Tag Archives: Alberta

Keystone XL Pipeline Passes Emissions Test

The proposed Keystone XL pipeline to bring heavy oil from Canada to the south of Nebraska has cleared an important hurdle, after an environmental impact statement concluded it would have only a marginal effect on greenhouse gas emissions.

The state department study argued that production in the oil sands of Alberta would increase even if the pipeline were not built because companies could make more use of rail transport to reach US refineries.

It also suggested that building Keystone XL would create more than 42,100 jobs across the US for one to two years, although once in operation it would support just 35 permanent jobs.

The conclusions make it more likely that President Barack Obama’s administration will approve the controversial project, which has become a battleground for the oil industry and environmental campaigners.

Formally, the state department has responsibility for deciding on the pipeline, because it crosses the border from Canada.

The pipeline would carry diluted bitumen from the oil sands – also known as the tar sands – which create higher levels of greenhouse gas emissions than many other forms of oil production.

Alison Redford, premier of Alberta, praised the study as “extensive, exacting and comprehensive”.

TransCanada, the company behind the project, addressed earlier concerns about leaks from the pipeline by re-routing it away from the environmentally sensitive Sand Hills area of Nebraska.

The new route is 875 miles long, and could carry up to 830,000 barrels of diluted bitumen per day to Steele City, Nebraska, where it will connect with a southern section already under construction. The aim is to connect to refineries on the Gulf of Mexico coast that are configured to use heavy oil including Canadian production.

The pipeline could also take some production from the fast-growing Bakken shale of North Dakota, the heart of the new US oil boom.

The state department study suggests that the oil sands of Alberta will be developed whether or not Keystone XL is built.

It argues: “Approval or denial of any one crude oil transport project, including the proposed project [Keystone XL], remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the US.”

Blocking Keystone XL would cut output from the oil sands by only 0.4-0.6 per cent by 2030, the study said. Even if all new pipeline capacity were restricted, oil sands production would drop just 2-4 per cent.

The study argues that other transport routes, particularly rail, would be capable of “providing the capacity needed to transport all incremental Western Canadian and Bakken crude oil production to markets if there were no additional pipeline projects approved”.

The state department will now take comments about the study, before a final decision from the administration on whether the pipeline is in the US national interest.

SOURCE: http://www.ft.com/cms/s/0/9763476c-82b3-11e2-8404-00144feabdc0.html

Shippers keen on TransCanada’s natural gas line conversion to carry crude eastward

EDMONTON – TransCanada Corp.’s plans to convert one of its main natural gas lines to carry crude oil from Alberta to Quebec and likely on to the Maritimes is set to move into high gear.

The firm said Tuesday it is considering an open season for shippers within a few months, and will schedule consultations with communities along the 4,800-kilometre route as soon as it is appropriate to do so.

And if all goes well, TransCanada will file for regulatory approval by the end of 2013, with construction to begin in 2015 and the line in operation by 2017. It could have a capacity of about one million barrels per day, sending light oil from Alberta and Saskatchewan as well as synthetic crude from oilsands upgraders to Eastern refineries that currently import expensive oil from Africa and the Middle East.

“There is a great deal of interest, we are advancing discussions with shippers and are pleased the way they are going,” said Alex Pourbaix, the firm’s president for energy and oil pipelines, during a conference call Tuesday to discuss fourth-quarter earnings.

Based on expressions of interest, TransCanada expects to have an open season for shippers within a few months, allowing firms to make formal commitments. He said when intentions are clear and a route proposed, TransCanada will immediately begin consultations with communities along the route.

The existing pipe that ends in Montreal has the necessary size for the conversion process, but east of that TransCanada expects it will install new pipe along its existing rights-of-way.

“We know there is 400,000 barrels per day of demand in the domestic market of Quebec (from refineries in Montreal and Quebec City) and a further 400,000 barrels per day in the Maritimes, largely at Irving’s refinery in Saint John,” said Pourbaix.

But while domestic demand is the initial target, there are also export possibilities to the U.S. eastern seaboard.

“(The U.S.) is importing 1.5 million barrels a day and that suggests a market for domestic production to attach to that market,” said chief executive Russ Girling.

The idea of cutting through Maine to shorten the route to the Maritimes is a non-starter for TransCanada, with Pourbaix stressing that the new streamlined National Energy Board approval process offers certainty to project builders.

For TransCanada, the stalled Keystone XL line from Hardisty south to Oklahoma is perhaps a good example of the kind of costly delays they hope to avoid.

But Pourbaix said Tuesday final approval seems to be only a few months away. He said the firm has been led to believe an amended environmental impact statement should be approved in a matter of weeks.

“At that point, we are of the view that the U.S. State Department will have every piece of information it could require to make a decision,” he said, adding that when the required statutory notice periods are included, the department should be able to make a decision in two to three months.

TransCanada also explained details of its recently announced $3 billion, 500-kilometre Grand Rapids pipeline project, a 50 per cent joint venture with Phoenix Energy Holdings to bring diluted bitumen from Fort McMurray to the Edmonton region and transport diluent northward.

The dual line will be built in stages, with the smaller pipe in operation by 2015 and carrying diluted bitumen. When the larger 900,000 bpd pipeline is completed by mid-2017, the smaller line will revert to carrying 330,000 bpd of diluent north.

For the fourth quarter, TransCanada said profit fell 19 per cent as shipments on natural gas pipelines declined. Net income dropped to $306 million, or 43 cents a share, from $376 million, or 53 cents, a year earlier.

TransCanada is moving less natural gas because a glut in North American supplies has reduced prices, resulting in more of the fuel being kept in storage. Deliveries on its Canadian Mainline system fell 19 per cent to average 4.2 billion cubic feet a day during the quarter.

“While the majority of our assets continued to generate stable and predictable earnings and cash flow, plant outages at Bruce Power and Sundance A along with a lower contribution from certain natural gas pipelines did adversely affect our financial results,” said Girling.

SOURCE: http://www.edmontonjournal.com/technology/Shippers+keen+TransCanada+natural+line+conversion+carry+crude+eastward/7955127/story.html#ixzz2Kng7Fr00

Canadian Pipeline proposal is a realistic option, expert says

A pipeline bringing crude oil from Alberta to New Brunswick could be more realistic than building a pipeline to the west coast, according to an energy expert.

Premier David Alward is in Alberta for three days to meet with Alberta Premier Alison Redford, oil executives and tour the oil sands in an attempt to drum up support for a pipeline to New Brunswick.

Warren Mabee, director of the Institute of Energy and Environmental Policy at Queen’s University, said TransCanada Corporation’s proposal to convert an existing natural gas pipeline might be more realistic than other plans to move Alberta oil to the west coast.

“It’s caught a little bit of the public imagination,” he said.

“This is something that really would bring together a lot of Canada. The real question is, will it bring us together? Or will it open up more wounds and more divisiveness?”

The energy expert said the terrain is relatively flat between Alberta and New Brunswick, making the idea feasible.

If the west-to-east pipeline were to be approved, it would still take several years before western crude would be flowing into Saint John’s Irving Oil Ltd., the largest refinery in Canada.

Mabee said it would take five years if the project started now.

TransCanada Corporation has said it wants to convert an existing, underused natural gas line to do the job, but it would be up to the National Energy Board to approve the projects.

TransCanada has not yet formally submitted the proposal.

SOURCE: http://www.cbc.ca/news/canada/new-brunswick/story/2013/02/04/nb-pipeline-future-119.html

Investment in Canada’s natural gas sector set to rival the oil sands

Canada’s natural gas sector could emerge as an investor magnet surpassing interest in the oil sands over the next two decades, The Conference Board of Canada forecasts show.

Natural gas could attract as much as $386-billion in investments by 2035 and create 3.2 million person-years of employment (or an average of 131,460 jobs annually), says the Conference Board of Canada in a new report. This compares to $364-billion investments expected in the oil sands and equal job growth during the period, according to an earlier Board study.

“There are similar numbers on the total investment… in general we see a lot of demand for energy,” Pedro Antunes, co-author of the report, told the Financial Post. “The oil sands have already seen a lot of investments in the last few years, and going forward there will be a lot of activity, but sooner or later it will ease off as we get into production mode.”

The investment surge in natural gas will generate $940-billion in direct and indirect economic growth, including $364-billion directly to the country’s GDP over the forecast period, the Board said in a report published Monday.

British Columbia will lead the natural gas investment charge, attracting $181-billion, with Alberta garnering $154-billion from 2012-2035, the Board estimates.

The report echoes British Columbia Premier Christy Clark’s comments last week that the province’s natural gas industry will rival the oil sands in the future.

“Think about it in these terms: what oil has been to Alberta since the 1970s-80s is what LNG is going to be for British Columbia, nothing less than that,” Ms. Clark told The Canadian Press. “Energy output from LNG will likely be as big as the total energy output today from the oil sands.”

The symbiotic relationship between Alberta’s oil sands and natural gas will only strengthen in future. To fuel their rising output, bitumen producers will triple their natural gas consumption to 1,200 billion cubic feet per year by 2035.

While oil sands, power and transportation sectors will revive the country’s natural gas production, it’s British Columbia’s plans to export liquefied natural gas to Asia that would help liberate the commodity’s price.

Canadian natural gas prices are trailing near a decade-low at $2.88 per million British thermal unit, and production is falling as the U.S. — the industry’s biggest customer — is in the midst of its own shale gas revolution.

While the Board does not expect all the planned LNG projects to proceed, the new industry will need another 1,200 billion cubic feet per year of natural gas by 2035 to satisfy energy-thirsty Asian markets.

Such market access will be crucial to lift commodity prices as the oil and gas sector is currently beholden to the U.S.’s energy revolution, says Michael Binnion, president of Questerre Energy Corp., with interests in Quebec and Alberta shale deposits.

“If you take what we export to U.S. in natural gas discounts and discount on oil price, it is $20-billion to $30-billion we are sending to America in the form of subsidies,” Mr. Binnion said at an oil and gas conference last week. “If I was a citizen of Alberta or federal government and getting $30-billion less royalties and taxes…., there is reason for everybody to be concerned about infrastructure issues.”

While Alberta and B.C. will rake in majority of the natural gas royalties, taxes and revenues, Ontario and Quebec will also see their manufacturing industries benefit from the boom’s trickle-down effect.

Things could look even rosier for Quebec if the province lifts a moratorium on shale gas drilling. The Board expects Quebec to attract more than $6-billion in investment from 2020 onwards if the ban is lifted.

While the Board’s forecast is “prudent” in its assumptions, Mr. Antunes says there are other downside risks that could derail investment potential, such as LNG projects which may not go ahead — although it it unlikely.

Another key risk is a collapse in crude prices due to the North American output glut, similar to what happened in natural gas.

“There are certain risks that oil prices could be weaker and thus, investments in the oil sands, which are highly natural gas-intensive, affect a lot of the demand for natural gas,” Mr. Antunes says.

SOURCE: http://business.financialpost.com/2012/12/17/canadas-386b-natural-gas-investments-set-to-rival-oil-sands/

Pembina Pipeline Corporation Plans Capital Spend of $965 Million in 2013

Pembina Pipeline Corporation (“Pembina” or the “Company”) (TSX: PPL; NYSE: PBA) announced that its Board of Directors has approved a capital spending budget of approximately $965 million for 2013. This is approximately 75 percent higher than Pembina’s 2012 capital budget and represents the largest in the Company’s history.

“2013 will mark the third consecutive year that Pembina has increased its capital program, again setting a record for the size of our investment,” said Bob Michaleski, Chief Executive Officer. “This impressive capital spending plan is directly aligned with our goal of continuing to provide long-term value to our shareholders, with the vast majority of our 2013 investments being targeted towards fee-for-service projects. Our focus in the next year will be to progress our current suite of projects and bring in the next phase of Pembina’s growth opportunities while maintaining a strong balance sheet and increasing our cash flow per share.”

A substantial portion – $240 million, or about 25 percent – of the 2013 capital spend will be directed towards completing the construction of the Company’s Saturn and Resthaven enhanced liquids extraction facilities along with the associated pipelines. These projects will provide extraction of natural gas liquids (“NGL”) in the field for producers located in west central Alberta.

Pembina also plans to direct $210 million, or 22 percent of its 2013 capital budget towards the expansion of its crude oil, condensate and NGL pipelines. These expansion projects will allow Pembina to continue to meet the growing needs of producers, which has resulted from new technology being deployed and increased activity in the Western Canadian Sedimentary Basin.

Pembina’s 2013 capital spending plan reflects strong growth opportunities that expand on existing operations in each of its four businesses and is expected to continue to drive shareholder value in the coming years.

SOURCE: http://www.sacbee.com/2012/11/28/5016826/pembina-pipeline-corporation-plans.html 

Alberta to include public in safety review of its energy pipeline network

EDMONTON – Alberta plans to broaden a safety review of its vast energy pipeline network to include input from the public.

The province’s energy regulator hired a company in September to conduct a technical review of pipeline safety, spill response plans and the security of pipelines that cross water.

Energy Minister Ken Hughes says after that report is complete at the end of the year, the government will ask Albertans for their views on pipeline safety.

“We do want to engage everybody who has something constructive to contribute to this so there will be wider consultations in the new year,” Hughes told The Canadian Press in an interview.

The Alberta government asked for the technical safety review last summer following three pipeline-related spills.

In one of those spills, is a pipeline that leaked about 475,000 litres of oil into the Red Deer River, a major drinking water source for central Alberta.

Since July, more than 50 environmental, conservation, land rights, unions First Nations and other groups have been calling on Alberta to include the public in its pipeline safety review.

Greenpeace spokesman Mike Hudema praised the government’s decision to open up the review process to the public, but said its success will depend on its willingness to share information and to really listen to people’s concerns.

“I’m glad that the public is finally getting a chance to have their say,” Hudema said Thursday.

“Of course, it remains to be seen as to how much of a say they will have, how much their feedback will be incorporated in the actual decisions, or whether this is really just a public relations exercise.”

The Energy Resources Conservation Board hired Group 10 Engineering Ltd. of Calgary to conduct the technical review.

The company is to hand in a report to the board by the end of the month. The ERCB is to then submit the report, including its own conclusions, to Hughes by the end of the year.

Group 10 officials say under the terms of the contract, the company is strictly focusing on reviewing pipeline regulations, policies and best technical practices around the world. Consulting with the public is not part of its job.

“For this process to be effective, we have to be very guarded in how we engage people because it could turn out to be a mud-slinging, political, publicized nightmare. So we have to be cautious,” Group 10 director Daryl Foley said from Calgary.

Alberta is criss-crossed by a network of more than 400,000 kilometres of provincially regulated oil and natural gas pipelines, many of them up to 40 or 50 years old.

Hughes said the report will be made public in the new year and its findings will be the subject of the public consultations. He gave no timeline on when more details of the public review will be released or when it will start.

The final goal will be to determine whether or not the pipeline industry is performing to the best world standards and to come up with science-based solutions to fix any problems if it isn’t, Hughes added.

He also said the government will not allow the public consultation to delay the review process, which it hopes will reassure people in the province and around the world.

“Pipeline safety is important, not just to Albertans with respect to how pipelines perform. Pipeline safety and performance is also an important element of our social licence to operate as viewed by other Canadians and people living outside of Canada.”

“We all, as Albertans, have a concern that the pipeline industry is performing at its highest level possible. That expectation is set, not just by people who are technicians, but also by ordinary people like you and me who want to have input into policy process.”

Hughes said the government hasn’t decided how it will consult with the public, or whether the process will include public meetings or hearings.

SOURCE: http://thetyee.ca/CanadianPress/2012/11/01/Alta-Pipeline-Safety-Review-20623047/

Sunshine Oilsands Plans $3.5 Billion in Capital Investment

China-backed Sunshine Oilsands Ltd. has budgeted about US$3.5 billion for capital investment in its Canadian oil-sands projects at a time when investors are on edge about the investment climate in energy-rich Canada.

The Calgary-based energy company’s projects are still in a preliminary stage, but it is aiming for its first production in the fourth quarter of 2013, with output of 5,000 barrels a day by mid-2014, Co-Chairman Shen Songning said in an interview.

Mr. Shen’s optimism about the projects—based in Athabasca Sands, Alberta—comes at a tense time for Chinese and other foreign investors hoping to capitalize on Canada’s huge reserves of oil and natural gas, much of which are expensive to extract as they are trapped in oil-sands deposits or in shale-rock formations.

Last month, the Canadian government turned down a US$5.18 billion bid by Malaysia’s state-run Petroliam Nasional Bhd., or Petronas, to acquire Canada’s Progress Energy Corp. The bid isn’t dead, however, as the two sides have agreed to resume talks on the purchase.

Next week, the government is expected to rule on the US$15.1 billion purchase of Canada’s Nexen Inc. NXY.T +0.78% by China’s Cnooc Ltd. 0883.HK +1.24%

The two deals are a litmus test for Canada’s aspirations to develop its oil and gas reserves and find new export markets at a time when its main buyer, the U.S., is cutting energy imports due to the success of shale projects there.

“Conventional oil supply is in demand and global production is expected to transition toward unconventional sources,” said Mr. Shen. “We see Canada’s oil sands playing a major role in meeting the needs of the world’s growing crude demand.”

Oil sands—a mix of sand and tarlike ultraheavy crude oil called bitumen—are costly to refine, but higher crude prices in recent years have made production from oil sands more feasible. Canada’s oil sands will likely account for 4.4% of global crude-oil output by 2035, up from 1.6% in 2009, the International Energy Agency has said.

Mr. Shen said the US$3.5 billion expenditure will be funded by cash flow from existing projects and potential energy joint ventures, as well as bank loans and proceeds from Sunshine Oilsands’ Hong Kong initial public offering in March. Possible joint-venture investors include China sovereign-wealth fund China Investment Corp. and China oil company China Petrochemical Corp., also known as Sinopec Group.

The company’s oil-sands projects can achieve positive cash flow per barrel when West Texas Intermediate prices are above US$50 a barrel, Mr. Shen said.

“We see oil prices hovering around US$100 a barrel over the next three to five years as demand for oil is rising on the back of strong economic growth in Asia,” he said. He didn’t specify whether he was referring to benchmark West Texas Intermediate or Brent crude.

He also said the company’s operations could benefit from falling natural-gas prices, because fuel costs account for 20% of Sunshine Oilsands’ total production expenses.

Sunshine Oilsands, which raised $579 million from the Hong Kong IPO, is planning a secondary listing in Toronto in the fourth quarter to increase shareholder value. The company’s share price has fallen 46% in Hong Kong since the stock’s debut.

“Our current share prices are extremely undervalued,” Mr. Shen said, adding the company’s net asset value per share is at 21.40 Hong Kong dollars (US$2.76). Shares in Sunshine Oilsands closed at HK$2.62 on Thursday.

In response to the decline in its share price, Sunshine Oilsands recently announced a $50 million share-repurchase program.

SOURCE: http://online.wsj.com/article/SB10001424052970204712904578092052566429508.html

Alberta pipeline spills prompt questions

EDMONTON – Three pipeline spills in Alberta this spring have many people wondering whether there are better ways to move the petroleum products that are the lifeblood of Alberta’s economy.

The oil industry’s reliance on pipelines — which organizations such as the Canadian Association of Petroleum Producers and the Canadian Energy Pipelines Association say are the safest way to transport products— have companies like TransCanada and Enbridge proposing to expand their lines to carry Alberta bitumen to refineries in Texas and tankers at Kitimat, B.C., for shipment to Asia and its hungry economy.

“The industry really does move all of its oil and natural gas products through pipeline to get to market,” says Greg Stringham, vice-president of markets and oilsands CAPP. “Today in Canada, we are actually producing … almost three million barrels a day, and that’s across the country of course, from the field, to the upgraders, to refineries.”

To put that volume in perspective, CN Rail began in 2010 to test its ability to move heavy crude, light oil, and bitumen to markets in Eastern Canada and the United States.

The company moved three million barrels of oil last year, and expects to move 15 million barrels in 2012. That’s about five days worth of total production.

“Rail does play a part. But (pipelines) are the main transportation grid we use to move oil across the continent. It really has proven to be a very reliable, very safe, and a very efficient way to move this product,” Stringham says. “We are getting fairly constrained on the pipeline capacity given the growth that is happening.”

The use of tanker trucks to move oil is more difficult to measure. Alberta Transportation does not keep track of vehicles carrying petroleum on roads, but can say 430 of 602 “incidents” in 2011 involved petroleum products. The department defines “incidents” as anything that prevents a product from getting to its destination.

Expanding the reach Alberta’s pipelines is key in maintaining the province’s economic stake in the global oil market, provincial Energy Minister Ken Hughes says.

With that need comes a responsibility to maintain the pipeline system.

“The industry as well as the government need to ensure that we have ways to demonstrate the solid aspects of this way of transporting fuels across Canada,” Hughes says. “North America will continue to be heavy users of oil and of natural gas. Those products have to get to market somehow. What we need to do is ensure that they get there with as few incidents as possible.”

The Pembina Institute think-tank, which is among the environmental groups supporting a call for an independent investigation of Alberta’s pipelines, suggests there could be alternatives to building pipelines — particularly the proposed Enbridge Northern Gateway line to Kitimat, B.C., which has raised concerns from First Nations communities and municipalities along the proposed northern route to the West Coast.

Nathan Lemphers, a senior policy analyst in the Pembina Institute’s oilsands program, says the capacity of existing pipelines could be increased by increasing the number of pumping stations. Alternatively, companies could transport more product via rail.

“It’s not necessarily a clear-cut solution. There’s benefits and drawbacks to each method of transporting oil,” Lemphers says.

Pipelines leak. Trains derail, tanker trucks crash.

Since trains typically move less product than pipelines, spills are smaller. Derailments can be recognized far faster than pipeline spills.

A natural gas operator in Michigan was the first to notice oil spilling from Enbridge’s pipeline at the Kalamazoo River in 2010. The incident has since netted the company a multimillion-dollar fine in the United States and raised questions about the state of the control room in Edmonton, after testimony given during the investigation shed light on what was happening during the 17 hours it took to shut the line.

“When you have the government coming out and saying, well, simply trust us, we have adequate measures in place without actually coming forward and offering evidence for that position, it puts the government in a fairly precarious situation,” Lemphers says. “Having more information on the table will help ground further discussions” about pipeline expansion.

“Having pipelines in your backyard is nothing new for Albertans, but Albertans also have strong ties to the land and want to see the land conserved,” he says.

Doug Goss still remembers an oil spill that cut summer short at Wabamun Lake in 2005.

“It was a disaster, in every sense of the word,” Goss says. “When you get to the point where the front of the beach is covered in oil and there’s dead animals all over the place, and you’re told you can’t use the lake for the rest of the summer for any reason, it’s pretty devastating.”

But unlike the recent spills, the one at Wabamun Lake was from a 43-car train derailment.

That summer, 1.1 million litres (7,000 barrels) of Bunker C fuel oil spilled into the lake, creating a seven-kilometre slick. The cleanup took nearly a year and cost CN Rail an estimated $28 million.

“We haven’t had any issues since that spill many years ago. We cross our fingers all the time that that won’t happen again,” Goss says. “As a resident, we would be proponents of whatever system is proven to be the safest to transport substances like oil.”

The Wabamun incident sparked a provincial study and recommendations for a faster, more comprehensive response to environmental disasters.

Despite a growing volume of freight being moved along its tracks, CN’s derailments are down. In 2011, the company had 55 main track derailments, compared to 110 in 2005. To date, there have been 27 derailments along main tracks compared to 34 at this time last year.

SOURCE: http://www.edmontonjournal.com/news/Alberta+pipeline+spills+prompt+questions/6896510/story.html

Alberta’s big small-pipe problem

They are the little brothers and sisters of the pipeline world. Some are barely large enough to jam a hand into, but they do the dirtiest work in the energy business, ferrying great volumes of raw oil and gas from wells to processing plants.

And though they are small, they often carry large risk, an issue of mounting concern in Alberta, a province that has seen a series of spills train a global spotlight on pipeline safety.

These smaller pipes can often be overlooked, next to the big ones that garner attention when they rupture into the Kalamazoo River — an accident that cost Enbridge Inc. a historic $3.7-million (US) fine this week, on top of $725 million in cleanup costs — or at an Alberta pumping station where the company recently had another large spill.

But in Alberta, the pipe is almost all small. Some 327,000 kilometres of pipe that is eight inches and smaller in diameter spread across the province like a network of veins. It is roughly 90 percent of all pipe in the province, a vast web of steel that is uniquely vulnerable to problems, and uniquely difficult to both oversee and maintain.

In large measure, that’s because the stuff those pipes carry is often nasty: impure, unprocessed energy laced with hydrogen sulphide and water and sand, each of which can inflict damage on buried steel. Construction methods of smaller pipes mean they often can’t be monitored and inspected using the best tools. Some of the junior and mid-sized oil and gas companies that run them don’t have the large dedicated inspection teams employed by larger pipeline operators.

Alberta’s energy regulator says problems on small pipes often lead to small spills, dampening the need for concern.

Alberta’s oil and gas regulator, the Energy Resources Conservation Board (ERCB), noted in a 2007 report that “most of Alberta’s pipeline infrastructure is used for the production of raw oil and gas, which by nature can be highly corrosive.” It said corrosion has been growing as a problem — from 63 percent of all leaks and ruptures in a 1998 report to 70 per cent less than a decade later.

And though overall accidents have been declining, last year Alberta saw 1.5 failures per 1,000 kilometres of pipe — or nearly 500 on its length of small lines. That’s down from an average in previous years of 3.5. Many of those spills are small — all leaks, regardless of size, get reported. But the ERCB also doesn’t record spills at pipeline facilities, like pumping stations, where many of them happen. That makes its numbers tough to compare with other jurisdictions.

The risks on small pipes are magnified by the low flows on stretches that might carry intermittent volumes of product from, say, oil tanks to a processing plant. When flow is slow or stopped, water and hydrogen sulphide are better able to corrode pipe. Sediments can also deposit, creating a mud where microbes can begin to eat away steel.

The ERCB played down the effect of corrosive products, which tend to create “pitting corrosion” that leads to “small volume spills (small leaks) that are not a significant safety hazard because they do not catastrophically rupture,” spokeswoman Cara Tobin said in an e-mailed statement.

(Although small pipes can lead to big spills: In December, 2011, 12,000 barrels spilled from a small Pengrowth Energy Corp. line, while 5,000 barrels leaked from a small Pace & Oil Gas Ltd. well pipe in May). The regulator requires surveillance of pipeline right-of-ways, corrosion evaluations, yearly inspections of water crossings and “continues to review and update its regulations and requirements to improve all aspects of pipeline performance,” she said.

Plus, industry has ways to combat corrosion. Pipes can be protected with MATCOR’s “cathodic protection,” products which uses electric current to counteract corrosion.  Cathodic Protection is mandatory in Alberta. They can also be chemically shielded from corrosion, and maintained with pigs, devices that travel inside the pipe, either to scrub it or detect areas of weakness.

But small pipe is often the hardest to “pig.” Worldwide, roughly a third of all pipe is not piggable. Alberta’s ERCB has no figure on what percentage of its pipe cannot accept pigs — and pigging is not required — but it’s likely to be large. Alberta’s pipeline system is made up of an enormous number of very short lengths, averaging just 1.6 kilometres long.

SOURCE: http://www.bnn.ca/News/2012/7/4/Albertas-big-small-pipe-problem.aspx

 

Searching for answers after Red Deer’s pipeline spill

For a pipeline that is nearly half a century old, a river crossing can pose all manner of hazards. Bacteria and corrosion can attack from inside. Floodwater, scouring away the river bottom and heaving against the exposed pipe, can damage the outside. Pipes installed using old methods can be particularly vulnerable.

Sometimes, the result is catastrophe.

Last week, the Rangeland pipeline, built in 1966 and run by Plains Midstream Canada, ruptured beneath the flooding Red Deer River. It leaked 160,000 to 480,000 litres of oil, coating the banks with crude when the waters receded and leaving a large stain on Gleniffer Lake, a reservoir that supplies drinking water to Red Deer, Alberta’s third-largest city.

It may take many months to conclude what went wrong with the Rangeland pipe, and Plains has declined to comment on the cause, saying it is focusing on a cleanup effort that continued on Monday with more than 100 workers.

Today, companies building across major rivers typically use horizontal drills to burrow deep beneath the water – anywhere from eight to 30 metres – into stable rock. Those crossings are considered some of the safest parts of a pipeline. “Virtually all creeks and rivers are drilled under,” said Kevin O’Brien, president of IMV Projects Inc., a Calgary engineering firm that works on pipelines. Environmental regulations won’t even allow other methods “except in rare circumstances where not technically feasible.”

Techniques decades ago involved digging into the riverbed. Dredges, diggers and backhoes were all used, sometimes with the help of temporary dams, to open a trench for the pipe. Depending on the method, the pipe might be pulled into place, or coated in concrete, floated above the trench with barrels and then dropped down and covered with sediment.

The risks were numerous: Trenching in a flowing river meant it was difficult to create a clean bed for the pipe. Dropping it into place could introduce stress and strain, creating weak spots. And the cover was not always certain: The pipe might be buried two to three metres from the bottom of the river, but rivers are dynamic systems with the power to sweep away sediment, exposing the pipe. When they do, the force of the water can crack a pipe, or throw rocks that puncture its sides. In other cases, the trench was too shallow, compounding the problem.

“Some of those older ones, they weren’t too deep. They might have a couple, three feet of cover,” said Barry Singleton, senior vice-president of Singleton Associated Engineering Ltd., which designs pipelines. Even then, construction crews knew that what they were doing might not last.

“Lots of times they would install two crossings – they would install a spare,” Mr. Singleton said. “There were concerns back in the day.”

But external issues are only part of the potential problems. River crossings are low parts of the pipe, where water can collect, posing a risk of corrosion. Older pipes also may not be used as consistently – the Plains Rangeland system, for example, operated intermittently – which allows sediment to collect in low spots.

“Things start falling out [of the oil] and start stagnating,” said Izak Roux, technical manager for RAE Engineering and Inspection Ltd., which specializes in pipelines. A kind of mud layer can build up, and “then you can start having what we call a bacterial attack. This bacteria can eat right through the steel, and then you get a leak as well.”

Worse, many older pipes use sharp bends to get into and out of the riverbed. Those bends can make it impossible to push through cleaning tools called pigs. Neither Plains nor Alberta’s Energy Resources Conservation Board responded to questions on whether the Rangeland pipe is accessible to pigs.

But those pipes “constructed in the ‘50s and ‘60s, not all of them are piggable,” Mr. Roux said. “That’s basically the problem we have on the older lines.”

SOURCE: http://www.theglobeandmail.com/news/national/searching-for-answers-after-red-deers-pipeline-spill/article4249733/?cmpid=rss1