NEW YORK - Prices for petroleum products could drop below the cost of the crude oil from which they're made as demand declines and supplies rise.
Prices of petroleum distillates - diesel, jet fuel and heating oil - have already dropped below those for gasoline on the wholesale market, spelling bad news for refiners already hurting from squeezed margins.
Price pressure is expected to mount with supplies building as the recession affects consumption by truckers, airlines and the farm sector.
Until recently, refiners were maximizing output because distillates were selling at a premium to gasoline.
According to some estimates, distillate stocks are running 26 percent above five-year averages.
Highway diesel retail prices, which peaked at $4.70 a gallon last summer, have fallen to $2.221 on average, down 44 percent from a year ago, according to the U.S. Energy Information Administration.
Thursday, April 9, 2009
Wednesday, April 8, 2009
Sheehan employee killed in Rockies Express construction accident
SHELBYVILLE, Ind. – Funeral services were held April 5 in Baxter, Tenn., for Randy Lynn Gardner, 46, who died while working on construction of the Rockies Express Pipeline in Decatur County, Ind.
Gardner died on April 1 at an Indianapolis hospital after being crushed by a rig mat on the construction job.
An account has been set up at Fifth Third Bank In Shelbyville, in care of Shelly Davis, for those who wish to make donations on behalf of Randy Lynn Gardner.
A spokesman for the pipeline's general contractor, Sheehan Pipe Line Construction Co. of Tulsa, Okla., told The Shelbyville News that the accident occurred about eight miles northwest of Greensburg, Ind.
"This is like a loss in the family, because it is a tightly knit industry, and the loss of anyone in it is like the loss of a family member and it affects us very deeply," said Leonard Pataki, director of administration and general counsel for Sheehan. "The pipeline industry is a close-knit business. We have third-generation people working for the company. Many people knew him. It's a tragedy. From our perspective, we've lost a member of the Sheehan family."
Pataki said the last time the pipeline company experienced a fatality was in June 2007 in Utah near the Utah-Wyoming border, when a Sheehan truck driver was involved in rollover accident.
Shortly after the accident occurred in which Gardner was fatally injured, a pipeline worker called a local newspaper to express safety concerns about the project. He said there were three incidents two days before the fatal accident that could have resulted in serious injuries, and there have been other close calls before the April 1 fatality.
Gardner died on April 1 at an Indianapolis hospital after being crushed by a rig mat on the construction job.
An account has been set up at Fifth Third Bank In Shelbyville, in care of Shelly Davis, for those who wish to make donations on behalf of Randy Lynn Gardner.
A spokesman for the pipeline's general contractor, Sheehan Pipe Line Construction Co. of Tulsa, Okla., told The Shelbyville News that the accident occurred about eight miles northwest of Greensburg, Ind.
"This is like a loss in the family, because it is a tightly knit industry, and the loss of anyone in it is like the loss of a family member and it affects us very deeply," said Leonard Pataki, director of administration and general counsel for Sheehan. "The pipeline industry is a close-knit business. We have third-generation people working for the company. Many people knew him. It's a tragedy. From our perspective, we've lost a member of the Sheehan family."
Pataki said the last time the pipeline company experienced a fatality was in June 2007 in Utah near the Utah-Wyoming border, when a Sheehan truck driver was involved in rollover accident.
Shortly after the accident occurred in which Gardner was fatally injured, a pipeline worker called a local newspaper to express safety concerns about the project. He said there were three incidents two days before the fatal accident that could have resulted in serious injuries, and there have been other close calls before the April 1 fatality.
Tuesday, April 7, 2009
South Dakota PUC sets public hearings on Keystone XL oil pipeline
PIERRE, S.D. - The Public Utilities Commission will hold public hearings in April on the proposed Keystone XL oil pipeline that will run through western South Dakota.
TransCanada Keystone Pipeline has applied to the PUC for a permit to build the pipeline to carry syncrude oil from Canada to Texas.
The route through South Dakota would be 313 miles long and cross parts of Harding, Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman and Tripp counties.
Public input hearings are planned April 27 during the day in Winner and that evening in Philip, and on April 28 in Buffalo.
TransCanada Keystone Pipeline has applied to the PUC for a permit to build the pipeline to carry syncrude oil from Canada to Texas.
The route through South Dakota would be 313 miles long and cross parts of Harding, Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman and Tripp counties.
Public input hearings are planned April 27 during the day in Winner and that evening in Philip, and on April 28 in Buffalo.
Monday, April 6, 2009
Enterprise begins service on Shenzi crude oil pipeline in Gulf of Mexico
HOUSTON - Enterprise Products Partners L.P. on April 2 announced that construction of its crude oil pipeline serving the BHP Billiton-operated Shenzi field in the Gulf of Mexico has been completed, and is now transporting production from the deepwater discovery located at Green Canyon Block 653. The 83-mile, 20-inch pipeline, which has a capacity of 230,000 b/d (of crude oil, connects to the partnership’s Ship Shoal 332B junction platform, giving Shenzi producers access to the Enterprise-operated Cameron Highway Oil Pipeline and Poseidon Oil Pipeline systems.
Enterprise owns a 50 percent interest in Cameron Highway and a 36 percent interest in Poseidon.
Located in approximately 4,300 feet of water about 120 miles off the coast of Louisiana, the Shenzi field is owned by a joint venture comprising BHP Billiton (operator), Repsol E&P USA Inc. and Hess Corp.
Through its ownership interest in the Cameron Highway and Poseidon pipelines, Enterprise will also benefit from incremental volumes of crude oil transported through those systems. Additional connection points and excess capacity that have been designed into the Shenzi pipeline will give Enterprise a competitive advantage in pursuing opportunities in the quickly developing Southern Green Canyon and Lower Tertiary plays of the deepwater Gulf of Mexico.
Enterprise owns a 50 percent interest in Cameron Highway and a 36 percent interest in Poseidon.
Located in approximately 4,300 feet of water about 120 miles off the coast of Louisiana, the Shenzi field is owned by a joint venture comprising BHP Billiton (operator), Repsol E&P USA Inc. and Hess Corp.
Through its ownership interest in the Cameron Highway and Poseidon pipelines, Enterprise will also benefit from incremental volumes of crude oil transported through those systems. Additional connection points and excess capacity that have been designed into the Shenzi pipeline will give Enterprise a competitive advantage in pursuing opportunities in the quickly developing Southern Green Canyon and Lower Tertiary plays of the deepwater Gulf of Mexico.
Friday, April 3, 2009
Separated service line blamed for fatal Montana natural gas explosion
BOZEMAN, Mont. - As investigators work to identify the cause of the March 5 gas leak that leveled half a city block, some Bozeman business owners are questioning whether downtown is safe.
Inspectors remain unsure about what prompted a two-inch service line behind Montana Trails Gallery to separate at a coupling about 11 feet from the meter, said NorthWest Energy spokeswoman Claudia Rapkoch.
"There was a physical separation, almost like a break in the line," Rapkoch said. "This was not a pin-hole leak."
Investigators are evaluating variables such as frost and soil composition. The pipe will be sent to a metal lab agreed upon by NorthWestern and private insurers where investigators should be able to identify what prompted the separation.
Many of downtown Bozeman's steel gas lines were installed around 1930, not unusual compared to other communities across the nation, said Rick Kuprewicz, a pipeline expert and president of Accufacts Inc., an energy consulting firm in Redmond, Wash.
In the past two years in central Bozeman, at least two small natural gas leaks in Northwestern's lines have been repaired. One was in a "riser" - a piece of line extending out from the ground near the meter - behind LillyLu Children's Boutique and was repaired in the past several months. LillyLu was one of the businesses destroyed by the explosion.
Inspectors remain unsure about what prompted a two-inch service line behind Montana Trails Gallery to separate at a coupling about 11 feet from the meter, said NorthWest Energy spokeswoman Claudia Rapkoch.
"There was a physical separation, almost like a break in the line," Rapkoch said. "This was not a pin-hole leak."
Investigators are evaluating variables such as frost and soil composition. The pipe will be sent to a metal lab agreed upon by NorthWestern and private insurers where investigators should be able to identify what prompted the separation.
Many of downtown Bozeman's steel gas lines were installed around 1930, not unusual compared to other communities across the nation, said Rick Kuprewicz, a pipeline expert and president of Accufacts Inc., an energy consulting firm in Redmond, Wash.
In the past two years in central Bozeman, at least two small natural gas leaks in Northwestern's lines have been repaired. One was in a "riser" - a piece of line extending out from the ground near the meter - behind LillyLu Children's Boutique and was repaired in the past several months. LillyLu was one of the businesses destroyed by the explosion.
Thursday, April 2, 2009
Williams in Marcellus Shale joint venture with Atlas Pipeline Partners
TULSA, Okla. - Williams announced on April 1 that it will enter the Marcellus Shale through a newly formed midstream joint venture with Atlas Pipeline Partners L.P.
The new venture will own Atlas Pipeline Partners' existing Appalachian Basin gathering system, which includes approximately 1,800 miles of intrastate natural gas gathering lines servicing 6,900 wells. The system has an average throughput currently in excess of 100 million cubic feet per day (MMcfd). The Marcellus production growth of Atlas Energy Resources, LLC, an Atlas Pipeline Partners affiliate, has driven a 30-percent increase in the gathering system's throughput in the past year.
Williams will contribute, subject to certain post-closing adjustments, $102 million and issue a $25.5 million note payable to a newly formed joint venture, Laurel Mountain Midstream LLC, in exchange for a 51-percent ownership interest in the joint venture. In addition to its ownership interest, Williams will operate the gathering system.
The new venture will own Atlas Pipeline Partners' existing Appalachian Basin gathering system, which includes approximately 1,800 miles of intrastate natural gas gathering lines servicing 6,900 wells. The system has an average throughput currently in excess of 100 million cubic feet per day (MMcfd). The Marcellus production growth of Atlas Energy Resources, LLC, an Atlas Pipeline Partners affiliate, has driven a 30-percent increase in the gathering system's throughput in the past year.
Williams will contribute, subject to certain post-closing adjustments, $102 million and issue a $25.5 million note payable to a newly formed joint venture, Laurel Mountain Midstream LLC, in exchange for a 51-percent ownership interest in the joint venture. In addition to its ownership interest, Williams will operate the gathering system.
Wednesday, April 1, 2009
Pennsylvania regulators seek more say on shale pipelines
HARRISBURG, Pa. - Since development of natural gas trapped in the Marcellus Shale formation could potentially last 50 years, state regulators are seeking authority to make sure the underground pipelines carrying the natural gas are well maintained and safe.
The Pennsylvania Public Utility Commission regulates the safety of natural gas pipelines in the state. The agency is pushing for state legislation to extend this authority over nonutility pipelines that will eventually be built throughout the Marcellus Shale, underlying a large part of Northeast and Western Pennsylvania.
While a federal pipeline safety agency was formed in the 1960s after some deadly pipeline explosions, states may also have some say in regulating the interstate lines in addition to lines existing solely within the state.
For example, state law requires that individuals or contractors notify a "one-call" center three days before excavation work to determine if natural gas pipelines are nearby. The center then notifies utilities of the pending work so they can mark the pipeline route.
Pipelines in Pennsylvania are typically made of cast iron or steel. They are subject to the freeze-and-thaw cycle of Pennsylvania winters. "We are seeing a lot of corrosion, breaking and cracking," said PUC spokeswoman Jennifer Kocher.
PUC Chairman James Cawley outlined the agency's goals last month before the House Consumer Affairs Committee. The agency is seeking authority to inspect pipelines owned by commercial natural gas producers that are outside its traditional jurisdiction over public utilities. The agency also wants to increase fines for pipeline safety violations. Enabling legislation has yet to be introduced.
Currently, the PUC's gas safety division inspects and investigates complaints concerning the utility-owned natural gas distribution lines that connect to homes and businesses. The division carried out more than 600 inspections and issued 70 safety violations in fiscal 2007-08.
The Pennsylvania Public Utility Commission regulates the safety of natural gas pipelines in the state. The agency is pushing for state legislation to extend this authority over nonutility pipelines that will eventually be built throughout the Marcellus Shale, underlying a large part of Northeast and Western Pennsylvania.
While a federal pipeline safety agency was formed in the 1960s after some deadly pipeline explosions, states may also have some say in regulating the interstate lines in addition to lines existing solely within the state.
For example, state law requires that individuals or contractors notify a "one-call" center three days before excavation work to determine if natural gas pipelines are nearby. The center then notifies utilities of the pending work so they can mark the pipeline route.
Pipelines in Pennsylvania are typically made of cast iron or steel. They are subject to the freeze-and-thaw cycle of Pennsylvania winters. "We are seeing a lot of corrosion, breaking and cracking," said PUC spokeswoman Jennifer Kocher.
PUC Chairman James Cawley outlined the agency's goals last month before the House Consumer Affairs Committee. The agency is seeking authority to inspect pipelines owned by commercial natural gas producers that are outside its traditional jurisdiction over public utilities. The agency also wants to increase fines for pipeline safety violations. Enabling legislation has yet to be introduced.
Currently, the PUC's gas safety division inspects and investigates complaints concerning the utility-owned natural gas distribution lines that connect to homes and businesses. The division carried out more than 600 inspections and issued 70 safety violations in fiscal 2007-08.
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