South Dakota weighing oil pipeline cleanup tax

PIERRE - An old idea of levying an environmental cleanup tax on oil pipelines in South Dakota took on new life on Feb. 22 in the Legislature.
The Senate State Affairs Committee voted 7-1 in favor of charging two cents per barrel on pipelines carrying more than 10,000 b/d.
The legislation now heads to the full Senate for consideration.
“I think it’s our responsibility to protect the state of South Dakota,” said Sen. Gene Abdallah, R-Sioux Falls.
The legislation, SB 161, is opposed by TransCanada officials, who have completed their international pipeline known as Keystone down the James River Valley through South Dakota.
TransCanada plans to build a second one, known as Keystone XL, across western South Dakota.
Sen. Ryan Maher, D-Isabel, said he brought the latest legislation on behalf of some constituents who will be affected by the proposed XL pipeline through their areas.
Luke Temple, a lobbyist for Dakota Rural Action, said the purpose is to protect landowners and to protect South Dakota taxpayers in general.
The money would be placed in a special fund that would be capped at $30 million and would be available in case of an oil release.

U.S. gas producers considering pipeline exports to Ontario market

OTTAWA - Canadian pipeline companies are considering requests from U.S. producers to reverse the flow of their natural gas export lines to bring natural gas from the Marcellus Shale in the U.S. into Ontario, displacing some Alberta suppliers who have dominated the Central Canadian market for half a century.
TransCanada Corp. and Chatham, Ont.-based Union Gas Ltd. have issued “open season” calls to determine the interest of Marcellus producers in supplying natural gas to the Ontario market from Pennsylvania and West Virginia.
The companies, together with New York-based Empire Pipeline, would use existing pipelines that now move Western Canadian gas to Southern Ontario and the U.S. Northeast.
“The Marcellus shale is a game changer in terms of our markets and how we serve them,” said Andrea Stass, spokeswoman for Union Gas, a subsidiary of U.S. giant Spectra Energy Corp.
Union Gas's so-called “open season” will gauge interest among shippers to move gas from the border at the Niagara River, through a TransCanada line and then westward to its Dawn hub near Sarnia, where Union has major natural gas storage facilities.
TransCanada vice-president Steve Pohlod said the company is responding to requests from Marcellus producers that want to supply the Ontario market. But, he added, it is too early to say whether there is enough interest to justify reconfiguring the export pipeline.

Enbridge Energy Partners plans $141.8 million Texas pipelines expansion

HOUSTON - Enbridge Energy Partners LP is planning to expand its East Texas Gas Gathering System.
The partnership will construct three new lateral pipelines linking with the Haynesville Shale play. In addition, it is also planning to build a large diameter lateral from Shelby County to Carthage, Texas.
Total project cost is approximately $141.8 million, which includes approximately 50 miles of 16-inch to 24-inch diameter pipe as well as an additional 38-mile, 24-inch lateral pipeline.
The expansions will increase the partnership's takeaway capacity to 900 million cubic feet per day (MMcf/d).

Enbridge blasts Suncor, allies in Alberta Clipper rhubarb

CALGARY, Alta. - Enbridge Inc. fired back at the critics of its Alberta Clipper pipeline on Feb. 20, accusing them of "inequitable and inexcusable conduct."
Enbridge is mired in a legal battle with oilsands producers who, led by Suncor Energy Inc., have sought to prevent Enbridge from raising its tariffs to pay for the U.S. portion of its new Clipper line.
Suncor argues that the Alberta Clipper pipeline is unnecessary, and Enbridge was imprudent to build it.
Enbridge, however, says it was hustled into building the line by the Canadian Association of Petroleum Producers (CAPP), which negotiated on behalf of the Canadian oilsands industry.

South Dakota tax bill targets TransCanada’s Keystone XL oil pipeline

PIERRE, S.D. - The company planning to build an oil pipeline across western South Dakota said it would lose an estimated $38 million in tax incentives under a bill approved by state lawmakers on Feb. 18.
The bill would change state law so oil pipelines would no longer be exempt from sales and excise taxes. It would apply to the TransCanada Keystone XL pipeline, which will carry crude oil from Canada to refineries in Texas.
Committee debate on the bill came just hours before the state Public Utilities Commission was to act on a construction permit for the $900 million pipeline project across seven South Dakota counties.
Bill sponsor Rep. Jason Frerichs, D-Wilmot, said once the pipeline is in the ground the state will get few benefits in terms of new jobs or other economic activity. He said incentives such as tax refunds should go to projects that bring long-lasting benefits, and that the tax revenue from the Keystone project would help the state balance its budget.
Dennis Duncan, a lobbyist for TransCanada, pointed out that the company would be paying $20 million in property taxes annually on the pipeline, and said the bill could damage the state's image as pro-business and tax friendly.
"It's clearly dangerous to change the rules in midstream after you've attracted businesses to the state," Duncan said.

National Fuel Gas to expand gas pipeline system in Pennsylvania

BUFFALO, N.Y. - National Fuel Gas Co. executives said on Feb. 6 they are moving ahead with three pipeline projects designed to capitalize on the Marcellus Shale region of western Pennsylvania.
The projects, valued at $74 million in all, would extend National Fuel's Empire Connector pipeline by 16 miles to the south, running from its current end point in Corning to Jackson Township in northwestern Pennsylvania.
NFG would also build a separate pipeline linking the southwestern end of its pipeline system with the Texas Eastern pipeline.
NFG is building a new compressor station in Lamont, Pa., to increase the capacity of an existing line that links with the Tennessee Gas pipeline.
The Amherst energy company also is working on the second phase of its project to build a gathering pipeline system to connect new wells in the Marcellus region with existing pipelines.

Magellan holds public meeting on Wisconsin gasoline spill

KRONENWETTER, Wis. - Magellan Pipeline hosted a public meeting at the Kronenwetter municipal center on Feb. 17 to inform local residents on its 35,000-gallon gasoline leak from a pipeline that runs through Kronenwetter. The public meeting about the spill and cleanup efforts was also attended by officials from the county health department and the state department of natural resources.
Magellan discovered the leak when it checked its inventory in December 2009.
Company officials have assured the village that they have replaced the
damaged pipeline and contained the spill to groundwater at their terminal property.
They've also begun cleanup efforts which include vacuuming up the gasoline to prevent the plume from spreading further underground.
Kronenwetter has hired an independent consultant to monitor the cleanup
and make sure that Magellan doesn't have any more problems that may
impact residents, village administrator Blaine Oborn said.

Rhubarb over Clipper rates pits Suncor, Imperial against Enbridge

CALGARY, Alta. - Suncor Energy Inc. and Imperial Oil Ltd. are accusing Enbridge Inc. of overbuilding pipeline capacity into the U.S. at a time when it's not needed, and are looking to escape the increase in tariffs that will come once the Enbridge Alberta Clipper, a major new crude pipeline, enters service later in 2010.
In a bid to duck the possibility of billions in extra tolls that could result, Suncor and Imperial have filed nearly 500 pages of documents with the U.S. Federal Energy Regulatory Commission (FERC), laying out a plan to force Enbridge Inc. to give them a break on pipeline rates into the U.S.
Though the industry agreed to tariffs for the pipeline three years ago, the two companies argue that Enbridge did not heed their urging to reconsider before it began construction in 2008, and called the company “imprudent” for building the 1,600-kilometer Alberta Clipper after it became clear oil sands production would not grow as quickly as expected.
The $3.7-billion line is to take oil from Hardisty, Alta., to Superior, Wis. It's expected to enter service in the first half of 2010, perhaps as early as April.
Suncor is leading an effort asking the U.S. regulator to prevent Enbridge from raising its tolls to pay for the cost of building and operating the 520-kilometer U.S. portion of Clipper until Enbridge can prove that there is enough demand for it.
Not only are oil producers trying to back out from Alberta Clipper, but Enbridge itself has battled an effort by TransCanada Corp. to build another major pipeline, called Keystone XL, to export crude to the U.S. That dispute, too, arises from a key problem: there are simply too many pipelines and not enough oilsands crude.
By 2013, pipeline companies plan to have capacity for 1.65 million b/d of crude more than Canada's energy companies expect to export.

TransCanada says market to determine Keystone onramp in Montana

BILLINGS, Mont. - Under political pressure to build an “on-ramp” for U.S. oil on the Keystone XL pipeline bound for the Gulf Coast, a TransCanada executive said on Feb. 5 that market forces would dictate where and if a terminal is built.
The company hopes to start construction this year on the 1,980-mile pipeline, part of TransCanada’s $12 billion investment in the Alberta oilsands market.
En route to Texas through the Northern Plains, Keystone will pass through the booming Bakken oil formation - an estimated 3.65 billion barrels beneath Montana, North Dakota and Saskatchewan.
That’s small in comparison to estimates of 1.7 trillion barrels of petroleum in the oil sands, where companies are signing long-term contracts with TransCanada to move up to 900,000 b/d.
The company has to get by regulators in Montana, where Democratic Gov. Brian Schweitzer is pushing for an on-ramp connecting Northern Plains producers to Keystone XL near the town of Baker.
After meeting with Schweitzer on Feb. 5, TransCanada Vice President Robert Jones said the company wants to stay focused on the main stem of the pipeline. Before he could commit to an onramp, Jones said, he needed to hear more from oil companies interested in using Keystone XL.

Buckeye and NOVA in JV for new Marcellus NGL pipeline to Canada

EMMAUS, Pa. - Buckeye Partners, L.P. and NOVA Chemicals Corp. on Feb. 11 announced a joint memo of understanding regarding evaluation and development of a mixed natural gas liquids (NGL) pipeline from the Marcellus Basin in Pennsylvania to the refining and petrochemical complex in the Sarnia-Lambton area in Ontario, Canada.
The Union Pipeline Project, which is subject to final agreements and any necessary regulatory approvals, would ship mixed NGLs, principally for use as petrochemical feedstock.
The Union Pipeline Project would diversify refining and petrochemical feedstock supply for NOVA Chemicals and other potential users in the area and provide producers in the Marcellus Basin with take-away capacity for their NGLs to the closest demand center.
Initial service of Union would be from Pittsburgh, Pa., to the NOVA Chemicals Corunna olefins cracker near Sarnia, a market that has historically had limited NGL feedstock flexibility.
Due to the proximity of Sarnia to the BTU-rich natural gas production area of the Marcellus Basin, NOVA Chemicals would be able to secure long-term competitive petrochemical feedstock supply via Union.
Buckeye would develop, construct, own, and operate the Union Pipeline and would conduct an open season to solicit additional customer interest in the destination market in Sarnia prior to executing definitive agreements. The proposed project is subject to the results of an ongoing feasibility study regarding construction requirements, project economics and other matters.

Explorer and LDH Energy sign connection agreement at Mont Belvieu

WILTON, Conn. - Louis Dreyfus Highbridge Energy LLC and Explorer Pipeline Co. on Feb. 1 announced plans to make connections from LDH Energy’s Mont Belvieu, Texas, storage facility to Explorer’s 28-inch pipeline system.
The connection, which will be designed to accommodate movements of both refined products and natural gasoline, will be capable of meeting Explorer’s mainline delivery rates of 32,000 barrels per hour. The parties expect the connection to be operational by the fourth quarter 2010.
“With the increase in demand projected for diluents moving into Canada, Explorer is the most logical choice for meeting the transportation needs from the Gulf Coast into the Midwest markets,” said Rod Sands, CEO of Explorer. Sands added, “The connection to the Mont Belvieu trading hub for natural gasoline as well as the connectivity of our system in the upper Midwest will position Explorer for future growth in the transportation of diluents.” , products pipelines

Gas leak in Minnesota destroys home, worker auguring sewer line hurt

ST. PAUL, Minn. – A home here was a total loss after a sewer worker using an auger ruptured a natural gas line and a fire started. St. Paul firefighters had to soaked the home at 2014 Villard St.
Fire Marshal Steve Zaccard said natural gas was drawn through a sewer line into the house where it found an ignition source in the basement.
The man responsible for the accident was treated for burns and released.
A homeowner in St. Paul's Highland Park neighborhood had hired the worker to auger out her sewer line.
A few hours later the house burned to a total loss, dozens of nearby houses had o be evacuated because of the gas leak and city Fire Marshal Steve Zaccard was reflecting on how much worse it could have been.
Firefighters who responded to the fire about midmorning found the homeowner and her two dogs safe, Zaccard said, but raced from the house
when they discovered it was filling with natural gas.
Extinguishing the fire right away, he said, could have resulted in a bigger gas buildup and a massive explosion.
The sewer worker suffered burns on his face and was taken to Regions
Hospital but released later on Feb.1, the chief said. The homeowner
escaped safely. He said he couldn't identify either person.

Dominion Cove LNG pays state $175,000 for alleged water pollution

BALTIMORE - The Maryland Department of the Environment (MDE) on Jan. 28 announced an enforcement action against Dominion Cove Point LNG.
On Dec. 28, 2009, MDE finalized a Complaint and Administrative Consent
Order with Dominion Cove Point LNG, LP and Sheehan Pipeline Construction Co. to resolve alleged violations including:
 Unauthorized discharges (fracouts) including drilling returns to Jordan and Zakiah swamps.
 Discharges related to the General Discharge Permit associated with
Hydraulic Testing.
 Failure to update required records.
 Discharge of sediment pollution to St. Leonard's Creek and associated wetlands.
 Discharge of sediment pollution into the Patuxent River.
 Failure to comply with the erosion and sediment control plan requirements at the Cedar Point Lane site; and
 Violations of wetland regulations for causing unauthorized impacts to
Ketts Pond, Hunting Creek, and St. Leonard's Creek.
The alleged violations occurred between March 2007 and December 2008 in connection with the installation of a 36-inch pipeline in Calvert, Charles,
and Prince George's Counties.
In accordance with the Order, Dominion paid MDE a penalty of $175,000 on
Dec. 29, and will perform remedial work at Ketts Pond by June 28, 2010.

Feds deny Ruby gas pipeline is related to wild horse roundup

RENO, Nev. – El Paso’s proposed $3 billion Ruby natural gas pipeline is at the center of a rhubarb over removing large numbers of wild horses from the northwestern Nevada range.
Activists who want the horses to stay on the range say the Ruby Pipeline project is the "smoking gun" that made federal officials decide to round up 2,500 horses in January from the desert about 100 miles north of Reno. The horses and burros will be sent to corrals and pastures in the Midwest and East.
Federal authorities and the pipeline firm denied the roundups have anything to do with the pipeline plan. Government officials said the horses would have been relocated even without the project because land and water resources can't sustain large numbers of mustangs.
Ginger Kathrens, executive director of the Cloud Foundation, a wild horse advocacy group, said speculation about the roots of the latest mustang roundup came from a February 2009 environmental document about the pipeline that stated the Bureau of Land Management will work with the pipeline company to "minimize wild horse and burro grazing along the restored (right-of-way) for three years. Possible management actions would be to... reduce wild horse populations following BLM policy in appropriate management areas."
Executives of El Paso Corp., which would build and own the pipeline, have said they don't support the roundups. In an e-mail to the Cloud Foundation, the firm said it has no interest in the removal of wild horses.

Spectra plans 16-mile gas pipeline in New Jersey

JERSEY CITY, N.J. - Homeowners in Jersey City and Bayonne, N.J., will have the opportunity in March to find out more about a proposed pipeline running through their town.
That’s when Spectra Energy Corp., based in Houston, Texas, plans to hold public meetings to inform the public about a 16-mile pipeline extension through Bayonne and Jersey City. The line would allow natural gas to flow from its existing metering and regulating station in Staten Island, N.Y., through Hudson County into Manhattan.
The gas would initially come from Pennsylvania to the tri-state area, and the pipeline would transport up to 800 million cubic feet per day of new natural gas supplies. It could be in service by the end of 2013.
Spectra spokesperson Marylee Henley said the supply will be primarily received by the New York utility Con Edison. She said the reason for the pipeline expansion was one of demand. “In the Northeast, there is a greater need for natural gas,” Henley said.
After a site survey is done, the pipeline project will have to be approved by the Federal Energy Regulatory Commission (FERC), according to Henley.

TransCanada files open-season plan for proposed gas line

ANCHORAGE - TransCanada Corp. on Jan. 29 filed hundreds of pages of new information with the Federal Energy Regulatory Commission (FERC) describing how it plans to obtain commitments for natural gas to fill its proposed multibillion-dollar North Slope pipeline.
The documents show that building the pipeline could be nearly twice as expensive as TransCanada, a Canadian pipeline company, predicted three years ago. However, the new estimates - ranging from $26 billion to $41 billion - are within the range that has been used by state officials for the project, which many see as critical to Alaska's future economy.
The documents also reveal that the company is trying to sweeten the deal for potential shippers - including oil producers BP, Conoco Phillips and Exxon Mobil. TransCanada says it is reducing the amount it will charge to ship the gas by $500 million per year for 25 years, or $12.5 billion. That's possibly good news for people in Alaska: lower shipping costs translate to higher royalties and tax revenue for the state and larger profits for the producers.

China turns financial crisis into energy sector opportunities

Two variables tend to explain almost 100 percent of what causes growth in gross national product in nations worldwide. The variables are energy consumption per capita and education per capita. While there may be peaks and valleys in charting GNP for a given nation, when both of the causal variables are increasing, the trendline for GNP will also be growing. For that reason, it's worth taking note of what China has been doing during the current worldwide recession - and asking what the United States has been doing at the same time.
China's energy sector has successfully used the international financial crisis to advance its energy sector.
From June 2006 forward, energy supply in China was tight for six straight years, but there was negative growth in 2008 that extended to June 2009. Consequently, all refined oil storage was filled, and a portion of the nation’s oil wells had to shut down for the first time in decades.
Daily electric power consumption was 8.5 billion kilowatt-hours in the last quarter of 2008 due to the financial crisis. However, daily electricity use reached 11 billion kWh after November 2009 and, in the first 15 days of 2010, daily consumption reached the maximum of 12 billion kWh.
In 2009, China adopted the following measures to turn adversity into opportunity.
First, the nation envisioned its long-term development and made huge efforts to advance domestic growth. Three nuclear power projects were started over the past two years. A total of 20 nuclear power units are currently under construction. If the average per-kilowatt generating unit is estimated to cost 12,000 yuan ($1,760), the direct investment could amount to 250 billion yuan at the least.
The 11.7-billion-yuan of funds arranged under the central budget for nuclear power projects is expected to drive or attract more than 40 billion yuan of social capital. From January to November 2009, the fixed asset investment in electric power, coal and oil industries reached a little more than 1.4 trillion yuan, a rise of 17 percent over 2008.
Second, the nation seized the opportunity to adjust the energy structure and do away with outdated production capacity. By the end of 2009, China had closed small power-generating units with a total of 60.1 million kilowatts, which could save 64 million tons of raw coal and reduce 128 million tons of carbon dioxide emissions.
With the acceleration of mergers and reorganization of the coal industry, China shut down more than 1,000 small-coal mines in 2009 and, with the hastened development of natural gas, its natural gas pipeline system has reached 34,000 km. Moreover, hydropower and wind power account for 32.3 percent of China's new energy-generating capacity for the year.
Third, it capitalized on the global energy slowdown in demand during the financial crisis and a declining trend in the demand for energy resources. China vigorously carried out the "going-out" energy strategy. In 2009, it was active with its energy diplomacy and greatly enhanced its right to speak in the international energy realm; it conducted a dialogue on its energy policy with the United States and built good momentum for an overall development of energy cooperation with Russia in various fields.
After more than a decade of arduous negotiations, development of China's crude oil pipeline system has been settled and it is slated for operation at the end of 2010 with an annual transport volume of 15 million tons. Furthermore, the Central Asia Natural Gas Pipeline Project is expected to supply five billion cu m of natural gas this year.
Fourth, scientific and technological work has been strengthened in the energy sector, and has netted gratifying achievements. To date, China has issued 116 new standards and set up 16 testing centers in the energy industry, and substantial results have been attained in its natural gas pipeline and offshore wind power projects.
In a nutshell, China's energy sector responded adequately and satisfactorily in responding to the global financial crisis. The nation's energy industry has now reportedly entered the world's top ranks in terms of both quantity and quality. (Source: Zhang Guobao, head of the National Energy Bureau under China's National Development and Reform Commission, in China Daily, Jan. 28, 2010)

Judge orders FERC to reconsider pipeline reporting rules

WASHINGTON - The D.C. Circuit has ordered the Federal Energy Regulatory Commission to reconsider its reporting requirements for interstate natural gas pipelines, saying the agency "failed to respond to the reasonable concerns of a dissenting commissioner."
In 2008, FERC adopted new reporting requirements that called for greater clarity, so users could better determine if pipelines were charging too much for operating costs.
The agency took action after discovering that pipelines were carrying over enormous fuel costs beyond what was consumed - $711 million in 2005, for example. This meant higher "fuel charges" for customers, who were billed a percentage of the retained fuel costs to offset the pipelines' costs.
FERC required pipelines to break down their costs, including showing the difference between the amount of gas received from shippers and the volume of gas consumed each month.
"In the commission's view, customers should only pay for the services they use," Judge Janice Rogers Brown explained.
The American Gas Association, a national trade group of gas utilities, agreed that reporting revisions were needed, but argued that "greater clarity regarding gas purchase and sales activities can be achieved."

U.S Dept. of Interior, API in dust-up over oil and gas development

WASHINGTON - The Interior Department has fired back at American Petroleum Institute President Jack Gerard, saying he made several "inaccurate statements" on Jan. 26 when charging the Obama administration with slowing development of oil and gas resources.
"Mr. Gerard needs to check his facts before making statements that are so far off the mark," said Interior spokeswoman Kendra Barkoff. "Oil and gas production on federal lands and waters is up - not down - from 2008, and under Secretary (Ken) Salazar's leadership, the Department has offered more than 56 million additional acres for development."
She added, "Interior's agencies will continue to promote oil and gas development in the right ways, in the right places, and with a fair return for the American taxpayer, regardless of the political spears Mr. Gerard may throw on any given day."
In a conference call with reporters, Gerard sharply criticized Interior's actions that he said have led to a dramatic drop in the leasing of federal land and waters for oil and natural gas development. Since Salazar took office, Gerard said, acreage leased "has shrunk to the lowest level on record." He also said revenues from lease sales in 2009 were less than $1 billion, compared with $10 billion a year earlier.
Interior disputed his claims, saying that last year the administration offered "more acres for lease than several years on record." In fiscal 2009, Interior said, the administration offered more than eight million more acres for oil and gas development, onshore and offshore, than in fiscal 2006.
The department also said the acreage offered far exceeded the oil and gas industry's demand in 2009. For example, the Bureau of Land Management offered 3.8 million acres in fiscal 2009 for oil and gas production, but industry bid on only 1.8 million acres.
Revenues from oil and gas lease sales in 2009 were in line with recent years, the department said. Since 2001, four years showed higher oil and gas bonus revenues, and four years showed lower revenues. The $10 billion in revenues generated in 2008 by oil and gas lease sales "is an anomaly and is largely due to high prices on world markets," it said.
But API defended Gerard's statements.
"API stands by our facts," spokeswoman Karen Matusic said.