Tag Archives: Texas

Plains All American to buy terminals for $500M

HOUSTON (AP) — Plains All American Pipeline LP said Wednesday that it will buy rail terminals used to store and transfer crude oil for $500 million to help it prepare for increased U.S. oil production.

Plains operates oil pipelines across the country. By owning the terminals, it will also give the company more control over the oil it moves and allow it to avoid paying storage costs at rented terminals.

The Houston company is buying the terminals from U.S. Development Group, a privately held company that owns crude oil, petrochemical and ethanol terminal and storage centers across the U.S. and Canada.

The deal includes three terminals in the oil country of Texas, Colorado and North Dakota, one rail unloading terminal in Louisiana and another unloading terminal that’s being built near Bakersfield, Calif. Crude oil loading capacity from these terminals is expected to total about 250,000 barrels per day.

The Plains deal comes as U.S. oil production grows. Monthly crude production reached its highest level since 1998 in September, said the Energy Information Administration on Tuesday. Production is growing the fastest in Texas and North Dakota, where two of the acquired terminals are located.

The United States could overtake Saudi Arabia as the world’s biggest producer of crude oil by 2020, driven by high prices and new drilling methods, the International Energy Association said last month.

Read more: http://www.sfgate.com/business/energy/article/Plains-All-American-to-buy-terminals-for-500M-4096109.php

TransCanada to Build Texas Segment of Keystone XL Pipeline

TransCanada Corp. will proceed with building a $2.3 billion segment of its Keystone XL oil pipeline from Oklahoma to the Texas coast so that it isn’t delayed by U.S. approval for the rest of the line.

The company, based in Calgary, expects the segment to begin carrying crude from the Cushing, Oklahoma, storage hub to refineries on the U.S. Gulf Coast as soon as mid-year 2013, according to a statement today. TransCanada is separating the Cushing line from its application to President Barack Obama for approval of a Keystone expansion that will bring crude into the U.S. from Canada’s oil sands.

“We remain committed to building this overall project in a timely and efficient manner and to meet demand of shippers,” said TransCanada Chief Executive Officer Russ Girling in an interview today. Shippers are making multi billion dollar commitments spanning decades and “they haven’t wavered from Keystone,” he said.

As originally envisioned, Keystone XL would have carried as much as 830,000 barrels of oil a day from Alberta, Canada, and the Bakken Shale formation in North Dakota and Montana along a 1,661-mile (2,673-kilometer) path to Texas refineries. The full $7.6 billion Keystone pipeline needed a permit from the State Department because it crossed the U.S.-Canada border.

Obama’s Keystone Rejection

Obama rejected Keystone XL in January based on concerns the pipeline might pollute drinking water resources in Nebraska. Obama said a Congressional deadline left him too little time to consider the revised route through Nebraska that the company accepted in November.

As a stand-alone project, the Cushing segment will not need approval from the State Department. The pipeline will help relieve oversupplies that have accumulated in the U.S. Midwest because of a lack of pipeline capacity to carry the oil to refineries on the coast.

Cushing is the delivery point for crude oil traded on the New York Mercantile Exchange. A lack of pipeline capacity between Cushing and the Gulf Coast, where most refineries are located, has caused U.S. oil to trade at a discount to imports.

Obama’s administration supports TransCanada’s plan to build the Oklahoma-to-Texas segment separately.

“Moving oil from the Midwest to the world-class, state-of- the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs, and encourage American energy production,” White House Press Secretary Jay Carney said in a statement today.

‘Near Future’

TransCanada will apply for a permit “in the near future” to build the section from the U.S.-Canada border to Steele City, Nebraska, according to the statement. The company may alter the route in Nebraska, the company said in the statement.

Proceeding with the Cushing section of the line will allow TransCanada to realize income from the pipeline before the full project is built, said Steven Paget, an analyst with FirstEnergy Capital Corp. in Calgary.

“The Gulf Coast Project will transport growing supplies of U.S. crude oil to meet refinery demand in Texas,” Girling said in the statement. “Gulf Coast refineries can then access lower- cost domestic production and avoid paying a premium to foreign oil producers.”

Environmental groups remain opposed to all sections of the pipeline because of concerns about the potential environmental impact of tar-like bitumen known as oil-sands crude.

‘National Interest’

“Whether in pieces or as a whole, the Keystone XL tar sands pipeline is not in the national interest,” Susan Casey- Lefkowitz, director of international programs for the New York- based National Resources Defense Council, wrote in a comment published on the environmental organization’s website. “Raw tar-sands oil going from the Midwest to the Gulf for refining means serious pipeline safety issues for landowners.”

Enbridge Inc. and Enterprise Products Partners LP are preparing to reverse the Seaway pipeline between Cushing and Houston, which will also help alleviate the glut at Cushing. Seaway will be able to carry 150,000 barrels by June 1, and will be expanded to 400,000 barrels by early 2013, the companies have said.

FirstEnergy’s Paget said there’s room for both pipelines, since oil production is growing in the U.S. Also, the full Keystone pipeline will eventually bring much more oil to Cushing, he said.

“The Seaway line’s contracts are independent of Keystone,” said Paget, who rates TransCanada’s shares“market perform” and owns none. “I’m not saying both lines will be full.”

SOURCE: http://www.businessweek.com/news/2012-02-28/transcanada-to-build-texas-segment-of-keystone-xl-pipeline.html

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

Galveston’s tall ship Elissa no longer seaworthy…corrosion issue

GALVESTON, Texas — The official tall ship of Texas is in trouble.

The iron and steel bottom of the three-masted 1877 Elissa is nearly rusted through in places, prompting the U.S. Coast Guard to declare that the vessel is not seaworthy.

Officials at the Texas Seaport Museum in Galveston where the Elissa is berthed were astonished when a Coast Guard inspection earlier this year revealed the rotten hull.

The tall ship is inspected twice every five years, said John Schaumburg, museum assistant director. The latest inspection uncovered the worst rot since the tall ship was rebuilt in 1982, he said.

Very little corrosion was discovered during the previous dry dock in 2008, prompting surprise that the bottom could have deteriorated so quickly, Schaumburg said.

“Everyone’s jaw just dropped,” said Ed Green, one of about 100 volunteer crew members from Houston. About half of the volunteers are from Houston, as are most of the ship’s visitors, Schaumburg said.

No one knows for sure what caused the rapid deterioration, but officials suspect that Hurricane Ike might be the culprit. Elissa rode out the September 2008 storm at a special mooring designed for violent storms, losing a sail, a spar and suffering some other minor damage.

The worst damage was unseen, Schaumburg said. Sea water eats into any metal, so 15 zinc “anodes” are fastened to the hull to draw off the corrosion. Naturally occurring electrical currents draw the corrosion to the anodes, Schaumburg explained.

Officials believe that an electric current, possibly caused by an electric line dislodged by the storm, may have caused the rapid erosion, he said.

The series of inspections were conducted at the Bollinger Texas City LP ship yard. Enough repair was done to allow the Elissa to sail back to Galveston, where it will remain until it celebrates the 30th anniversary of its reconstruction at a Greek shipyard.

By then the museum hopes to have raised $3 million to replace the hull as well as do a long overdue replacement of the fir deck and deck furniture, such as the companionway and skylight.

Schaumburg said officials won’t know until refitting begins whether the entire hull below water will need replacement or only the 54 corroded steel plates, each 4 feet by 10-12 feet. If all goes according to plan, the Elissa will be sailing again in 2012, he said.

The museum is negotiating with a professional fundraiser and has established a system that allows $10 donations to be made by texting 50555.

Green, a 7-year volunteer, said it is vital that the Elissa keep sailing.

“The Elissa is indicative of the types of ships that brought commerce to Galveston and to Texas,” Green said. “I think it’s important to keep that part of history for everyone to see it.”

SOURCE: http://www.chron.com/disp/story.mpl/ap/tx/7650327.html