Thursday, April 29, 2010

Iraq invites contractors to prequalify for work around Basra

BASRA, Iraq - Iraq’s state-run South Oil Co. (SOC) is inviting contractors interested in providing services to enhance its southern oil export facilities, as part of the plan to boost its crude output, to begin the bid process.
Companies have until May 5 to prequalify to compete for the rehabilitation and expansion of the existing export facilities and pipelines in the southern oil hub city of Basra.
Iraq hopes to boost its output capacity from 2.5 million b/d now to 12 million b/d in six to seven years.
Iraq has plans to expand its oil exporting facilities to handle the expected rise in output following deals to develop its oilfields.
The crude oil export facility project - funded by a Japanese government loan - includes the installation of two new onshore and offshore pipelines plus one floating oil terminal.
“This is part of an extensive plan to raise the export capacity from Basra ports to more than four million b/d in four years, up from 1.8 million b/d now,” an official at SOC said.
Iraq aims to install four new floating oil terminals and three new undersea oil pipelines that will boost export capacity to eight million b/d from 1.9 million b/d now, the head of SOC said last November.
Iraqi oil exports reached 1.79 million b/d in March, including exports from its northern fields, which flow through a pipeline from Kirkuk in the north to the Turkish port of Ceyhan.
The bulk of Iraq’s oil reserves, the world’s third largest, are in the south, and are currently pumped through two offshore terminals.
The existing pipelines carry oil from southern oilfields to the Khor al-Amaya and al-Basra oil terminals, but equipment is old and decrepit after years of war and economic sanctions.

Wednesday, April 28, 2010

EU begins seeking suppliers for pipe to build Nabucco Pipeline

VIENNA - The European Union's Nabucco gas pipeline took a step closer to becoming reality on April 23 when the consortium building it launched the process to find companies to supply the pipe needed for the project.
Nabucco Gas Pipeline International said it formally started the process to find a supplier for "long-lead items" - such as pipes and valves - needed for the 2,060-mile pipeline.
"The pre-qualification for long-lead items is a substantial step towards starting construction at the end of 2011," Nabucco managing director Reinhard Mitschek said.
Nabucco, estimated to cost $10.5 billion (7.9 billion euros), is intended to bring gas from central Asia to southeastern Europe, initially running from Azerbaijan to Ankara in Turkey and then on to Vienna.
The EU sees it as vital to energy security following a number of recent disputes that disrupted supplies of Russian gas to some countries in eastern and central Europe.

Tuesday, April 27, 2010

Kinder Morgan to expand Cochin Pipeline to handle Marcellus NGLs

HOUSTON - Kinder Morgan Energy Partners, L.P. on April 20 announced plans to modify and expand the existing Cochin Pipeline system to provide a solution for transporting natural gas liquids (NGLs) from the Marcellus Shale Basin to fractionation plants and chemical markets near Sarnia, Ontario, and Chicago, Ill.
Kinder Morgan plans to build approximately 250 miles of NGL pipeline from the Marcellus Shale Basin in southern Pennsylvania to the Cochin interconnect at Riga, Mich. From Riga, Kinder Morgan anticipates that product will be transported through the existing Cochin Pipeline system to Windsor, Ontario, and then through the Windsor-Sarnia Pipeline to Sarnia. Kinder Morgan also plans to reverse the eastern leg of its Cochin pipeline in order to move NGLs from Riga to the Chicago area, where it expects to build an additional pipeline to connect to existing fractionation facilities and chemical plants.
“Our proposed pipeline and key existing infrastructure offers NGL producers the quickest and most efficient solution to get their product to the market,” said Don Lindley, vice president of business development for Kinder Morgan’s Products Pipeline group.
The pipeline will be designed to transport mixed NGLs (Y-grade), as well as purity NGLs such as ethane, and will have an initial throughput capacity of 75,000 b/d and can be expanded to handle up to 175,000 b/d.

Monday, April 26, 2010

Crews cleaning up Bridger Valley spill in Wyoming

GREEN RIVER, Wyo. - Workers continue to clean up a pipeline break that spilled tens of thousands of gallons of crude oil earlier this month in
southwest Wyoming's Bridger Valley.
The oil spill occurred April 5 near Robertson in southwest Uinta County,
according to Wyoming Department of Environmental Quality officials. The
pipeline is owned by Bridger Lake LLC of Louisiana.
DEQ emergency response coordinator Joe Hunter estimated that about 2,000 barrels (84,000 gallons) of oil spilled onto the ground before workers
located and plugged the leak.
"Right after they found the leak, they shut the line in, and at that point no more (oil) goes into the line," Hunter said.
Hunter said the company reported the leak in a "timely manner" and that its cleanup response has been good.
"After the cleanup is done, we'll evaluate the causes and the cleanup actions and we'll go forward from there," he said.
Hunter said an oil fire broke out and burned for a short while on April 10 during cleanup work, pouring black smoke into the valley skyline.

Thursday, April 22, 2010

BP shareholders defeat oilsands resolution

BP shareholders overwhelmingly rejected a resolution that would have required the company to report on the environmental, financial and reputational risks of developing Canadian oilsands projects. The resolution was rejected by 85 percent of shareholders voting.
BP was one of four major oil companies involved in oilsands extraction targeted for such shareholder resolutions. The other three, Shell, ConocoPhillips, and ExxonMobil, have their shareholder meetings in May.
Besides being more expensive to extract, crude oil derived from oil sands, also known as tar sands, emits 20 percent more CO2 over its life cycle than oil from conventional sources.
However, the rising price of oil, combined with the prospect of a major new source in a friendly, stable nation, makes such development attractive, and Canada’s tar sands contain the second largest crude oil reserves in the world after Saudi Arabia.

Wednesday, April 21, 2010

‘Deepwater Horizon’ rig explosion injures 17 workers, burns out of control

PORT FOURCHON, La. – Transocean’s Deepwater Horizon drilling rig in the Gulf of Mexico off the Louisiana coast was involved in an explosion and fire at around 10 p.m. on April 20, sending spectacular bursts of flame into the sky.
The fires were still raging on the afternoon of April 21. Nearly 24 hours after the explosion, the rig continued to burn, and authorities could not say when the flames might die out. A column of boiling black smoke rose hundreds of feet over the Gulf of Mexico as fireboats shot streams of water at the blaze.
Seventeen workers were injured, three critically, the U.S. Coast Guard said.
Eleven others were reported missing after the explosion.
Of those on the rig when the accident occurred, 79 were Transocean workers, six were BP employees and 41 were contract workers.
Vice President Adrian Rose of Transocean, the rig owner, said crews before the explosion were performing routine work and that there was no sign of trouble. The rig was under contract to BP PLC.
Rose said the explosion appeared to be a blowout, in which natural gas or oil forces its way up a well pipe and smashes equipment.
The rig late on April 21 was listing by 10 degrees and said to be sinking.
According to the Transocean website, the Deepwater Horizon is 396 feet long and 256 feet wide and was located in 5,000 feet of water.
Offshore drilling is a dangerous occupation. Since 2001, there have been 69 offshore deaths, 1,349 injured and 858 fires and explosions in the Gulf of Mexico, according to the federal Minerals Management Service.

Tuesday, April 20, 2010

For new TransCanada boss, Alaska pipeline at bottom of priorities

CALGARY, Alta. - The Alaska gas pipeline project will be vital for TransCanada Corp. in a decade, but the company’s incoming chief executive said he is more focused now on moving forward with $22-billion of projects that garner far fewer headlines.
Russ Girling, who takes over as CEO in July, said on April 15 that the multibillion-dollar Alaska proposal would help TransCanada keep its Alberta and Canadian main line gas systems running at capacity as conventional western Canadian production dwindles in the coming years.
But Girling, 47, said in an interview he is still more focused on major investments that will come to fruition over the next eight years, such as its Keystone oil pipeline system to the United States in June and its subsequent expansions.
“If you made the decision today, you’d be looking at eight to 10 years in terms of first flow of gas (from Alaska). So it’s still a long lead-time project,” he said.

Monday, April 19, 2010

New pipeline trade group formed in Pennsylvania to counter PUC

HARRISBURG, Pa. - State utility regulators are concerned about the safety of pipelines used by Pennsylvania's booming Marcellus Shale natural-gas industry and are exploring whether they should have new powers to oversee that area and others.
Not all industry participants, however, are in favor of more oversight from the Public Utility Commission.
"Personally, I think the PUC is just trying to expand its power," said Lou D'Amico, president of the newly formed Pennsylvania Independent Oil & Gas Association - a melding of the Pennsylvania Oil & Gas Association, and the Independent Oil & Gas Association of Pennsylvania.
"We don't want them expanding regulation beyond what's already in place," D'Amico said.
Major interstate and pipelines within Pennsylvania are under the jurisdiction of federal or state regulatory agencies. But the pipelines that connect wells to larger transport pipelines - gathering pipelines - lie in a gray area, PUC spokeswoman Jennifer Kocher said.
"Given the significant development that will be associated with the Marcellus Shale region, the commission is concerned about oversight of pipelines and that trucks carrying items used in drilling carry PUC certification and proof of insurance," Kocher said.
The number of gathering lines running from individual wells is unknown - but is thought to be huge.
More than 350,000 oil- and natural-gas wells have been drilled throughout Pennsylvania, dating back to Edwin Drake's first well in 1859.
From Jan. 1, 2000, through April 9, 2010, nearly 30,000 oil- and natural-gas wells were drilled, according to state Department of Environmental Protection data.
Gathering lines range in length between a few hundred feet to as long as 20 miles, D'Amico said. Marcellus Shale wells could use gathering lines even longer, depending on their proximity to larger pipelines, he said.
For the PUC to have jurisdiction over all gathering pipelines would require special legislation, Kocher said.

Friday, April 16, 2010

Petrohawk, Kinder Morgan in Haynesville Shale joint venture

HOUSTON - Kinder Morgan Energy Partners on April 13 said it has agreed to pay $875 million in cash to Petrohawk Energy to form a natural gas gathering and processing joint venture centered on the Haynesville Shale play in northwest Louisiana.
With the creation of KinderHawk Field Services, the small Houston-based exploration and production company will have raised $1.4 billion in cash from asset sales in 2010 alone.
That's on top of another $1.2 billion in asset sales, $2.7 billion in equity fund raising and $1.1 billion in debt issued since December 2007.
“Yes, we've raised a lot of capital, but we've had a great use for those funds,” Petrohawk Chairman and CEO Floyd Wilson said.
In that time the company took its acreage in the Haynesville and expanded it to become a top producer of natural gas from the tight, cement-like shales that until recent years were considered too expensive to drill. Almost single-handedly, Petrohawk created awareness of the Eagle Ford Shale in South Texas, becoming the dominant player there.
All told, Petrohawk has gone from being a company with four trillion cubic feet equivalent of gas reserves and a $3 billion market capitalization in December 2007 to 34 trillion cubic feet in reserves and a $7 billion market cap. With the scale also has come greater efficiency: Petrohawk went from 25,000 wells to 5,000 in that same time.

Thursday, April 15, 2010

Atlas Energy in $1.7 billion Marcellus venture with India’s Reliance

PITTSBURGH - Atlas Energy, Inc. (NASDAQ: ATLS) on April 9 announced its entry into a joint venture with a wholly owned affiliate of Reliance Industries, the largest private sector company in India and a global energy leader,
In the deal, Atlas will transfer an interest in its Marcellus Shale position equal to 120,000 net acres in a transaction valued at $1.7 billion.
Reliance will pay approximately $340 million in cash upon closing and an additional $1.36 billion in the form of a drilling carry.
Atlas will serve as the development operator for the joint venture. Reliance will have the option to operate in certain project areas in the coming years outside of Atlas’ core operating areas of Fayette, Greene, Washington, and Westmoreland Counties in southwestern Pennsylvania.
Reliance will acquire a 40 percent undivided interest in some 300,000 net acres (120,000 net to Reliance) of undeveloped leasehold held by Atlas, and Atlas will retain a 60 percent undivided interest in the acreage.
In addition to funding its own 40 percent of drilling obligations, Reliance has agreed to fund 75 percent of Atlas’ portion of drilling and completion costs until the $1.36 billion drilling carry is fully utilized. Atlas has 5 1/2 years to utilize the drilling carry, subject to a two-year extension under certain conditions.

Wednesday, April 14, 2010

Canadian union appeals NEB approval of Keystone XL pipeline

TORONTO - The Communications, Energy and Paperworkers Union of Canada is charging that approval by Canada’s National Energy Board of the Keystone XL pipeline will result in tens of thousands of Canadian jobs being exported to Texas. The energy union filed leave to appeal the decision on April 9.
"The oil and gas industry has decided that the enormous economic development associated with upgrading and refining oil sands resources will take place in Texas, not Canada," said Dave Coles, president of the union.
The Keystone XL pipeline construction project will export 900,000 barrels of oil per day to the U.S. Gulf Coast - most of it unprocessed bitumen from the Alberta oil sands.
"This means the loss of tens of thousands of jobs in the Canadian oil upgrading and refining sector that either exist now, or that would have been created by projects that are likely to be canceled as a result of the dramatic expansion of oil export pipeline capacity to upgraders and refineries in the U.S.," Coles charged.
Keystone XL was opposed by CEP, the Alberta Federation of Labor, the Sierra Club as well as by Enbridge, Imperial Oil, BP and Nexen.
The companies argued that Keystone XL will create enormous excess export capacity, raise service costs on other pipelines and increase input costs to Canadian refineries by US$600 million in 2013.
"Not only will this project abandon the enormous opportunity of creating a diversified Canadian oil and gas industry," said Coles, "but it will seriously undermine the viability of existing refineries. Astonishingly, the NEB has signed off on the industry's plan as being the Canadian public interest. The Board has abandoned its mandate to the entirely ill-founded notion that a deregulated export market is in the Canadian public interest."
The legal argument filed by CEP alleges that the NEB made several fundamental errors of law, and failed to properly exercise its mandate to protect the Canadian public interest.
The National Energy Board approved the Keystone XL pipeline project on March 11, subject to the federal government giving it the final green light. CEP filed its appeal on April 9.

Tuesday, April 13, 2010

NRDC questions State Dept.’s early release of DEIS for Keystone XL

WASHINGTON - Senior Attorney Susan Casey-Lefkowitz of the Natural Resources Defense Council wrote on her Blog on April 9 “the State Department (on April 9) made available on its webpage its draft environmental impact statement (DEIS) for the proposed Keystone XL tar sands pipeline. The DEIS is oddly dated one week from now and it seems as though no Federal Register notice has been published. We can only hope that its premature release is a trial balloon and that initial reaction will be considered before the real publication occurs.”
NRDC contends that State should have waited for completion of a new White House guidance on incorporating greenhouse gas emissions impacts into environmental impact statements. And, State should have been taking a hard look at whether Keystone XL is in the national interest before investing in a draft EIS.
Keystone XL is a target of environmental groups because it will double the amount of tar sands oil currently being piped into the United States – of what will be bitumen, not syncrude. Much of the tar sands oil received in the U.S. is already refined to a synthetic crude, more like common oil. Bringing in the raw bitumen in the new pipeline means that the upgrading and refining has to take place in the United States, resulting in increased emissions of greenhouse gases, heavy metals, and other pollutants, say the environmentalists.

Monday, April 12, 2010

Canadian government funding clean energy pipeline project

CALGARY, Alta. - The Government of Alberta will invest $US1 million into Enbridge Inc.'s CO2 Slurry Pipeline Project being developed in the United States to lessen the impact of the pipeline industry on the environment.
Where conventional slurry pipelines rely on liquids such as water to carry entrained solids, the Enbridge project proposes using carbon dioxide. Enbridge says that carbon dioxide is a more efficient carrier fluid than water because it is less abrasive, is able to carry a greater volume of material, and delivers solids that are dry rather than wet.
Under the program, carbon dioxide will be compressed into a liquid, then pumped through a pipeline to transport materials. Afterwards, the carbon dioxide will be stored underground in a manner similar to carbon capture and storage projects.
The government funding will be used for Phase 1 of the project, which will cost $1-$2 million and take approximately two years to complete. This phase, the CO2 Slurry Pipeline Research Initiative, will determine the viability of building a long-distance carbon dioxide slurry pipeline, which would transport sulphur, petroleum coke and limestone from the Fort McMurray area to local and international markets.
Phase 2 will involve building a carbon dioxide flow loop to prove slurry and de-slurry capability, while Phase 3 will involve commercial operation and market integration.

Friday, April 9, 2010

Denali estimates Alaska gas pipeline will cost $35 billion

JUNEAU, Alaska - Details of the Denali project, a joint effort of ConocoPhillips and BP PLC, were released on April 6 in a filing with the Federal Energy Regulatory Commission. The pipeline to move natural gas from Alaska's North Slope to North American markets will cost an estimated $35 billion, according to its planners.
Denali proposes a pipeline stretching more than 1,700 miles, with delivery points along the way to help meet gas needs in Alaska and Canada. It bills the project as "one of the largest private investments in the history of North America."
Denali is competing with a proposal being advanced by Calgary, Alberta-based TransCanada Corp. and Exxon Mobil Corp., of Irving, Texas. That project, which has been promised up to $500 million from the state for eligible costs, has estimated its cost at $20 billion to $41 billion, depending on the route, with an option crossing Alaska and into Canada estimated at $32 billion to $41 billion.

Thursday, April 8, 2010

ExxonMobil to pay $32.2 million in back-royalties to U.S.

WASHINGTON - Exxon Mobil Corp will pay $32.2 million to the United States to resolve claims that some of its units knowingly underpaid royalties owed on natural gas, the Justice Department said on April 5.
The government alleged that Mobil Natural Gas Inc., Mobil Exploration & Producing U.S. Inc. and affiliates underreported the value of natural gas taken from federal and American Indian leases between March 1, 1988 and Nov. 30, 1999.
As a result, the Mobil entities paid lower royalties than they owed to the United States and to American Indian tribes, the government said. The Mobil entities became part of Exxon Mobil through a 1999 merger.
The case arose out of a lawsuit filed by a private citizen on behalf of the United States under the whistleblower provisions of the federal False Claims Act.
Various other energy companies have agreed to pay more than $200 million to settle their portions of the lawsuit.

Wednesday, April 7, 2010

FERC backs higher tariffs for Enbridge Alberta Clipper in dispute

CALGARY, Alta. - Pipeline tariffs are set to surge for Canada's oil producers after Enbridge Inc. won a key battle against oil sands companies that have criticized the company for building what they called an unnecessary pipeline to the United States.
The U.S. Federal Energy Regulatory Commission (FERC) ruled against Suncor Energy Inc., which wanted to avoid paying additional tolls for the new $3.7-billion line. Suncor argued that Enbridge should not have built the pipeline, and its argument was supported by a number of other producers.
FERC sided with Enbridge, which wants to raise the tolls on its network of crude pipelines on April 1 in order to pay back the costs of building and operating the line, which runs 1,607 kilometers from Hardisty, Alta., to Superior, Wis.
The ruling means Enbridge tolls will increase by 97 cents, a 33-per-cent hike, over 2009 levels, Enbridge said. About three-quarters of that increase is because of Clipper costs.
That's not enough to significantly impact oil producers' profits, since it's a small percentage of the price of crude. But had Enbridge lost against Suncor, "it would have been a negative for Enbridge earnings," said UBS Securities analyst Chad Friess.

Tuesday, April 6, 2010

Enterprise buying gas gathering lines from M2 for $1.2 billion

Enterprise Products Partners L.P. said on April 1 that it has agreed to purchase two natural gas gathering and treating systems from M2 Midstream for about $1.2 billion.
The transaction for the State Line system and the Fairplay system is expected to close in early May 2010 and be accretive to Enterprise's distributable cash flow in the second half of 2010.
The systems are located in Northwest Louisiana and East Texas, and gather natural gas produced from the Haynesville/Bossier Shales and the Cotton Valley and Taylor Sands formations. The company noted that both systems are supported by long-term acreage dedications and volumetric commitments from producers.
In late February, Enterprise Products announced the completion of its $3.3 billion merger with TEPPCO partners, L.P., an energy logistics partnership. With an enterprise value of about $30 billion, 48,000 miles of pipelines and market capitalization of $18 billion, the combined entity has become the nation's largest publicly traded partnership.
According to Enterprise, the two natural gas systems that it has agreed to acquire complement its downstream assets and provide multiple opportunities for synergies, including a long-term gathering conduit for the company's Haynesville Extension pipeline and Enterprise Texas pipeline, as well as natural gas liquid or NGL volumes for the company's Panola pipeline and downstream Mont Belviue fractionation, storage and distribution complex.
The State Line system, which began operations in February 2009, is located in Desoto and Caddo Parishes, La., and Panola County, Texas. The system includes 138 miles of natural gas pipelines with a capacity of approximately 400 million cubic feet per day or Mmcfd, and two treating facilities. The system, currently gathering about 260 Mmcfd, will almost triple its capacity to 700 MMcfd after a 50-mile expansion of the system that is expected to be completed in June 2010.
The State Line system will interconnect with the 42-inch Haynesville Extension of Enterprise's Acadian natural gas pipeline system. The Haynesville Extension, currently under construction, is expected to be completed in the third quarter of 2011. Enterprise noted that the State Line system, once connected to the Haynesville Extension, can be further expanded to 1.2 billion cubic feet per day for a nominal cost.
In late 2008, M2 Midstream initiated the State Line Gathering System, a greenfield project, to serve the Haynesville Shale play in DeSoto Parish, La. During 2009, the company added over 90 miles of pipeline to the system and three processing plants.
The Fairplay system, located in Rusk, Panola, Gregg and Nacogdoches counties in Texas, includes 249 miles of natural gas pipelines. This includes about 62 miles leased from third parties, with a capacity of approximately 285 MMcfd, and is currently gathering approximately 180 MMcfd. This system is expected to be connected to the Enterprise Texas Pipeline system by the first quarter of 2011.
The Fairplay system was acquired by M2 Midstream in December 2007 and began a significant capital improvement and expansion during 2008.

Monday, April 5, 2010

India snubs U.S. warning over gas pipeline from Iran

WASHINGTON and NEW DELHI - Denying any U.S. pressure on its ties with Iran, India has decided to nominate its ambassador to participate in a meeting on nuclear disarmament in Tehran, and further stressed that it has not shut its door on the proposed Iran-Pakistan-India gas pipeline project.
Four days after a Nuclear Security Summit in the U.S., Iran, under escalating international pressure over its nuclear program, will be hosting a two-day conference beginning April 17 on nuclear disarmament and is seeking India’s support for the initiative.
India’s Ambassador to Iran Sanjay Singh will participate in the April 17-18 Tehran meeting on nuclear disarmament entitled “Nuclear Energy for All, Nuclear Weapons for None.”
Further, India said it has not withdrawn from the proposed $7.5 billion tri-nation IPI gas pipeline, well-placed sources said on April 3.
“We haven’t shut the door on dialogue. Besides pricing and security issues, the volatile situation in Pakistan also has a bearing on the project,” a source said.
In March, Iran and Pakistan signed a bilateral pact on the pipeline project, but left the door open for India to join in at a later stage.
Underlining India’s ties with Iran, the sources pointed out that Tehran is important for New Delhi not just for energy but also for strategic reasons in Afghanistan.
The source also denied any American pressure on India to scale down its ties with Iran, saying New Delhi’s ties with Tehran stand independently of its relations with other countries.

Thursday, April 1, 2010

Mayeaux to receive ISHM Laurance S. Reid Award

OKLAHOMA CITY, Okla. - The International School of Hydrocarbon Measurement (ISHM) has announced that Donald P. Mayeaux is the recipient of the Laurance S. Reid Award, given annually to recognize individuals who have made significant contributions to the hydrocarbon measurement industry.
Mayeaux is the founder and CEO of A+ Corp., headquartered in Gonzales, La.
Mayeaux is an internationally recognized expert on natural sampling and analysis. He has been awarded 30 patents and has 10 more pending on various aspects of natural gas sampling and analysis, including gas blending, gas analyzers, membrane separators, sampling components, and moisture and corrosion control packets.
Mayeaux founded A+ Corporation in 1988. The company has grown into one of the preeminent gas sampling equipment manufacturers in the U.S. Mayeaux is also the founder of the Natural Gas Sampling Technology Conference (NGSTech), an international conference held biennially to help advance the state of the art of natural gas sampling and measurement, and an Instrument Society of America Fellow.
The award will be presented at the International School of Hydrocarbon Measurement to be held May 11-13 at the Cox Communications Center in Oklahoma City.