Thursday, June 30, 2011

PG&E may be assessed $26 million fine for 2008 natural gas explosion

SAN FRANCISCO, Calif. - State regulators might finally penalize PG&E $26 million for a deadly pipeline explosion that occurred nearly two years before the blast in San Bruno.

On Christmas Eve 2008, a pipeline exploded in the Sacramento suburb of Rancho Cordova, killing one person and injuring five others. A federal investigation into the incident revealed that PG&E was in violation of several safety requirements.

Despite those findings, the California Public Utilities Commission (CPUC) only opened a penalty case against PG&E in December 2010, after the San Bruno explosion had brought pipeline safety under close public scrutiny.

Now, CPUC staff has announced a settlement that would fine the utility $26 million in shareholder funds for its failure to comply with safety regulations. The settlement must still be approved by the full commission.

Wednesday, June 29, 2011

Enbridge Energy Partners Prices seven million Class A common unit offering

NEW YORK - Enbridge Energy Partners, L.P. (NYSE: EEP) announced on June 28 that it has priced an underwritten public offering of seven million of its Class A Common Units at a price to the public of $30 per unit, a 2.9 percent discount to the $30.89 at which units closed on June 27. The offering is expected to close on July 1.

Enbridge Partners granted the underwriters a 30-day option to purchase up to an additional 1.05 Million Class A Common Units to cover any over-allotments.

The partnership expects net proceeds from the offering will be approximately $203 million. The partnership will use the net proceeds from the offering, including the proceeds from any exercise of the overallotment option, to repay a portion of its outstanding commercial paper, to repay any credit facility borrowings that are outstanding, to fund a portion of its capital expansion projects, or any combination of such purposes. The operator of crude oil and natural gas transportation systems has 252.8 million units outstanding.

Tuesday, June 28, 2011

NuStar and Velocity to develop pipeline for Eagle Ford Shale condensate

SAN ANTONIO, Texas - NuStar Logistics, L.P. and Velocity Midstream Partners announced on June 27 that they have signed a letter of intent to develop a joint pipeline solution to transport west Eagle Ford Shale condensate from Velocity's Gardendale Hub to NuStar's North Beach Corpus Christi, Texas, terminal facility.

Velocity will build and operate a new 70-mile, 12-inch pipeline with the capacity to move over 100,000 barrels per day (b/d) of condensate from Gardendale to Oakville, Texas.

Velocity's 12-inch pipeline will interconnect with NuStar's new Oakville Storage Facility near Three Rivers, Texas. This storage facility will be connected to NuStar's existing 16-inch pipeline, which has the capacity to transport approximately 200,000 b/d of crude and condensate into NuStar's Corpus Christi North Beach Terminal.

The North Beach terminal has approximately two million barrels of storage capacity, large-scale marine loading facilities, and access to several Corpus Christi refinery markets. NuStar also has a land lease option for 15 acres contiguous to the existing property, which will provide terminal expansion capabilities.

Velocity is currently constructing 65 miles of pipeline and 150,000 barrels of storage to transport condensate to Velocity's Gardendale Terminal for producers, including Shell E&P, Chesapeake, SM Energy and Rosetta Resources.

The addition of the NuStar partnership allows Velocity to quickly offer these and other producers a downstream solution to transport condensate from the Gardendale Terminal to end markets with strong purchaser demand. Construction of Velocity's 12-inch pipeline and NuStar's Three Rivers storage facility will begin this summer and the system is expected to be in service by April of 2012.

Monday, June 27, 2011

TAPI gas project hits snags as buyers seek uniform price

ISLAMABAD - The much-delayed Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project has hit new snags as buyer countries Pakistan, Afghanistan and India sought uniform price of gas while Turkmenistan wants a bilateral arrangement (separate prices) for every buyer country, senior officials at the Ministry of Petroleum and Natural Resources told The International News.

Under the proposed project, the 1,640-km. TAPI gas pipeline backed by the Asian Development Bank will bring 3.2 billion cubic feet of natural gas per day (bcfd) from Turkmenistan’s gas fields to Multan in Central Pakistan and end in the northwestern Indian town of Fazilka. Out of this, Pakistan will get 1.365 billion cubic feet of gas per day, India 1.365 bfcd and Afghanistan 0.5 bfcgd.

Sources say the Manila-based ADB is willing to sponsor Pakistan's equity in the TAPI project. The official said Pakistan, which is virtually a cash-starved country, needs a huge injection of gas to meet its growing energy needs and to this effect the ADB's offer to sponsor the major chunk of Pakistan's equity in the project will provide massive ease to the country. Sources privy to the Manila talks said stalemate plagued talks in Manila from May 30 to June 3 between the seller and buyer countries when Afghanistan, Pakistan and India united on the stance that a separate tariff would have huge political repercussions in each buyer country.

Sources said buyer countries also raised the issue of which countries would pay the price of lane-packed gas (gas which remains in the pipeline). Turkmenistan is of the view that buyer countries always pay for lane-packed gas but buyer countries want the seller to share the price of the lane-packed gas. "Buyer countries argue that since they will have take off of gas from their respective border points, why should they pay for gas which remains in the pipeline," said a source.

When asked when the Gas Sales Purchase Agreement (GSPA) would be signed by seller and buyer countries, sources said it would be finalized by July 31, 2011.

During the Manila talks, India brought up the issue of sulphur content in the gas saying India had comprehensive legislation in this regard and wants minimum sulphur content in the gas imported from Turkmenistan. Sources said Afghanistan and Pakistan also sided with India on the issue and Islamabad demanded that sulphur content be no more than 0.25 percent. On this issue Turkmenistan said it would have to build a de-sulphurisation plant, which would increase prices for all buyer countries.

"During the talks many technical issues got resolved, but 15 to 16 issues are still to be resolved," official sources told The International News. "All stakeholder countries have decided that the project will be completed not in the segmented approach adopted in the case of the Iran-Pakistan gas pipeline but using the integrated approach."

Friday, June 24, 2011

DOT's LaHood says PHMSA will stop letting energy pipeline industry fund safety studies

WASHINGTON, D.C. - U.S. Transportation Secretary Ray LaHood, whose department oversees the Pipeline and Hazardous Materials Safety Administration (PHMSA), has promised to repeal the outside funding requirement of land-based pipeline safety studies after a reporter briefed his spokeswoman on the findings of an investigation by Hearst Newspapers.

"Secretary LaHood believes that credible, independent research is a crucial component of the Department of Transportation's safety agenda, and he has directed the Pipeline and Hazardous Materials Safety Administration to end the practice of using industry resources to help finance research," spokeswoman Olivia Alair said.

According to the Hearst story, U.S. gas pipeline operators and their trade organizations shaped, managed and provided sizable funding for numerous safety studies conducted by the federal agency that regulates the industry.

The Hearst investigation revealed that two-thirds of the 174 safety studies of land-based pipelines that the federal agency has launched in the last decade were largely funded by pipeline operators or organizations they control. That's because the agency has required that in most cases, at least half the funding for its pipeline safety research come from outside sources - a policy that the Obama administration is now promising to change.