by units of Equitrans Midstream, the lead partner, and NextEra Energy, Consolidated Edison, AltaGas and RGC Resources among others. 

In late July, the U.S. Supreme Court lifted orders from the 4th Circuit that temporarily shut down construction on a final 3.5-mile (5.6-km) segment of the pipeline through the Jefferson National Forest. 

An Equitrans spokesman told Reuters the group is “committed to finalizing” work on the project by the end of 2023, which was the pipeline was initially projected to be finished by late 2018.

Vaca Muerta Boost Prompts Oil Export Record Regionally 

Argentina’s northwest province of Neuquen exported 2.77 million barrels of oil in June, the local government said, adding this came as a result of greater the in the Vaca Muerta formation. 

The region is expected to ramp up production of natural gas further after a pipeline running from Neuquen to Buenos Aires came online in early July. 

Neuquen also exported 3.83 Bcf (108.48 MMcm) of natural gas in June, bringing in an additional $31.5 million. 

“We are very happy that the province continues to provide solutions to the country,” Gov. Omar Gutierrez said in the statement, “bringing in foreign currency and decreasing energy imports” 

Oil exports pulled in $184.8 million for the province in June, averaging $67 a barrel, government records show. Vista Energy led June’s oil exports with 491,000 barrels, according to Reuters, followed by Petronas with 470,000 barrels.

Trans Mountain Expansion to Start Filling Pipeline in Fall 

The Trans Mountain expansion project plans to call on oil producers to start filling the pipeline in the days ahead, the head of shipper Canadian Natural Resources said during a quarterly earnings call. 

The move that would boost the Canadian heavy benchmark crude Western Canada Select (WCS). 

“I look at it as very positive and very constructive for Canada's oil,” the company’s president, Tim McKay, said. 

Canadian Natural has committed to shipping 94,000 bpd on expanded pipeline, which is scheduled to go on line in the first quarter of 2024. It will take up to 5 million barrels to fill the line before it can stop shipping.

The Trans Mountain expansion will ship an additional 590,000 bpd of Alberta oil to the Pacific Coast of Canada, adding to the 300,000 bpd of existing capacity.

Canadian Natural’s production in the quarter ended June 30 stood at 1.19 million barrels of oil equivalent per day (boepd), below last year's 1.21 million boepd, in part due to wildfires in Western Canada and unplanned third-party pipeline outage, the company said. 

State Regulators Balk on Carbon Pipeline Application 

The North Dakota Public Service Commission rejected a permit application from Summit Carbon Solutions to build a 320-mile (515-km) pipeline across the state in order to ship captured carbon dioxide from ethanol plants to an underground storage site. 

The three-member commission said in its order that the Iowa-based company “failed to meet its burden of proof to show the [project] will produce minimal adverse effects on the environment and upon the welfare of the citizens of North Dakota.” 

In response, Summit wrote that it “respects the decision” and plans to reapply for a permit in the state. 

Summit would like to store up to 18 mtpa of CO2 in North Dakota. The company said in March it had easement agreements already signed by 375 North Dakota landowners, along 70% of its pipeline route. 

Summit, along with Navigator CO2 Ventures and Wolf Carbon Solutions, are separately trying to build multi-state Midwest carbon pipelines in an effort to decarbonize the ethanol sector and prove carbon capture and storage (CCS) options. 

Pipeline Operator Magellan Sees US Crude, Fuel Exports Rising 

Pipeline operator Magellan Midstream Partners said it expects exports of U.S. crude and refined products to grow due to growing global demand for energy. U.S. exports of crude and petroleum products hit 11.27 MMbpd in March. 

While Corpus Christi in south Texas will remain the dominant U.S. crude export hub, a lack of capacity in pipeline capacity will push additional crude to flow to Houston in the future. 

Crude oil volumes shipped on Magellan's fully owned pipeline rose 14% to 70 million barrels, the company said, while volumes moved on refined products pipelines fell 1%. 

Transportation revenue per barrel of refined products shipped rose 17.5%, as more refinery outages in the quarter increased the proportion of long-haul shipments, which move at higher tariffs. 

Poland Successfully Repairs Leaked Druzhba Oil Pipeline 

Pipeline operator PERN said it restored the Druzhba oil pipeline to full functionality, after a leak was discovered. The Polish company shut down a section of the pipeline that connects Russia to Europe, after detecting a leak in central Poland. 

Pern said there was no indication of third-party involvement. 

“PERN's technical services restored full functionality of the damaged pipeline on Monday evening,” PERN said. “Now the company's focus will focus on clearing the area and restoring it to its proper condition.” 

The Druzhba pipeline is among the world’s largest and can carry 2 million barrels per day. The total capacity of the western section of both lines that carry oil from central Poland to Germany is 27 mtpa. 

Flows through the Druzhba pipeline have fallen significantly since Russia's invasion of Ukraine and pipeline infrastructure has been hit several times since then.

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