Opposition organizes to Canada-New England tarsands pipeline

A proposal by Canadian Energy giant Enbridge, Inc. to partially reverse the flow of a Canadian pipeline has received 41,000 comments in opposition.

The reversal is the first step in a plan to ship tarsands oil through New England in order to access East Coast and overseas markets.

Comments to the Canadian National Energy Board (NEB) expressed concerns about the environmental and public health impacts of the proposal.

The NEB, the Canadian federal agency that oversees permitting interprovincial pipelines, is reviewing Enbridge's proposal to reverse the flow direction of a portion of its aging 62-year-old pipeline to move tar sands crude approximately 125 miles from Sarnia to the Westover Oil Terminal, outside of Hamilton, Ontario. Pipeline companies have sent clear signals that the real intent is a long-range plan to ship tar sands oil further on through Vermont, New Hampshire and Maine to tankers in Portland harbor for Eastern U.S. and overseas markets.

"A more responsible approach would be for the Canadian Energy Board to order an investigation into the full environmental impact of the larger project, including the safety implications of shipping tar sands and impacts on the environment, waterways and communities and carbon pollution from burning tar sands oil," said Jim Murphy, senior counsel at NWF. "Enbridge is trying to skirt scrutiny and downplay their goals by breaking the plan into smaller pieces. The public isn't fooled. New Englanders are opposed to tar sands in our region and demand a transparent process."

The latest permit application follows Enbridge's 2008 effort, a pipeline project called "Trailbreaker" to move tar sands oil 750 miles from mining operations in Alberta through Ontario and Quebec and across New England to Portland, Maine, where the crude would be loaded onto tankers for export. Purportedly due to the economic downturn, Enbridge temporarily shelved the project.

"The people of Vermont do not want to live side-by-side with the dirtiest fuel in existence flowing through our communities, threatening to seep into our streams and lakes and pollute our natural resources. The Canadian government should stop this spurious scheme," said Steve Crowley, chair of the Vermont Sierra Club. "Not only can pipelines rupture, pumping stations can break down too, wreaking untold harm on a community."

Alberta tar sands oil is a heavily-polluting type of viscous crude oil, a mixture of sand, clay, water and bitumen, that must be diluted before it can be pumped through pipelines. Diluted bitumen is more corrosive on pipelines than conventional oil and harder to clean up when spilled, as proven by the devastating spill of over 800,000 gallons from an Enbridge pipeline of over one million gallons into Michigan's Kalamazoo River in 2010.

The coalition of U.S. and Canadian public interest and environmental groups leading efforts to stop the Trailbreaker pipeline include:

• 350.org
• Conservation Law Foundation
• Environmental Defense Canada
• Environment Maine
• Environment Northeast
• Èquiterre
• Friends of the Earth
• Natural Resources Council of Maine
• Natural Resources Defense Council
• National Wildlife Federation
• Sierra Club

Shell extends open season for Houma-to-Houston reversal project to April 27

HOUSTON, Texas - Shell Pipeline announced on March 8 the start of a binding open season period for firm capacity on the Houma-to-Houston pipeline system reversal project (Ho-Ho Reversal).

To accommodate requests by shippers for final management approval for commitments, Shell Pipeline has extended the Ho-Ho Reversal Project Open Season by one week. The open season will now close on April 27 at noon CDT.

Shell Pipeline's Ho-Ho Reversal project will provide pipeline access to additional crudes across the 300 miles of the U.S. Gulf of Mexico refining complex. Those crudes include the domestic crude oil production increases in Texas and the mid-continent including the Barnett, Eagle Ford, and Bakken shale plays, as well as the growing crude supplies in the Cushing, Okla., area.

Additionally, the Ho-Ho Reversal project would complement the new pipeline infrastructure that is currently being built to the Houston area.

Shell Pipeline's project would reverse the existing Ho-Ho service to connect the Houston and Port Arthur, Texas, markets with the Louisiana markets. The Ho-Ho Reversal could enable the distribution of approximately 300,000 bbls. per day (b/d) of crude across the region depending upon crude types shipped.

Lawmakers consider ways to expedite Keystone XL pipeline construction

WASHINGTON, D.C. - The House Energy and Commerce Committee held a hearing on the Keystone XL Pipeline on Dec. 2.

Lawmakers reviewed alternatives to expedite construction approval. Labor union and oil production company representatives testified.

The 1,700-mile, $7-billion pipeline would carry oil from Canada to refineries in Texas.

Jane Kleeb, executive director of the anti-pipeline group Bold Nebraska, testified along with Alex Pourbaix, president of the TransCanada pipeline company.

A group of Senate Republicans recently unveiled legislation to move forward on the Keystone XL Pipeline project. Sen. Dick Lugar (R-Ind.), who co-authored the bill with Sen. John Hoeven (R-N.D.), said on Nov. 30 that it was time to "pursue domestic energy alternatives and reduce the need for foreign oil."

The plan would require a State Department permit to allow the pipeline project to move ahead within 60 days, unless President Obama determines that doing so not in the national interest.

Obama said he would veto any legislation aimed at expediting the Keystone XL approval.

Enterprise Products makes $2.41 billion offer for Duncan Energy

HOUSTON, Texas - Enterprise Products Partners LP (NYSE: EPD) has offered to acquire Duncan Energy Partners LP (NYSE: DEP) in an all-unit deal valued at about $2.41 billion.

Such an acquisition would see the web of oil-and-gas pipeline and processing companies controlled by the family of late Texas billionaire Dan Duncan, who died last year, further consolidated.

Enterprise owns Duncan's general partner and about 58 percent of Duncan's common units. Late last year, Enterprise merged with Enterprise GP Holdings LP.

Duncan has "received Enterprise's merger proposal and will begin our review process," said William A. Bruckmann III, chairman of the audit, conflicts and governance committee of DEP’s general partner.

Enterprise's results have improved in recent quarters thanks to its $3.3 billion merger with Teppco Partners LP in late 2009, which created one of the U.S.'s biggest pipeline companies. Enterprise is increasing its focus on developing pipeline projects serving the Eagle Ford and Haynesville shale gas fields in Texas and Louisiana.

Advances in technology and increased investment have led to surging natural-gas supply as companies tap resources trapped in shale rock formations.

Earlier this month, Enterprise reported its fourth-quarter profit soared, helped by production growth in shale regions and increasing demand for natural-gas liquids. Duncan's earnings for the period rose 7.8 percent.

Enterprise units closed on Feb. 22 at $43.70, while Duncan finished at $32.56, compared with the $41.71 offer price. Then came the offer after the close of the market. On Feb .23, DEP closed at $39.57 a unit, up $7.01. EPD closed on Feb. 23 at $42.97, down $0.73.

PHMSA calls for major work on trans-Alaska pipeline

ANCHORAGE, Alaska - The U.S. Pipeline and Hazardous Materials Safety Administration has given Alyeska Pipeline Service Co. a list of proposed corrective measures tied to challenges that have spun off from having too little oil in the 48-inch diameter, 800-mile pipeline.

The agency is concerned that Alyeska Pipeline Service Co., the oil-company-owned business that runs the pipeline, can't check part of the pipeline system for corrosion and that it takes too long to restart the line after shutting it down, among other issues.

A PHMSA investigation found that the trans-Alaska pipeline poses a risk to public safety and the environment and that issues tied to corrosion, inspection and pipeline restarts after shutdowns must be addressed.

The pipeline currently operates at less than one-third capacity from its peak of 2.1 million barrels per day. Less throughput means decreased crude oil temperatures and conditions that lead to corrosion.

The cooler oil allows more buildup on pipeline walls of paraffin, a corrosion hazard. Alyeska inserts cleaning pigs inside the pipe to scrape the paraffin from the walls. "Smart pigs," on the other hand, perform other pipeline maintenance jobs, such as the detection of abnormalities in metal, but the inline inspection tools are at risk of being stopped by paraffin.

Lower temperatures also means water mixed in with crude oil is susceptible to freezing in Alaska's extreme cold if the pipeline is shut down, making re-starts more risky if the pipeline has been involved in a long shutdown.

"There is a risk of water accumulation in low points freezing and creating ice plugs which could impede restart of TAPS and damage valves, instrumentation, and other pipeline components," the letter said. The water itself is another corrosion hazard.

The oil companies that own Alyeska and the pipeline - BP, Conoco Phillips, Exxon Mobil, Koch Industries and Chevron - are finalizing a two-year study on how to manage the risks involved in operating the pipeline as the oil flow rate declines.

Alyeska is also paying for a third-party risk assessment of the pipeline from the North Slope to the ship-loading arms at the Valdez tanker port. The study was requested by U.S. Sen. Lisa Murkowski, R-Alaska, after a big oil spill last year at a Pump Station 9 near Delta Junction.

The two studies are expected to be finalized in the first half of this year.

The proposed safety order in a letter prepared this month follows a January leak at Pump Station 1 on Alaska’s North Slope. A containment vault collected an estimated 13,326 gallons of oil that leaked from a pump station pipe. Still, the pipeline was shut down for days and producers for a time were limited to extracting five percent of capacity.

To fix the leak, the trans-Alaska pipeline was shut down twice for a total of 142 hours. That disrupted as much as $300 million worth of production. The leak was contained inside a building at Pump Station 1 and did not cause environmental contamination, according to regulators.

The agency proposed 13 corrective measures, including replacement of any piping in the system that cannot be assessed with smart pigs or other technology it approves.

TransCanada begins delivering tarsands crude to Cushing hub

CALGARY, Alta. - TransCanada Corp. started making commercial oil deliveries to the Cushing, Okla., storage hub on Feb. 8 from a newly completed extension of its Keystone pipeline system.

Paul Miller, TransCanada's senior vice-president, oil pipelines, said Keystone's Cushing Extension is complete and the line has entered commercial service, pushing more oil into the hub, where record amounts of the commodity are already depressing prices.

"We completed linefill and we're delivering barrels into Cushing," Miller said.

Record levels of oil at the storage hub, the delivery point for West Texas Intermediate (WTI) oil futures traded on the New York Mercantile Exchange, are blamed for widening the premium that Brent crude oil futures receive compared to the U.S. benchmark.

The Cushing extension is part of the second phase of TransCanada's Keystone system, running 298 miles from Steele City, Neb., to Cushing. The additional leg pushes the capacity of the system to 591,000 b/d of oil from the 435,000 b/d carried by the first phase, which runs from Alberta to Wood River and Patoka, Ill.

Miller said the system was carrying less than its full capacity as service on the new line ramps up.

"On the entire line we're flowing probably about 450,000 b/d," he said.

Miller said he expects that the additional Canadian oil into Cushing would displace shipments to the hub from Gulf of Mexico producers.