Tag Archives: Energy

Pipeline Petroleum Transport Investment May Predict Growing Cathodic Protection Needs

If Warren Buffet’s investment strategy is any indication, pipeline efficiency is going to start playing a bigger role in moving crude oil and natural gas in the United States.

The Berkshire Hathaway luminary is pipeline-efficiency-cathodic-protectionspearheading a swap of about $1.4 billion in shares of Phillips 66 for full ownership of the energy company’s pipeline petroleum transport services business. The business unit’s focus is polymer-based additives that are used to move crude oil and natural gas through pipelines more efficiently by reducing drag.

The shift in Berkshire’s investment strategy comes amid a boom in U.S. crude oil and natural gas production. Since many liquids pipelines in the United States are operating at capacity, producers can use the pipeline petroleum transport additive to quickly increase capacity without immediately growing pipeline infrastructure.

Although future pipeline projects may be in the works to meet the sharp increase in demand, the process of gaining approval for new pipeline projects can be slowed by permitting.

A greater reliance on existing pipelines for transporting liquids means that producers and pipeline owners need to pay even more attention to cathodic protection management, according to Kevin Groll, project management director for MATCOR, a Pennsylvania-based company that specializes in cathodic protection products and services.

“Any time you have pipeline you have to protect it from corrosion,” Groll said. “And that’s especially true when you increase the value of a pipeline by increasing its capacity. If that pipeline were to develop a corrosion problem you’d be facing a situation where your profitability could suffer significantly.”

“With pipeline owners using additives to push greater volumes of liquids it becomes imperative to use cathodic protection products such as impressed current anodes and cathodic protection rectifiers to protect the increased capacity and profitability of the pipeline infrastructure.”

Further Reading

Berkshire Swaps $1.4 Billion in Phillips 66 Stock in Deal,” Bloomberg, December 31, 2013.

Major expansion of natural gas pipeline

$44 million project would put 5.6-mile line through Bucks County, PA.

One of MATCOR’s key clients Texas Eastern Transmission LP, is seeking federal approval of a $5.3-million expansion of its pipeline and compressor station system to distribute Marcellus shale gas produced locally by Chevron and EQT.

A subsidiary of Spectra Energy Transmission, of Houston, Texas, Texas Eastern wants to gain Federal Energy Regulatory Commission (FERC) approval in November this year and put the new pipelines into service by November 2014, according to a pre-application filing recently submitted to FERC.

The project involves installing a total of 33.6 miles of new pipeline in five counties in the state; upgrading four compressor stations in the state and other work at 41 company facilities between Pennsylvania and Mississippi.  MATCOR has the ability to provide its SPL Mixed Metal Oxide Linear Anode to cathodically protect this pipeline expansion.

“Texas Eastern’s (pipeline) runs from the Gulf of Mexico to Lambertville, N.J. This is an expansion of that system,” said Spectra spokeswoman Marylee Hanley.

Texas Eastern has agreements with Chevron and EQT to charge them for the work, which would provide both producers with the capacity to transport 300,000 additional Btu/d.

These two shippers are major producers in the Marcellus shale play need the project to ensure that pipeline capacity exists to transport their gas to markets as the production comes on line. The shippers have agreed to pay negotiated rates for the pipeline service, according to Texas Eastern’s FERC filing.

“We are an open access pipeline, which means we are required to provide service to our customers,” Hanley said.

The new pipelines would be installed adjacent to existing pipelines in existing rights of way, and all the compressor station work would be done on the stations’ existing property, she said.

Specifically, the project would transport 300,000 Btu/d of gas from western Pennsylvania to the eastern end of the system in Lambertville, N.J., and Staten Island, N.Y.; 50,000 Btu/d from western Pennsylvania to the Lebanon, Ohio, hub and 250,000 Btu/d of of gas from western Pennsylvania to markets in Mississippi and Louisiana.

In addition to providing access to markets for the producers, the project would promote commodity price competition and reduce price volatility by introducing new supply sources from the Appalachian production area, particularly the prolific Marcellus shale, to these market areas, Texas Eastern said. The project would also provide gas to developing markets in the Gulf Coast Region and improve the company’s transportation security, flexibility and reliability, according to the filing

SOURCE: http://www.elp.com/news/2013/03/10/texas-eastern-transmission-planning-pipeline-extension.html

5 Billion Pipeline Project – Awarded to TransCanada

TransCanada Corp said Wednesday it has been chosen by Progress Energy Canada Ltd. to build, own and operate a 5 billion Canadian dollar ($5.1 billion) pipeline project that would transport natural gas to a new liquefied-natural-gas export terminal planned off Canada’s west coast.

The Pacific Northwest LNG export terminal in British Columbia was proposed as part of the multi-billion takeover of Progress Energy Resources Corp. by Malaysian state-run energy giant Petroliam Nasional Bhd, which closed last month.

Calgary, Alberta-based TransCanada said it expects to finalize definitive
agreements for the Prince Rupert Gas Transmission project early this year. The proposed pipeline will transport natural gas primarily from the North Montney gas-producing region near Fort St. John, British Columbia to the LNG export facility, which is aimed at exporting natural gas to Asian markets.

The pipeline company also said it’s planning to extend its existing NOVA Gas Transmission Ltd. system in northeast British Columbia to connect both to the Prince Rupert Gas Transmission project and to additional North Montney gas supply from Progress and other parties. It estimates initial capital costs for the extension at about C$1 billion to C$1.5 billion.

Before Petronas closed its takeover of Progress, the two had said they were moving their LNG export project into the next phase of engineering and said a final investment decision would be made in late 2014. First LNG exports are targeted for 2018.

The World’s Longest Gas Pipeline – Operational

The world’s longest gas pipeline became operational in China as of December 30.

The China National Petroleum Corporation announced the last section of the west-to-east pipeline that stretches more than 5,400 miles was completed.

It is carrying natural gas from the central part of the country to Shanghai in the east and Guangzhou and Hong Kong in the south, crossing through 15 provincial regions.

China.org reported that the pipeline cost $22.5 billion dollars to build and will help bring power to 500 million people.

The pipeline will help China deliver energy to meet its increasing demands. China Daily reported the country’s electricity consumption continued to rise, growing 7.6 percent in November compared to the same month in 2011. October saw a 6.1 percent year-over-year rise, the article stated.

Extensive Corrosion Found – Port Arthur Refinery

Extensive corrosion, that may require up to five months to repair, has been found inside a new 325,000 barrel per day (bpd) crude distillation unit at a 600,000 bpd Port Arthur, Texas, refinery, according to sources familiar with refinery operations.

The root cause of the corrosion, found in vessels and piping on the crude distillation unit (CDU), has not been determined, the sources said.

Damage from a fire on the CDU during an attempted June 9 restart was seen as negligible, the sources said.

The refinery owner won’t know the full scale of repair work needed until it determines the cause of the corrosion, the sources said.

A representative was not immediately available to discuss refinery operations. On Friday, the owner said there was no timeline for bringing the crude unit back into production.

The unit began refining crude oil in April and was officially commissioned at a May 31 ceremony

This particular refinery’s Port Arthur CDU was built to run heavy, sour crude oil grades that have a high risk of corroding refinery units due to high sulfur content.

“There’s extensive corrosion in the crude unit itself,” one of the sources said. “All of it. Piping, vessels, all of it. It could take up to five months to fix. It will be several months.”

The CDU, which does the initial refining of crude oil coming into the refinery and provides the feedstock for all other refining units, is the centerpiece of a $10-billion, 5-year project to expand the refinery to be the nation’s largest.

At the time, the CDU was shut down it was three weeks away from reaching full production, a refinery owner executive had said.

Pipeline set to link pair of projects – Marcellus Shale

Mike Stice, President of Chesapeake Midstream Development, a subsidiary of Chesapeake Energy, spoke during the Marcellus Midstream Conference & Exhibition in Pittsburgh this week. He said the potential for collecting methane, ethane, butane, propane, pentane and even oil make the Utica and Marcellus shale formations very attractive to companies like his.

“The diversity of the opportunities is where the strength lies,” he said. “We find ourselves on the cusp of a breakthrough for natural gas and oil.”

Chesapeake Energy and its partners will run a 12-inch diameter pipeline to connect the northern and southern portions of its $900 million natural gas processing complex in Harrison and Columbiana counties.

In total, the Oklahoma City-based company plans to lay 200 miles of pipelines across Eastern Ohio in 2012, most of which will be located in Harrison, Jefferson, Columbiana and Carroll counties.

Chesapeake is building the plant with M3 Midstream and EV Energy Partners. Frank Tsuru, president and chief executive officer of M3, also spoke at the conference, highlighting the 12-inch pipeline that will connect the Harrison and Columbiana portions of the major complex.

According to a map on the M3 website, it appears the Harrison County portion of the complex would be built near Scio, while the Columbiana County part would be located near Hanoverton.

The processing facility to be located in Columbiana County will have an initial capacity of 600 million cubic feet per day. Natural gas liquids, via the 12-inch pipeline, will be delivered to a central hub complex in Harrison County that will feature an initial storage capacity of 870,000 barrels. The Harrison County facility also will have fractionation capacity of 90,000 barrels per day, as well as a substantial rail-loading facility, according to Chesapeake.

Chesapeake officials also want to make sure the industry flourishes in Ohio, noting they agree with a comment Gov. John Kasich made during his State of the State speech at Steubenville High School earlier this year.

During the conference, Mark Halbritter, managing director of commercial activities for Dominion Transmission, discussed the company’s $500 million processing complex, which is scheduled to open south of Moundsville by the end of this year. He said a second phase of the plant that would be completed next year could raise the final cost to about $800 million. He said the facility is strategically positioned along the Ohio River so it can process gas derived from the Utica and Marcellus formations.

As for ethane that is derived at the Natrium site, Halbritter said the complex will be able to send ethane to Canada, the Gulf Coast, or to any local ethane cracker, such as the one Royal Dutch Shell plans for Monaca, Pa.

“We expect enough ethane to support both pipelines and up to two crackers,” Halbritter’s presentation states, adding the company anticipates more than 400,000 barrels of ethane will be derived from the Marcellus and Utica shales by 2020.

Jeannie Stell is the editor of Midstream Business magazine, said industry leaders have learned valuable lessons over the past few years of working in the Marcellus and Utica shales.

“It is never too early to start applying for a permit,” she referenced as one of these lessons. A second lesson, Stell added, is that laying pipelines in the sometimes rugged terrain of West Virginia, Ohio and Pennsylvania can be more challenging than doing so in the relative flat country of Oklahoma and Texas.

MATCOR was an active participate and exhibitor at this conference.

SOURCE: http://www.heraldstaronline.com/page/content.detail/id/571616/Pipeline-set-to-link-pair-of-projects.html?nav=5010

Industry Challenges Texas Pipeline Ruling

Pipeline companies are asking the Texas Supreme Court to overturn a ruling they say jeopardizes new projects, escalating the battle over the costs of transporting oil and natural gas produced by the energy boom in South Texas.

The industry says its costs are soaring as landowners, bolstered by a recent appellate-court opinion, seek much higher payments for damage to their property values from pipelines and reject what they see as lowball offers from companies. Under Texas law, companies can build pipelines across private property over landowners’ objections, but must pay for use of the land and any damage to the value of the rest of the property.

The dispute in the South Texas case could have ramifications in other states where pipelines are proliferating along with new oil and gas fields, some legal experts say, as lawyers and appraisers build on arguments that have gained traction in court.

A year ago, an appellate court in San Antonio upheld a jury verdict against LaSalle Pipeline LP that awarded $600,000 to the Donnell family of McMullen County, Texas. The award was mostly for the loss of value to an 8,000-acre ranch after LaSalle built a natural-gas pipeline that stretched for four miles across the property.

LaSalle has appealed to the Texas Supreme Court, which has asked for briefs but not yet agreed to hear the case. Another pipeline company filed an amicus brief last month.

In the case, an appraiser hired by the family calculated the loss in value by studying sales of similar properties nearby, and found that those with pipelines sold for 20% less on average than those without pipelines.

A lawyer representing the family declined to comment on the case.

LaSalle didn’t dispute that it should pay for the rights to the 17 affected acres, but it said the pipeline didn’t diminish the value of the overall property at all. The Houston-based company argued that the landowner’s appraiser failed to consider factors besides a pipeline that could affect what people would pay for it, including location, shape and access to water.

LaSalle also maintained the landowner’s appraiser didn’t submit figures to the jury that would support his calculations.

Tom Zabel, a Houston lawyer representing LaSalle and other pipeline companies, said that costs to obtain rights of way have increased fivefold or sixfold in South Texas since the verdict in the Donnell trial.

In the Southwest alone, the Interstate Natural Gas Association of America estimates the region will need 50,100 miles of gathering pipelines, which take gas from wells to processing plants, between 2011 and 2020, 31% of the total nationally.

Energy Transfer Partners LP, a major pipeline operator that filed the amicus brief with the court in support of LaSalle, said that landowners, armed just with the appellate opinion, have argued in more than 20 condemnation hearings that pipelines would reduce their property values by at least 20%. Under state law, local panels hold hearings when pipeline companies sue landowners to obtain rights to build on their property.

Dallas-based Energy Transfer argued that if allowed to stand, the rationale affirmed in the appellate opinion would leave companies unable to “predict the costs associated with their projects and the viability of pipelines.”

Barry Diskin, a professor at Florida State University who has done work for pipeline companies, said he has never seen a study that found a systematic pattern in property values tied to pipelines. “I’ve not seen one, and I’ve looked,” he said.

But just the possibility of a major explosion is enough, in the real world, to depress property values near pipelines, said Marcus Schwartz, a lawyer in Halletsville, Texas, who represents landowners.

SOURCE: http://online.wsj.com/article/SB10001424052970203436904577153001395050804.html

Alyeska agrees to $600,000 penalty to settle federal cases

The operator of the trans-Alaska pipeline has reached a settlement with federal regulators to resolve four enforcement cases dating back to 2006.

Under the deal, Alyeska Pipeline Service Co. will pay a civil penalty of $600,000, which represents a considerable savings over the sum of penalties the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration had originally proposed.

Michael Joynor, Alyeska’s senior vice president of operations, and Jeffrey Wiese, PHMSA’s associate administrator for pipeline safety, signed off on the “compromise agreement” on Nov. 15 and 16, respectively.

As part of the deal, Alyeska agreed to drop a federal lawsuit it had filed against the agency challenging a fine imposed in one of the enforcement cases.

Alyeska is the Anchorage-based consortium that runs the 800-mile trans-Alaska oil pipeline on behalf of owners BP, Conoco Phillips, Exxon Mobil, Chevron and Koch Industries.

The seven-page settlement notes that Alyeska and PHMSA agreed the settlement will avoid further administrative proceedings or litigation.

Aside from the $600,000 civil penalty, Alyeska also “must develop and implement a risk-based atmospheric corrosion control program for TAPS,” the trans-Alaska pipeline system, the settlement says. PHMSA, in 2008, said Alyeska had failed to produce records for required atmospheric corrosion inspections in locations such as vaults and below-ground piping corridors where regulators found water. The deal also calls for Alyeska to take other “corrective actions.”

The settlement resolves four enforcement cases that PHMSA had opened against Alyeska in 2006, 2007, 2008 and 2009.

All totaled, Alyeska was facing fines of $1,293,800 in the four cases, including $263,000 the company paid in 2010.

Alyeska was facing its largest fine, $817,000, under a case brought in 2007.

PHMSA, in that case, issued Alyeska a notice of probable violation for “at least three pipeline failures of TAPS.”

The alleged failures included a fire in the containment area of a crude oil storage tank at Pump Station 9 in which a portable heater ignited escaping oil vapors; a 900-gallon oil spill at a valve along the pipeline; and a failed operation involving a “scraper pig,” which is a device used to clean the inside of a pipe.

PHMSA said the failures raised “cause for concern regarding the operational integrity of TAPS.”

Among other criticisms, the agency said Alyeska failed to properly report the fire and failed to follow its corporate safety manual, which requires keeping portable industrial heaters at least 25 feet from any oil, gas or electric process facility.

In 2006, PHMSA issued Alyeska a notice of probable violation and, after a hearing held at the company’s request, issued a final order much later, in January 2010, assessing total penalties of $263,000.

PHMSA alleged Alyeska committed two violations of pipeline safety regulations. First, it was too slow to obtain a vendor’s full report on a 2004 pig run to test for corrosion or other hazards on the pipeline, the agency said. Second, Alyeska failed to promptly repair a damaged segment of buried pipe near Mile 546, PHMSA said.

In August 2010, after paying the $263,000, Alyeska sued PHMSA in Alaska federal court, arguing among other things that the fine was excessive.

As a result of the settlement with PHMSA, Alyeska’s lawyers on Nov. 17 filed papers to have the suit dismissed.

In 2008, PHMSA issued a notice of probable violation to Alyeska, proposing a civil penalty of $170,000.

The agency said inspections along the pipeline, including at road crossings, turned up deficiencies in the company’s efforts to prevent corrosion. The case questioned Alyeska’s vigilance in using a corrosion-fighting technique known as cathodic protection, and also faulted the company’s record-keeping.

The fourth case covered under the settlement was brought against Alyeska in April 2009, when PHMSA issued a notice of probable violation to the company with a proposed civil penalty of $43,800.

The notice said that during an inspection, a flange was found to be inadequate for handling surge pressure at Pump Station 3, allowing the release of oil onto the station floor.

Under the settlement, however, PHMSA withdrew the safety allegation regarding the flange.

The $600,000 civil penalty specified under the settlement stems from only two of the four cases involved: the 2007 case and the 2008 case.

“We worked with PHMSA for several months to reach agreement,” Alyeska spokeswoman Michelle Egan told Petroleum News. She said the deal closes “all open matters” with the agency.

Read more: http://www.adn.com/2011/11/26/2190471/alyeska-agrees-to-600000-fine.html#ixzz1eyMWK79T

PG&E replacing plastic pipes in Cupertino

A San Francisco  neighborhood is being made safer.

PG&E is replacing thousands of feet of dangerous plastic pipeline that carries natural gas. That kind of pipe has a history of failure and it did so recently in the very spot where PG&E is now changing it out.

PG&E crews began carving out sections of the street to gain access to the old plastic pipeline.

“The lines you see here along the road and outside the homes, those are the main lines and from the main line and from there branching out to the individual service lines that go directly to the meter,” PG&E spokesperson Brian Swanson said.

Twelve-thousand feet of pipeline will be replaced after a gas leak caused an explosion that rocked a Cupertino neighborhood on August 31.

The type of plastic used in Cupertino has failed in the past. The maker, had warned pipe made prior to 1973 can crack.

Assm. Jerry Hill, D-San Mateo, says there were other warnings.

“The National Transportation Safety Board in 1998 came out with a recommendation that the pipes should be checked, monitored and replaced; here again nobody did anything about it,” Hill said.

PG&&E claims it has.

Still, the utility company says replacing all plastic pre-1973 pipes was not priority until now.

PG&E will replace 1,200 miles of the plastic pipeline system wide, which will take at least four years.

Hill will now introduce legislation demanding that all safety recommendation made by the National Transportation Safety Board be adopted by all utility companies.

SOURCE: http://abclocal.go.com/kgo/story?section=news/local/south_bay&id=8424072

Workers repairing the damaged Maui pipeline in New Zealand

Gas supplies to industrial consumers look set to be partially restored this afternoon as workers repair the damaged Maui pipeline in north Taranaki.

Acting Energy and Resources Minister Hekia Parata told a media conference in Auckland this morning there were adequate gas supplies already in the pipeline north of the breach to allow some major gas users – including dairy factories – to be brought back on line.

”But this will rely on as moderate use of the gas as possible – we still need to conserve it,” she said.

Engineers worked through last night carefully excavating the site of the damaged section of pipeline, digging in increments of just 300mm to ensure no further damage would be caused to the Maui line or to a small Vector gas line just 5m away.

Vector CEO Simon McKenzie said it was hoped the excavation work will be completed this afternoon, at which time work can start on replacing the damaged section of line.

The leak appears to have been the result of a failed weld, he said.

”But it is far too premature to come to any conclusions as to why this happened,” Mr McKenzie said, adding that there have been no issues with the Maui line in its 30-year history.

Gas industry experts face a frantic mission today to find and fix a gasline rupture crippling industry in the top half of the North Island.

The Maui gas pipeline, which runs from the Maui production station at Oaonui and feeds gas to much of the North Island, was closed early yesterday morning when a leak was discovered near White Cliffs north of Urenui.

By noon the closure of the line forced 15 of Fonterra’s northern factories reliant on gas to shut down or only partly operate, and Waikato dairy farmers last night began dumping milk.

Other industries also began to suffer and Employers and Manufacturers Association manufacturing manager Bruce Goldsworthy described the situation as “a bloody disaster”.

At this stage residential supplies are not affected.

Hekia Parata, the acting Energy Minister, travelled to New Plymouth for briefings on the crisis.

Last night pipeline operator Vector could not say when gas would be turned back on. Although the leak has been isolated to a section of pipe near White Cliffs, spokeswoman Sandy Hodge did know the extent or type of damage suffered by the pipe.

“For safety reasons a full excavation of the pipe cannot be undertaken until a detailed site evaluation has been carried out. We need to have a careful look at the pipeline before we bring diggers in,” Ms Hodge said.

She said engineers were working on “every scenario they can come up with” on what type of fix the pipe will need so repairing can begin as soon as the fault is understood.

Ms Hodge said the leak had not posed an explosion risk and as far as she knew it was the first time the pipeline had been compromised.

Yesterday residents near the pipeline on Pukearuhe Rd reported hearing a huge roar of gas being vented but little else.

“They were blowing stuff through there today. It made a hell of a noise. A big roar,” said Ian Besley.

“There was a message on my phone from Vector to say they were doing something. They had some sort of problem.”

Mr Besley said he had heard the pipeline being vented in the past and did not think it unusual.

Neighbor Michael Kuriger said Vector called his wife in the morning to say there had been a major leak and they might be flaring off some gas. But it was only the appearance of a Taranaki Daily News car on Pukearuhe Rd that made him think anything unusual might be going on.

“And I saw a truck go down the end of the road with a steel cage arrangement that they might use to protect men working in a hole. But I didn’t think anything of it. I didn’t link that with what my wife said about work from Vector,” Mr Kuriger said.

The high pressure pipeline was opened in 1978 and is owned by Maui Development Ltd.

The section containing the leak has been isolated from production supplies in Taranaki.


The Maui pipeline is the largest-capacity high pressure gas pipeline in New Zealand.

Commissioned in 1973, it runs from the Maui production station at Oaonui to Huntly. At Huntly it is connected to other pipelines that feed gas to thousands of consumers throughout northern North Island.

It is 84cm in diameter, opened in 1978, and is owned by Maui Developments Ltd.

It is operated by gas transmission company Vector.

It does not only carry Maui gas, but gas from all Taranaki’s fields.

SOURCE: http://www.stuff.co.nz/taranaki-daily-news/news/5851498/Workers-repairing-the-damaged-Maui-pipeline