House, Senate pass wrong pipeline safety bill

WASHINGTON, D.C. - It was a celebrated, bipartisan achievement: Congress sent the president a bill to address pipeline safety issues - a sign that lawmakers could get beyond the bitter partisanship that has slowed down nearly everything in this divided Congress.

And still they managed to at least temporarily screw things up.

Due to human error, the House on Dec. 12 and Senate on Dec. 13 both passed a pipeline safety bill all right, but an earlier, stronger version of the bill - not the final watered-down bipartisan, bicameral compromise.

"There was a House clerical error and we expect the correcting resolution to be approved in the House and Senate without issue," said Caley Gray, a spokesman for Sen. Frank Lautenberg (D-N.J.), who was a lead author of Senate pipeline safety legislation this year. The Senate was the one that discovered the error, Gray added.

The House by unanimous consent late Dec. 14 agreed to the version they meant to approve on Dec. 12; the Senate was expected to quickly follow suit.

The corrected bill would double to $2 million the maximum fine for safety violations, increase the number of pipeline inspectors and require automatic shutoff valves on new or replaced pipelines, but only "where economically, technically and operationally feasible." (Source: Darren Goode,  Politico Pro, Dec. 14, 2011) 

Kinder Morgan to invest $130 million in new condensate processing facility

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (NYSE: KMP) on Dec. 14 announced it will build, own and operate a petroleum condensate processing facility near its Galena Park terminal on the Houston Ship Channel.

With an initial throughput of 25,000 barrels per day (b/d) and a design that provides for future expansions of up to 100,000 b/d, the approximately $130 million project will split condensate into its various components such as light and heavy naphthas, kerosene and gas oil. A major oil industry customer is underwriting, through a fee structure, the initial throughput of the facility.

"The location of our new facility, when combined with our recently announced $220 million crude/condensate pipeline, will provide customers with unparalleled connectivity to crude oil and clean products markets including refineries, chemical companies, gasoline blenders, finished product storage, outbound pipelines and marine facilities on the Texas Gulf Coast," said KMP Products Pipelines President Tom Bannigan.

The transaction is expected to be immediately accretive to cash distributable to KMP unitholders upon the project's completion in January 2014.

The pipeline, which will transport crude/condensate from the Eagle Ford Shale in south Texas to the Houston Ship Channel, will consist of almost 70 miles of new-build construction and 113 miles of converted natural gas pipeline. Construction on the pipeline has begun and Kinder Morgan expects it to be in service in the second quarter of 2012.

The pipeline is one of several projects to tap the prolific light, sweet Eagle Ford shale oil formation to make the connection between the field and the heavy concentration of refineries along the U.S. Gulf Coast, replacing more expensive crude imports.

Williams Partners seeks FERC OK for more natural gas service to Northeast

TULSA, Okla. - Williams Partners L.P. (NYSE: WPZ) announced on Dec. 14 that its Transco pipeline has filed an application with the Federal Energy Regulatory Commission (FERC) to provide 250,000 dekatherms per day of incremental, year-round firm natural gas transportation capacity to serve growing markets in the Northeast by November 2013.

The Northeast Supply Link project is designed to expand certain segments of the existing Transco pipeline in Pennsylvania and New Jersey to transport robust domestic supplies of natural gas to growing markets in the Northeast.

"Because of its existing location, the Transco pipeline is well positioned to connect vast domestic natural gas supplies with growing markets in New York, New Jersey and Pennsylvania," said Randy Barnard, president of Williams' natural gas pipeline business. "This increased access will not only enhance reliability of natural gas service, but should contribute to a more stable gas and electric pricing environment in markets served by the project."

The proposed expansion will primarily consist of approximately 12 miles of new pipe at various locations in Pennsylvania and New Jersey, in addition to a new 25,000-horsepower compressor facility in Essex County, N.J., along with other facility modifications. The capital cost of the project is estimated to be $341 million.

Most of the new pipe will be installed either entirely within or parallel to existing pipeline and utility rights-of-way. The new Essex County compressor facility will be constructed on land already owned by Williams. All other compression-related activities will be performed entirely within existing compressor station facilities.

If approved, compressor station construction would begin in November 2012 with pipeline construction following in the spring of 2013.

Southern Union shareholders approve merger with Energy Transfer

DALLAS, Texas. - Southern Union Co. shareholders on Dec. 9 overwhelmingly approved a $9.4 billion merger with Energy Transfer Equity LP, ending Tulsa-based Williams Cos. Inc.'s chance of gaining reconsideration for its lower bid to buy the Houston-based pipeline company.

Williams, however, still has a shot at buying some of Southern Union's pipeline assets after the merger.

"Obviously, Williams has shown interest in the assets in the past," company spokeswoman Julie Gentz said.

"While we can't speculate on any future actions, Williams is always looking at strategic and financially disciplined growth opportunities."

Energy Transfer CEO Kelcy Warren said last month that the Dallas-based ETE would not rule out a later deal with its former bidding rival.

Plains All American converting Oklahoma LPG pipeline to crude service

HOUSTON, Texas - Plains All American Pipeline, L.P. (NYSE: PAA) on Dec. 8 announced it is converting an existing Oklahoma liquefied petroleum gas (LPG) pipeline into crude oil service.

The pipeline, which extends from Medford, Okla., to PAA's crude oil terminal facility in Cushing, Okla., will provide an initial crude oil throughput capacity of 12,000 barrels per day (b/d) by January 2012 and will be expanded to 25,000 /d by July 2012.

"Converting and expanding this pipeline provides timely take-away capacity for growing crude oil production in the Mississippian Lime formation in northern Oklahoma and southern Kansas," said Harry N. Pefanis, president and COO of Plains All American. "This project extends our commitment to service Mississippian producers and is one of a number of projects PAA is progressing to service the growing infrastructure needs in this area and multiple resource plays throughout North America."

Magellan returns Nebraska pipelines to service after 2,834-barrel spill

NEMAHA, Neb. - Magellan Midstream Partners LP returned its products pipeline system to service in Nebraska late on Dec. 12.

Repairs to the pipeline that spilled an estimated 2,834 barrels of refined oil products have been completed, Bruce Heine, a company spokesman, said in an e-mail.

Two separate lines carrying diesel and gasoline were shut Dec. 10 after they were struck by a bulldozer. The pipelines were damaged when a bulldozer operator - the son of a landowner - was tearing out trees with a "rock ripper," Heine said. The plow-like piece of equipment is attached to the rear of a bulldozer and is used to break up hard soils, or remove tree stumps and boulders.

The landowner's son was clearing brush with the bulldozer when he hit the pipelines at a site 2 1/2 miles southwest of Nemaha. 

Some of the site was saturated with fuel to a depth of up to 15 feet, DEQ said, and the agency expected to drill wells to see if the fuel reached groundwater.

Magellan said the spill could have been prevented if the bulldozer operator would have called the Nebraska One-Call Center at 811 before excavating in the area near the pipelines.

Crews installed four underflow dams on a tributary of Jarvis Creek that flows to the Little Nemaha River in an attempt to keep the fuel from flowing to the river. An underflow dam draws water from the bottom of a stream through a tube and allows it to continue downstream. Because petroleum floats, the dam holds the fuels back so they can be removed. Such structures are preferred over holding back the entire stream flow, which would cause the contaminated water to flood surrounding property. However, some components of refined petroleum products dissolve into water and would flow downstream regardless.

The company also has built berms on the site to contain runoff from rain, which is forecast for Dec. 13-14.

State officials have set up monitoring sites downstream from the spill to measure for contamination. They also will drill deep into the soil to determine how far the fuel has penetrated. Contaminated soil will have to be removed.

"There have been no dead fish reported," said Jim Bunstock, spokesman for the Nebraska Department of Environmental Quality, on Dec. 12. "There's a lot of monitoring going on."

The company spokesman declined to say how deeply the pipelines were buried. He indicated there had been no call to the digger's hotline, as required by state law before any underground work is done.

The incident was the biggest pipeline spill in Nebraska since 2001. The Pipeline and Hazardous Materials Safety Administration (PHMSA) said the next worst spill happened in 2007, when 72,450 gallons spilled. However, the PHMSA figure ignores 5,000 barrels that spilled from the Platte Pipeline in 1996 near Lawrence, said Bunstock. Bunstock added that 6,300 barrels of petroleum products were spilled by Williams Pipeline in Omaha in 1989.