Tag Archives: New Jersey

Hess Exits Refining as Elliott Seeks Board Seats

Hess Corp. (HES) will sell its fuel storage terminal network and exit the refining business as Paul Singer’s Elliott Associates LP fund said it plans to buy more than $800 million shares and seek board seats.

Hess will close its Port ReadingNew Jersey, refinery by the end of February and seek a buyer for its 19 storage terminals, the New York-based company said in a statement today. Hess rose 5 percent to $61.84 at 10:24 a.m., the highest intraday gain on the Standard & Poor’s 500 Index.

Singer is the founder and president of Elliott Management Corp. which oversees two funds, Elliott Associates and Elliott International LP, that have $21.5 billion of assets under management. Elliott Associates notified Hess that it may seek board seats at the annual shareholder meeting this year, according to a separate release from Hess. Elliott last year added two new board members to BMC Software Inc. (BMC)after pushing BMC to consider a sale.

Peter Truell, a spokesman for Elliott, declined to comment when reached by phone today.

Hess’s terminals business may sell for as much as $1 billion, said Fadel Gheit, a New York analyst with Oppenheimer & Co. The moves also will free up about $1 billion in working capital “for future growth opportunities,” the company said. The Port Reading closure culminates a process that last year included shutting down another money-losing refinery Hess co- owned in the U.S. Virgin Islands known as Hovensa LLC

Gradual Transformation

“They’ve been doing this gradually,” Gheit said today in a telephone interview. “Hess has turned a corner and the company is executing the right strategy.” Gheit rates Hess the equivalent of a buy and doesn’t own shares.

Hess joins companies including ConocoPhillips (COP) and Marathon Oil Corp. (MRO) in exiting the refining business, which rallied in 2012 in areas where operators have had access to cheaper U.S. crude. East Coast refineries, which pay more for imported oil, have been shut as their profit margins narrowed.

“We have transformed Hess into a predominantly exploration and production company, which is part of a multi-year strategy to grow shareholder value,” Chairman and Chief Executive Officer John Hess said in the statement.

Hess has exploration and production assets around the world, from the Bakken and Utica plays in the U.S. to Equatorial Guinea and Norway. The company has tripled its revenue from exploration and production in the past decade, while continuing to generate 75 percent of sales from marketing and refining. Production in the third quarter climbed 17 percent from a year earlier to the equivalent of 402,330 barrels of oil a day, according to data compiled by Bloomberg.

Shale Emphasis

Of the $6.7 billion Hess plans to spend this year on exploration and production, 40 percent of it will go towards its unconventional shale resources in the U.S., the company said Jan. 9. Hess, which was founded by John Hess’s father, began as a fuel oil delivery business and expanded into retail, refining, and oil storage.

The company is retaining its gas station business, which includes more than 1,350 Hess-branded sites in 16 states along the East Coast, the statement said. The company is the leading gasoline convenience store retailer in the region, according to the company’s website.

Retail Exit?

“The next potential move for them could be to exit the retail side,” Brian Youngberg, an analyst with Edward Jones & Co. in St. Louis, said in a telephone interview today. “Retail is a lower-margin business, so exiting could potentially unlock further value.”

Valero Energy Corp. (VLO), the largest independent fuel processor in the world, is in the process of spinning off its convenience store business.

Founded in 1977, Singer’s Elliott Management is one of the oldest private investment firms of its kind under continuous management. The Elliott funds’ investors include large institutions, college and charitable endowments, family offices, and friends and employees of the firm.

Singer is among a group of creditors seeking payment from Argentina for bond defaults. Ghana detained an Argentine navy ship in October on the bondholders’ request and Argentine President Cristina Fernandez de Kirchner took a chartered flight to Indonesia this month to avoid creditors seizing the nation’s plane.

Hess has retained Goldman Sachs Group Inc. as its financial adviser on the terminal sales.

SOURCE: http://www.bloomberg.com/news/2013-01-28/hess-to-pursue-sale-of-terminal-network-exit-refining-business.html

Williams Partners gets FERC approval for pipeline

Williams Partners LP said Wednesday that it received federal approval for a $341 million expansion of the Transco natural gas pipeline, which should expand capacity in the Northeast by this time next year.

Williams said the project will expand the Transco Leidy Line and Transco mainline in Pennsylvania and New Jersey, to transport natural gas to the Northeast. It will add 12 miles of new pipe, mostly along existing pipeline routes, and a compressor facility in Essex County, N.J.

Construction of the compressor station begins this month, with pipeline construction starting in the spring. The new line should be in service by November 2013, the company said.

The project needed approval of the Federal Energy Regulatory Commission.

SOURCE: http://www.businessweek.com/ap/2012-11-07/williams-partners-gets-ferc-approval-for-pipeline

New Jersey Natural Gas wants to spend $204M on new pipes

New Jersey Natural Gas wants to replace about 343 miles of distribution pipes, old mains that are in danger of corrosion and leaks.

If approved by state regulators, the proposed five-year, $204 million project will occur throughout Monmouth, Ocean and Morris counties. The Wall-based utility sent the proposal to the state Board of Public Utilities on Tuesday.

It will replace cast iron and steel distribution lines that are at least 45 years old, as well as associated lines and meters that are connected to customers’ homes, spokesman Michael Kinney said. The scope of the project accounts for 60 percent of the utility’s aged infrastructure, which totals 570 miles out of more than 7,000 miles of pipe.

The cast iron and steel distribution mains, which either lack or have deteriorated wax or epoxy coatings, were commonly use in the industry prior to 1970, the utility said. They are more susceptible to corrosion and leaks and account for over 95 percent of all leaks found on the system, not accounting damage from others.

After it is approved, the utility will file a request with the BPU in June to raise its base rate each year the program is in effect. The project is estimated to annually raise customers bills $8.44, or 0.7 percent, on average, for the typical residential heating customer using 1,000 therms a year, over the life of the program, the utility said.

The utility is calling the program Safe Acceleration and Facility Enhancement. “Ensuring safe, reliable service for our customers and the communities we serve is the most important thing we do,” said Laurence M. Downes, chairman and chief executive officer of New Jersey Natural Gas.

“With the SAFE program, we are looking to upgrade our older and more susceptible infrastructure to ensure the integrity of our system and best serve our customers,” Downes said.

The locations of specific projects for the first year will be filed with regulators after the program is approved, the utility said. The five-year time frame is meant to minimize the impact on towns, help scheduling and give it the ability to buy materials in bulk, Kinney said. It comes as U.S. Secretary of Transportation Ray LaHood pushes for increased pipeline safety, Kinney said. The state’s Energy Master Plan also places an emphasis on investment in natural gas infrastructure.

SOURCE: http://www.dailyrecord.com/article/20120320/NJBIZ/303200021/Gas-utility-wants-new-pipes

Millennium Pipeline clears safety check

Millennium Pipeline has been given the go-ahead to return to full service, company officials said, after a natural gas leak led to a government investigation that uncovered missing weld inspection records. While the records weren’t located, new weld inspections were conducted to verify the integrity of four “suspect” welds that raised the ire of federal officials for inadequate paperwork.

“Our integrity confirmations revealed that no additional anomalies were found, no weld defects of any kind were found. Our digs didn’t reveal anything out of the ordinary or unusual to be of concern.”

State and federal officials launched an investigation into the pipeline after a weld, located near the Broome-Tioga county border, sprung a leak on Jan. 11. The leak released an estimated 1.3 million cubic of feet of natural gas — enough to heat an average home in the Northeast for 18 years — before repairs were completed five days later.

The results of that investigation were released in a U.S. Pipeline and Hazardous Materials Safety Administration document in July, which pointed to the three other welds in a 93-mile section of the Millennium system that were considered “suspect” because of missing inspection documents.

Between the leak and the recordkeeping deficiencies, the July PHMSA document expressed concerns about the integrity of the pipeline as a whole.

“Similar defects may also develop leaks and potentially lead to a rupture of the pipeline,” the federal document said.

Following the report, Millennium reduced pressure on the pipeline — which can reach a maximum of 1,200 pounds per square inch, but is normally lower — by 20 percent until the integrity of the welds could be verified.

On Sept. 21, Millennium and PHMSA reached a consent agreement, in which they agreed to conduct new testing to allay concerns about the welds by Dec. 31.

The consent agreement document identifies the “suspect” welds with approximate locations that would place all four in either western Tioga or eastern Broome counties.

Gibbon said the work was completed recently, and Millennium was given the green light to return to normal pressure in mid-October.

An estimated $500,000 to $600,000 in “pig testing” — a process in which camera equipment is shuttled through the pipeline to collect data from the inside — in addition to nine investigative digs provided information that was missing in the records.

The welds turned out to be OK, according to Gibbon.

“There were different places along the pipeline where they asked if we would please go through and get a visual to make sure that everything is okay, and it was” she said. “We submitted our findings back to PHMSA … and we’ve returned to normal pressures.”

‘Not a perfect system’
Richard Kuprewicz, a Bellingham, Wash.-based pipeline safety expert, said situations such as this are “not unusual.”

Pipeline operators are not required to conduct an X-ray inspection of every weld on a pipeline, even though it’s the best way to ensure the integrity of a weld.

On top of that, government agencies don’t typically look over the shoulder of pipeline operators during construction to make sure every single weld has an inspection record.

“Everyone thinks, especially during the construction, that there’s safety inspectors looking at this every step of the way,” he said. “They can’t be checking every weld or every record. There’s only a certain number of people.”

Case in point: Although the Millennium Pipeline gained government approval prior to going online in December 2008, PHMSA became aware of recordkeeping deficiencies only after the January leak.

“It’s not like it’s your car being built and there are quality controls,” Kuprewicz said. “It’s not a perfect system.”

Gibbon said Millennium takes “full responsibility” for the missing records, and has both revised its recordkeeping system and launched its own internal investigation.

“Even though we have modernized our system going forward, we’re going back and doing a very careful examination of where something could have slipped through the cracks,” she said.

PHMSA did not respond on Monday to questions about the agency’s records on inspection policies.

SOURCE: http://www.pressconnects.com/article/20111031/NEWS01/110310371/Millennium-Pipeline-clears-safety-check?odyssey=nav%7Chead

NJ Reservoir Drainage May Affect Local Drinking Water

Officials say water may look, smell differently, but is still safe to drink while the Cedar Grove Reservoir is drained.

While the Cedar Grove Reservoir is drained, workers will go in and repair corrosion damage, inspect its conduits and fix leakage.

The process of draining the reservoir, which is located along Ridge Road, is expected to take three to four months. During that time, water customers in towns supplied by the reservoir may notice some discoloration or changes to the taste of the water, but officials say the water is safe to drink.

The City of Newark owns the reservoir and the city’s Department of Water and Sewer Utilities for the City of Newark along with Mayor Cory A. Booker, explained that the discoloration occurs when valves are opened and closed during the drainage process. The Great Notch reservoir, owned by the Passaic Valley Water Commission and located in Woodland Park, will supply additional water to customers, so there is no interruption in the supply or quality of water while the repair work is being done.

“We are working to upgrade and modernize our water system and to provide residents with the highest quality water supply in the nation,” said Booker. “This repair work will require us to drain and inspect the Cedar Grove Reservoir, which may cause temporary discoloration or a change in the water’s taste. But the water provided will be safe to use.”

City officials say there is a leak in the outlet tunnel and corrosion damage to the 60-inch water main. The main also needs a new valve.

The reservoir provides water for Newark, Belleville, Bloomfield, and some areas of East Orange. Every decade or so, the reservoir is drained and cleaned of debris. Its pipes are inspected, and then it is re-filled. The project is expected to finish on April 30 of next year, according to Township Manager Thomas Tucci, who said the project will not create any issues to residents.

The city has not drained the reservoir since 1990 to perform repairs. Water samples are taken daily from the reservoir and tested to make sure the water quality complies with safe water drinking standards. Discoloration does not make the water unsafe, officials say, but could cause discoloration while washing clothes.

“There may be some slight color changes during the switchover,” said Andrew Pappachen, Director of Operations for the Newark Watershed Conservation and Development Corp. “However, we will ensure the potability by maintaining sufficient chlorine residual in the water. We will be monitoring the water quality more often.”

SOURCE: http://southward.patch.com/articles/reservoir-drainage-may-affect-local-drinking-water

Engineers use Route 23 bridge in Wayne to study corrosion

WAYNE – An international team of engineers and researchers, each dressed in a yellow vest and hard hat, on Tuesday poked and prodded – so to speak – at a steel string bridge, looking for signs of deterioration & corrosion.

International engineers conduct a study of highway bridge deterioration using a bridge on Route. 23 in Wayne for the test.

As drivers whizzed by without giving thought to the condition of the structure, the engineers were unleashing a variety of high tech tools – ground penetrating radar, ultrasonic equipment and impact echoing technology – to aid them in evaluating the bridge deck that spans Route 23. The bridge carries traffic over Mountainview Boulevard in Wayne.
They are part of the “International Bridge Study,” a project organized by the Center for Advanced Infrastructure and Transportation at Rutgers University in June 2010. It brings together engineers and researchers from Japan, Switzerland, Austria, Korea, the United States and other nations to study the North Jersey bridge, according to Carl Blesch, a spokesman for Rutgers University.

Their purpose is two-fold. They are looking for ways to identify bridge corrosion early so that it can be treated earlier – when the cost is less expensive. They are also looking for ways to treat corrosion that extends the life of infrastructure in their own countries.

“We have no sustainable path forward to manage our infrastructure,” said Franklin Moon, an associate professor of structural engineering at Drexel University, a lead engineer on the project.

“If you want a public infrastructure system, someone has to pay for it. Public infrastructure costs more now than it has to cost,” he said. “We’re spending a lot of money on repairs we might not need to do if we can catch them early.”

Moon said there are 600,000 bridges in the nation and 66,000 in New Jersey. He said he believes agencies are spending more to maintain bridges than they need to because bridge repairs often do not occur until the deterioration has progressed significantly.

He said corrosion expands the rebar in the bridge and when it expands, it pops the concrete, creating a pothole. If the corrosion is detected earlier, it can be treated – with a corrosion inhibitor, for instance – which can prevent it from expanding, he said.

“It’s analogous to finding cancer early so you can deal with it,” he said. “Find cancer late and you’re in trouble … If you let that go to the point that it’s spalling and you’ve got potholes, now you’re out there with a jack hammer and replacing it.”

Moon said the New Jersey Department of Transportation selected the Wayne bridge to study because it is representative of 2,600 other bridges in the state. They all have similar drainage, deck quality and vibration issues, he said.

This bridge, which was built in 1983, handles about 73,100 vehicles a day, said Tim Greeley, spokesman for the state transportation department.

It was last inspected in July 2010, and “is in overall fair condition,” he said.

Greeley said all bridges 20-feet in length or longer are inspected at least every two years.

The teams will meet for a workshop June 14 and 15 to share findings and make recommendations.

SOURCE: http://www.northjersey.com/news/Engineers_use_Route_23_bridge_in_Wayne_to_study_corrosion.html