Tag Archives: Pipeline Integrity

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.

Marcellus Shale Production Data Hints at Growing Cathodic Protection Needs

Production from the Marcellus Shale natural gas reserves is expected to exceed 13 billion cubic feet per day this December, nearly seven times the 2 billion cubic feet per day it produced during the same period in 2010, according to a recent report.

The report on Marcellus Shale production data, by the U.S. Energy Information Administration, said the figure would equal about 18 percent of total U.S. natural gas production during the month.

One of the Marcellus Shale companies that’s taking advantage of the natural gas boom is Cabot Oil & Gas Co., based in Houston, which claimed 15 of the 20 highest-producing natural-gas wells in the area during the first half of the year.

According to Dan O. Dinges, Cabot’s chief executive officer, 10 wells from a single well pad in Auburn Township produced enough natural gas in 30 days to meet the average monthly demand of the entire city of Philadelphia.

Cabot plans to increase its Marcellus Shale drill rigs from six to seven in 2013, with each rig capable of drilling 20 wells during the course of the year.

The sharp rise in natural gas reserves production hints at the growing need for Marcellus Shale companies to incorporate pipeline corrosion control equipment like cathodic protection rectifiers into their gas delivery infrastructure, according to Chris Sheldon, who works as utilities practice lead for MATCOR, a Pennsylvania-based cathodic protection company.

“Marcellus Shale companies are experiencing a tremendous upswing in natural gas production and are building new drill rigs and digging new wells to take advantage of the vast natural resource at their feet,” Sheldon said. “That means a lot of new pipes are going to be laid. And more pipes means more opportunities for corrosion.”

“At MATCOR, we’re here to help Marcellus Shale companies, as well as other pipeline companies and natural gas producers, with a full line of advanced cathodic protection equipment, systems and services designed to help them meet their corrosion control needs.”

Further Reading

A Marcellus Natural-Gas Bonanza,” The Philadelphia Inquirer, December 10, 2013.

MATCOR Offers Take on Natural Gas Liquids Production and NGL Transportation

“There is much discussion about the abundance of natural gas deposits in Marcellus Shale, and there is tremendous focus in extracting this precious resource. However, the industry’s ability to get this product to the end user is impacted by the infrastructure that currently exists.

“While rail is a means to transport natural gas, MATCOR is working with a growing number of midstream companies in expanding transmission and distribution piping networks. The key is to get product to market in a cost-effective and safe manor, and MATCOR’s cathodic protection products and services help ensure any new pipeline, regardless of the product it delivers, is in compliance and protected from corrosion.”

John Rothermel, PE

Vice President of Sales, MATCOR

Pipelines Planned for NGL Transportation Through Central Pennsylvania

At least one company is looking to take advantage of the rapid growth of natural gas liquids production from two of the largest shale regions in the nation.

Sunoco Logistics, a Philadelphia-based company that transports, terminals, and stores crude oil and refined petroleum products, recently announced that it was surveying land for a new pipeline, dubbed Mariner II East, that would connect production of natural gas liquids (NGL) from the Marcellus and Utica  shale regions of Pennsylvania, Ohio, and West Virginia to one of the company’s oil and diesel tank farms outside of Mechanicsburg.

The company also has plans to convert its existing Mariner East I pipeline, which used to carry oil and diesel fuel west, so that it carries propane and ethane east to its facility in Marcus Hook, which had also been idled.

The company bought the refinery from the former Sunoco Co. earlier this year for $60 million and is spending an unspecified amount of money to upgrade it and bring it back online as a natural gas liquids production refinery.

Sunoco Logistics is betting on the continued growth of natural gas production, of which NGLs like propane and ethane are byproducts. Natural gas production has increased in recent years thanks to hydraulic fracking, which has resulted in a larger supply that has driven prices down and has therefore, like a circle, created bigger demand for natural gas.

As a result of this process, NGL production has climbed during the last four years from 50 million to 70 million barrels per month. But, without greater avenues for NGL transportation, the increased production is moot.

Sunoco Logistics says that its plan to build a new NGL transportation pipeline, and convert an old pipeline for NGL transportation, will help create a northeast NGL hub in Marcus Hook that will help meet the demands of NGL producers and local and overseas consumers.

The Mariner East projects are only a few of the pipelines being planned by Sunoco Logistics. The company has roughly a dozen oil and gas projects on the books over the next 12 months at a cost of $1.3 billion, four times what it spent on capital expenditures each of the last four years.

MATCOR offers cathodic protection safety products and services to companies like Sunoco Logistics, which require cathodic protection equipment to maximize safety, efficiency, and capital investment in their pipeline projects.

Further Reading

Sunoco Logistics Plans Marcellus, Utica Pipeline Through Susquehanna Valley,” The Patriot News, Nov. 21, 2013.

Pipeline Cathodic Protection News: New Spectra Natural Gas Pipeline Construction

Pipeline cathodic protection industry received a boost this week: proposed high-volume natural gas pipeline construction across 3 Southeastern states. Spectra, the company behind this jolt of economic opportunity, has dubbed it the “Renaissance Project”. The natural gas pipeline proposes several lines branching off the main pipeline to potential customers along the route.

The pipeline is a complex project and will require a number of business services such as pipeline cathodic protection. MATCOR’s pipeline protection program uses a number ISO 9001:2008-certified solutions to protect such a project. For example, MATCOR’s SPL™-FBR linear Anode and Durammo™ Deep Anode System would help lower total cost of ownership on the pipeline.

The proposed pipeline is almost 300 miles with three different pipeline diameters. The natural gas pipeline will feature two compressor stations to maintain line pressures, according to officials. It was stated the line will have a capacity of 1 billion cubic feet per day, and can be expanded to over 1.5 billion cubic feet per day.

Spectra plans for the pipeline to run from the Chattanooga, Tennessee area, through Alabama and towards the Atlanta, Georgia area. “We are continuing to work with multiple potential customers to design a project to fit their supply demand needs,” Grover said in a statement on the project.

Furthermore, Spectra executed letter of intent with the AGL, the parent company of Chattanooga Gas Co., and Atlanta Gas Light Co.to explore a joint arrangement for local distribution. Sources close to the matter state the “Renaissance Project” could be up and running by mid-2017.

“From a project kickoff standpoint, we continue to reach out to federal, state and local public officials informing them of the project,” she said. “We’ll send letters and start contacting landowners along our proposed study corridor pending further market feedback.” Grover stated Spectra the Renaissance Project study corridor map is in the final stages. Currently, the map highlights 15 counties across Tennessee, Alabama and Georgia.

Economic groups across these states laud the move as one that will stimulate the economy and bring jobs to the region. “It’s going to be a good project and the infrastructure for natural gas is such that, industry-wide, there’s a great demand for it,” one source familiar with the matter said. Experts familiar with the project say it is a crucial move to support industrial expansion and business growth in the region.


MATCOR’s Insight That Works

The Renaissance pipeline is indeed poetically named. The Southeastern region has recently seen improvements to its economic state and industrial competitiveness. However, key investments such as the natural gas pipeline and other infrastructure must be put in place to attract jobs, manufacturers and families into these committees. That said, the pipeline is a key cog to the continued rebirth of this region. MATCOR and other service providers will be stewards of this bright future, protecting valuable assets that power communities.

SOURCE: http://www.timesfreepress.com/news/2013/aug/20/proposed-tri-state-natural-gas-pipeline-taking/

MATCOR is a leading provider of ISO 9001:2008-certified cathodic protection for pipelines and cathodic protection management. Our team maintains the highest quality standards of cathodic protection for systems for storage tanks and other products that let you focus on your business operations.

Canada gives preliminary OK for new pipeline

The Canadian government said it conditionally approved plans by a division of TransCanada to expand natural gas pipeline capacity in the country’s west.

The National Energy Board announced it approved of three natural gas loops in northeastern British Columbia and northwestern Alberta. The 69-mile loops make up the so-called Northwest Mainline Expansion Project submitted by NOVA Gas Transmission Ltd., TransCanada’s Alberta division.

The $325 million project will link natural gas supplies in the region to markets in Canada and the United States, the NEB said.

“The NEB’s approval of this project is contingent on conditions that (NOVA) must meet,” the agency said in a statement. “The conditions relate to pipeline integrity, the protection of the environment, protection and monitoring of caribou habitat, and matters of public and Aboriginal consultation.”

The company estimates production from shale and conventional natural gas plays in the region could reach around 3.5 million cubic feet per day by 2025.
SOURCE: http://www.upi.com/Business_News/Energy-Resources/2012/02/29/Canada-gives-preliminary-OK-for-new-pipeline/UPI-26551330519419/

PG&E Proposes Spending $769M To Test Gas Pipelines, $2.2B Overall

PG&E Corp. (PCG) on Friday proposed spending $769 million over three years to test its natural gas pipelines as part of a $2.2 billion pipeline safety program, following a deadly pipeline explosion last year.

PG&E said it will pressure-test all of its untested pipe segments and expand use of automated pipeline shut-off valves. The utility has proposed passing on the cost of the project to its customers, with a $250 million rate increase in 2012 and subsequent increases of $30 million and $80 million in 2013 and 2014, respectively.

Overall, the utility said it plans to spend $2.2 billion through 2014 on pipeline safety costs.

In June, the California Public Utilities Commission ordered PG&E and the state’s other natural gas utilities, owned by Sempra Energy (SRE), to file by Friday plans to test or replace their gas transmission pipelines that haven’t been tested with high-pressure water techniques.

The plans are part of the CPUC’s effort to beef up the state’s pipeline safety regulations and improve its own oversight over the state’s thousands of miles of natural gas pipelines.

On Sept. 9, a PG&E pipeline in San Bruno, Calif., exploded, igniting a fireball that killed eight people, injured several others and destroyed 38 homes.

The National Transportation Safety Board, which has been investigating the cause of the explosion, is scheduled to issue a final report on its findings Aug. 30.

The NTSB has suggested in interim reports that poor record-keeping and a lack of safety tests by PG&E likely masked manufacturing defects in the 55-year-old San Bruno pipeline. The agency also found that the company didn’t provide the local fire department and other emergency responders with information they needed to react properly to the pipeline explosion.

The U.S. Department of Justice has been leading a criminal investigation into the explosion, and several lawsuits have been filed against the utility.

In June, an independent panel of experts concluded that PG&E had a “dysfunctional culture” that gave little heed to public safety or the high level of technical expertise needed to safely operate a gas pipeline system.

The CPUC has launched a separate probe to determine whether PG&E’s poor record-keeping violated any rules or laws that might warrant penalties. The CPUC also is considering new pipeline-safety rules for PG&E and other pipeline operators in the state and has promised to beef up its oversight of PG&E and the state’s pipelines.

Earlier this month, PG&E announced it hired a new chief executive, Anthony Earley, to replace former CEO Peter Darbee, who left the company in the wake of the disaster.

The company has said damage claims from the accident could total as much as $400 million, and that other costs associated with the accident could total $1.1 billion through 2012.

In July, credit rating company Fitch Ratings lowered its outlook on the company, saying continued fallout from the accident has added uncertainty to its credit status.

The utility said Friday it will enhance electronic monitoring of its gas system to quickly identify ruptures and replace segments in need of new piping. It also plans to transition to electronic records from paper documents to streamline the testing and repair process.

“This plan represents a clear break with the way PG&E and other gas utilities once approached pipeline safety,” Nick Stavropoulos, PG&E’s new executive vice president of gas operations, said in a statement.

SOURCE: http://online.wsj.com/article/BT-CO-20110826-714596.html

BP Ducks Investor Suit for Prudhoe Bay Spill

(CN) – The 9th Circuit on Wednesday dismissed a securities-fraud complaint against BP Exploration related to the oil company’s 2007 conviction for negligently discharging oil into Alaska’s Prudhoe Bay.

This decision from the federal appeals court in Seattle unanimously reverses a federal judge’s finding that BP’s contractual filings with the U.S. Securities and Exchange Commission laid adequate foundation for securities fraud.

BP Exploration pleaded guilty in 2007 to violating the Clean Water Act after some 200,000 gallons of oil befouled Prudhoe Bay on Alaska’s North Slope. The company admitted that the spill resulted from internal corrosion in its pipelines. In its plea agreement, BP said it knew about accumulated sediment had caused the corrosion, but it had neglected to fix the problem.

Claude Reese led a federal class action, claiming that BP’s negligence amounted to securities fraud, as the spill had caused the company to temporarily shut down its operations in the bay and costing investors billions of dollars.

Despite knowledge of the corrosion, BP failed to take action or notify investors, Reese argued. He also claimed that the oil company’s executives had made misleading statements about the operation, and that BP continued to mislead investors though its SEC filings.

U.S. District Judge Marsha Pechman in Seattle tossed most of Reese’s claims for failure to meet the heightened standards of the Private Securities Litigation Reform Act of 1995. But the judge said Reese could move ahead with the claim that accused BP of defrauding investors through SEC filings.

On appeal, a three-judge panel of the 9th Circuit reversed, finding that the filings were forward-looking contractual promises, the breaking of which did not amount to fraud.

“The breach of a contractual promise of future performance typically does not constitute a misrepresentation that will support an action for fraud,” Judge Ronald Gould wrote for the panel. “BPXA’s contractual promise to act as a prudent operator did not expressly or implicitly assert that BPXA was in full compliance with its obligations thereunder, and we do not view the public filing of the ORC Agreement as the sort of traditional fraudulent misrepresentation of fact that could induce investors mistakenly to buy securities. We hold that, in this case, the public filing of a contract containing a promise of future compliance did not, upon the contract’s breach at a time after execution, provide an actionable misrepresentation for the purposes of a private damages action for securities fraud.

SOURCE: http://www.courthousenews.com/2011/06/29/37791.htm

Mike Feuer Calls Upon Public Utilities Commission to Provide Gas Pipeline Safety Information

Feuer Requests Answers to Concerns Raised by Investigation of San Bruno Pipeline Rupture.

Assembly Member Mike Feuer (D-Los Angeles) has asked the California Public Utilities Commission (CPUC) to provide information about the safety of gas pipelines in Feuer’s district after a devastating explosion in San Bruno, California raised questions about the safety of aging pipeline infrastructure.  In a letter dated June 10, 2011, Feuer called for the CPUC’s assistance in obtaining answers to a number of specific concerns identified by the National Transportation Safety Board (NTSB) in its investigation of the pipeline rupture in San Bruno.

“The safety of my constituents is my number one priority, which is why I called on the CPUC to provide answers to a comprehensive set of questions about the safety of the pipelines running through neighborhoods in my district,” said Feuer. “I want to ensure that residents and businesses have the information they need to protect their families and workplaces.”

After the San Bruno disaster, Feuer’s office met with representatives from Southern California Gas Company (SoCalGas), whose pipelines serve most of Southern California, to discuss issues of pipeline safety.  This session, Feuer supported Assembly Bill 56, legislation designating the CPUC as the state authority responsible for the development and administration of a safety program for natural gas pipelines. Feuer’s current request to the CPUC seeks information that would increase transparency and communication between SoCalGas and the communities it serves.

“I am asking for the CPUC’s help to gather information about SoCalGas pipelines to increase public awareness and promote industry practices that will contribute to safer communities,” Feuer stated.

In his letter to the CPUC, Feuer asked a number of specific questions, among them:

  • Has SoCalGas identified all gas transmission lines in the District that have not previously undergone a testing regimen designed to validate a safe operating pressure?
  • What steps has SoCalGas taken to ensure it is basing operating pressures on accurate information contained in its records?
  • Where are the high consequence areas (HCAs) located within the 42nd District?  Have residences, businesses, schools and other institutions been made aware of their proximity to the HCAs?
  • Does each high-pressure pipeline identified by SoCalGas pursuant to the NTSB recommendations have an automatic or computerized shut-off valve?  If not, why not, and when could a plan be developed to install and pay for such valves?

A complete copy of Feuer’s letter to the CPUC can be found here.

The 42nd Assembly District includes all or part of the Los Angeles neighborhoods of Sherman Oaks, Studio City, North Hollywood, Valley Glen, Valley Village, Toluca Lake, Universal City, Griffith Park, West Los Angeles, Brentwood, Bel Air, Holmby Hills, Beverly Glen, Westwood, Century City, Hollywood, Fairfax, Hancock Park, Los Feliz and the Cities of Beverly Hills and West Hollywood.

SOURCE: http://studiocity.patch.com/articles/feuer-calls-upon-public-utilities-commission-to-provide-gas-pipeline-safety-information-to-42nd-district-residents

Rainbow Pipeline outage extended to end of June

Plains Midstream continues integrity work on oil line in northern Alberta

Follow-up article from a recent MATCOR Blog Posting: A pipeline which caused the largest oil spill in Alberta since the 1980s likely will remain out of service until the end of June, said operator Plains All American Pipeline.

The parent of operator Plains Midstream Canada said Thursday dig operations to check pipeline integrity along the northern portion of the 187,000 barrel per day line Rainbow pipeline will continue until at least the end of the month.

The line, which runs from Zama to Edmonton, has been shut down since rupturing late April near Little Buffalo in northwestern Alberta. At least 28,000 barrels of crude were spilled into boggy muskeg, flowing to a beaver pond where it was contained.

The rupture was caused by soil settlement after a maintenance program that allowed a section of the pipeline sag, according to initial reports. Plains was ordered by the Alberta Energy Conservation Board to check along the entire portion of Rainbow’s 20-inch line, from Zama to Nipisi in north-central Alberta, as part of the restart plan. The extended program came after the operator found a crack on a weld seam approximately 25 kilometres south of the original break.

“We asked them to do two dig programs and we are waiting for the results of the programs,” said Kim Blanchette, spokeswoman with the ERCB on Thursday.

After the April 29 spill, Plains identified five areas that has similar maintenance to the failure site, Blanchette said. The discovery of a crack downstream of those areas prompted the regulatory to call for a second, random dig program.

Plains said its digs were going slowly due to the remote locations of the sites, as well as the forest fire threat and bad weather.

“We are working to complete the remaining digs by the end of June,” the company said in an e-mail. It said it did not have a firm timeline for the restart of the line.

Plains said it expects repair and remediation costs of the Rainbow pipeline to range from $64 million US to $75 million US, with insurance covering the bulk of the expense.

Also on Thursday, the Houston-based company said it expected to “meet or exceed the high end” of its second quarter guidance for adjusted earnings of $290 million US to $320 million US

Operations on Rainbow’s 24-inch line from Nipisi to Edmonton started soon after the spill was detected, then interrupted for 10 days after forest fires caused power failures in the region.

The outage of the pipeline’s southern leg prevented delivery of about 150,000 barrels a day of heavy crude to the Edmonton, Alberta, refining and pipeline hub.

The northern section of Rainbow, which was built in the 1960s, carries mostly conventional crude from northern Alberta fields. It was moving about 75,000 barrels a day at the time of the rupture.

In May Enbridge Inc. also reported a major leak on its Norman Wells oil pipeline, which feeds directly into the Rainbow line. The spill, in a remote location of the Northwest Territories, could be as large as 1,500 barrels, Enbridge recently disclosed.

The 39,400 barrel per day line flows oil from Imperial Oil’s processing facility in Norman Well, NWT to Zama. Imperial had to reduce production on the Rainbow outage. When the Enbridge line started flowing again at reduced capacity, the company was able to add some barrels to the pipeline.

“That’s helping but it’s not resolving the situation for us,” said Imperial spokesman Jon Harding. “It is status quo.”

Imperial has been storing production at Norman Wells, increasing storage capacity by re-certifying tankage left over from the sites days as a refinery, Harding said. Other volumes are flowing to Zama, where it is being trucked to market.

The outages have had minimal impact on cash crude prices, traders said, but come at a time when several ruptures and leaks in pipelines carrying Canadian oil have raised questions about reliability and safety.

Since the Rainbow spill, TransCanada Corp. suffered two leaks and outages on its 591,000 barrel a day Keystone pipeline to Oklahoma from Alberta due two faulty equipment in pump stations.

SOURCE: http://www.calgaryherald.com/news/Rainbow+Pipeline+outage+extended+June/4920080/story.html#ixzz1OsZyujf1

TransCanada reopens Keystone oil pipeline

There were no concerns about the integrity of the 1,300-mile Keystone oil  pipeline following a May 29 spill in Kansas, the U.S. government said.

Canadian pipeline company TransCanada restarted the Keystone oil pipeline  during the weekend. The Department of Transportation’s Pipeline and Hazardous  Materials Safety Administration issued a corrective action prohibiting a restart  last week but reconsidered in time for a Sunday restart.

Julia Valentine, a spokeswoman for the PHMSA, was quoted by The Wall Street  Journal as saying there weren’t any concerns about the integrity of  Keystone.

“Every pipeline incident is unique,” she said. “In this case, the failure did  not raise concerns for the integrity of the pipeline.”

Keystone transits around 591,000 barrels of oil per day from Alberta, Canada.  A May 29 leak in Kansas spilled about 10 barrels of oil. There were 11 separate  spills on the pipeline recently though the company said all were relatively  minor.

TransCanada is pushing for a $13.3 billion extension to the pipeline. The  project is scrutinized by regulators and environmentalists who worry about the  potential for spills and uncertainty about the safety of transiting oil from tar  sands in Canada.

SOURCE: http://www.upi.com/Business_News/Energy-Resources/2011/06/06/TransCanada-reopens-Keystone-oil-pipeline/UPI-85081307364816/#ixzz1OaJxzzrS