News – April 2019

April 2019

Jupiter Extends Open Season for Crude Pipeline from Permian to Gulf

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Jupiter Energy extended an open season until May 31 on a crude oil pipeline from the Permian to the Port of Brownsville. It is expected to be operational in fourth quarter of 2020.

The Jupiter Pipeline will be a 650-mile, 36-inch pipeline originating near Crane, Texas, and Gardendale/Three Rivers, Texas. It will be the only pipeline out of the Permian Basin with access to all three deep water ports in Texas (Houston, Corpus Christi and Brownsville).

It will have direct access to a fully capable VLCC loading facility off the coast at Brownsville, where the Jupiter Brownsville Terminal will consist of up to 10 MMbbls of storage, three docks and an offshore VLCC loading facility.

“We’re very pleased with the results of the initial open season period for the Jupiter Pipeline,” said Albert Johnson, president of Jupiter Pipeline. “The supplemental period validates our belief that the interest in transportation commitments on the pipeline is as substantial as expected.”


 New Pipelines Drain West Texas Crude Stocks to 4-Month Low

Crude inventories in West Texas dropped to the lowest in four months after a converted pipeline began transporting crude from the nation’s biggest shale oil field to the U.S. Gulf Coast, data from market intelligence provider Genscape showed.

The drop-in storage in the Permian Basin is another sign that new pipelines out of the region have begun to alleviate a crude bottleneck that depressed local crude prices as production overwhelmed pipeline capacity and filled storage tanks.

Crude inventories in the Permian Basin fell to 15 million barrels in the week to Feb. 19, the lowest since October and down from a record 22 million barrels in November. That glut had doubled in size from 11 million barrels in June, according to the Genscape data.

The decline began in mid-November after Plains All American Pipeline LP expanded the capacity of its about 300,000 bpd Sunrise Pipeline.

The drawdown accelerated this month when Enterprise Products Partners LP began shipping crude on a converted natural gas liquids pipeline, the 200,000 bpd Seminole-Red line, two months ahead of schedule.

Permian Basin output is expected to hit 4 MMbpd in March, a year-on-year surge of over 1 MMbpd, the U.S. Energy Information Administration projected.

Three major pipelines transporting more than 2 MMbpd from the Permian Basin to the Gulf Coast are scheduled to open over the next 18 months. They are the 900,000 bpd EPIC pipeline, the 670,000 bpd Cactus II pipeline and the 800,000 bpd Grey Oak pipeline.


Mountain Valley Pipeline Subject of Criminal Probe

Federal authorities launched a criminal investigation into the Mountain Valley Pipeline in Virginia.

A spokeswoman for EQM Midstream, the natural gas pipeline’s parent company, said Mountain Valley is complying with the related grand jury subpoena for documents.

In recent corporate filings with the SEC, the company said it had been informed by the U.S. Attorney’s Office for the Western District of Virginia of a criminal investigation. The scope of the inquiry is unclear.

In January, two Virginia attorneys called for a federal investigation into whether pipeline crews violated laws by continuing construction on the 300-mile (483-km) pipeline after a permit suspension.

With a vast supply of natural gas from Marcellus and Utica shale at its disposal, the pipeline is expected to provide up to 2 Bcf/d of firm transmission capacity to markets in the Mid- and South Atlantic regions of the United States when it goes on line, according to the company.

It will extend the Equitrans transmission system in Wetzel County, W.V., to Transco’s Zone 5 compressor station 165 in Pittsylvania County, Va.


Denmark Still Deciding on Russian-German Pipeline

Denmark’s Foreign Minister Anders Samuelsen said his country was still deciding whether to allow a joint German-Russian gas pipeline to pass through its territorial waters.

However, he suggested Moscow’s continued aggression in Ukraine was making it less likely to be approved, according to the Associated Press.

The Baltic Sea pipeline would bring Russian gas directly to Germany, bypassing Poland and Ukraine.

Danish authorities are evaluating an application from Russia’s state-owned Gazprom for a pipeline through Danish territorial waters, which includes an “assessment of environmental and safety implications as well as an assessment of the project’s compatibility with Danish foreign, security and defense policy interests.”

An application for an alternative route would pass through Denmark’s exclusive economic zone and is being evaluated by the Danish Energy Agency.


Enbridge Delays Line 3 Pipeline Opening in Minnesota by a Year

Enbridge Energy is delaying the start-up of its planned Line 3 replacement crude oil pipeline through northern Minnesota by a year.

The Canadian-based company said it now expects the new pipeline to go into service in the second half of 2020. Enbridge officials had hoped to put the pipeline into service in the second half of 2019.

But Minnesota Gov. Tim Walz recently said his administration will keep pursuing an appeal of an independent regulatory commission’s approval of Enbridge’s plan.

The state Public Utilities approved the project last summer. But the Minnesota Department of Commerce argued that Enbridge failed to provide legally adequate long-range demand forecasts to establish the need for the project.

Enbridge wants to replace Line 3 because it’s increasingly prone to cracking and corrosion. Native American and environmental activists argue the project risks spills in pristine areas in northern Minnesota, including where American Indians harvest wild rice considered sacred and central to their culture, and that the Canadian tar sands oil the line would carry will accelerate climate change.

Under the permitting timeline that Minnesota presented to Enbridge, the Calgary, Alberta-based company said certifications on all remaining state permits required for constructing Line 3 will be provided by this November. Enbridge said it expects the remaining federal permits to be finalized about 30 to 60 days after that.


McDermott to Construct Pipelines off Malaysian Field

McDermott International signed contracts from Sarawak Shell Berhad (SSB) and Sapura Exploration and Production, to provide transportation and installation of pipelines and offshore structures for the Pan Malaysia field development, offshore Malaysia.

McDermott’s scope of work for SSB includes jackets and topsides for the Gorek gas field.

McDermott expects work to begin in the second quarter of this year, using its Malaysian-registered installation vessel, Derrick Barge 30. The project management team will be based in Kuala Lumpur, and fabrication of the risers and spools will be performed at McDermott’s center in Batam, Indonesia.

“These two contracts give McDermott the opportunity to strengthen our relationship with Sarawak Shell Berhad and develop a new relationship with Sapura Exploration and Production,” said Ian Prescott, McDermott’s vice president for Asia Pacific.


ET Completes Bakken Open Season, Places Pipe Expansion in Service

Dallas-based Energy Transfer (ET) said it completed a successful open season for the Bakken Pipeline system and placed its expanded North Texas gas pipeline in service while announcing record 2018 financial results.

The Bakken system expands transportation service from the Bakken/Three Forks play in North Dakota to storage terminals located in Patoka, Ill., and Nederland, Texas.  It will increase capacity to 570,000 bpd on the 1,915-mile pipeline.

ET also said its 160,000 MMBtu/d North Texas natural gas pipeline expansion went in service in January. The 160-mile pipeline is part of an integrated system that operates in four North Texas counties to gather, compress, treat, process and transport natural gas from the Barnett and Woodford Shales.


Navigator Expanding Glass Mountain System

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Navigator Energy Services plans to significantly expand its Glass Mountain Pipeline System (GMP) with new segregated crude grades, more storage and transportation capacity, additional origin points and expanded market access at Cushing, Okla.

The expansion includes 70 miles of new transportation mainlines and 750,000 barrels of additional storage capacity. Upon completion, the system will include more than 440 miles of pipeline, 10 truck injection stations and about 4.3 million barrels of storage to accommodate five neat grades of crude oil and condensate, and pipeline capacity to transport in excess of 450,000 bpd.

Underpinning the expansion are multiple long-term agreements with top tier operators representing more than 50,000 bpd of existing production and almost 600,000 operated acres, bringing Navigator’s total dedicated acreage in Oklahoma to more than 800,000 acres.

Navigator is already providing service at one of the five new origin points and expects to be in service with the entire expansion in the third quarter of 2019.


Trump Signs New Permission for Keystone XL Pipeline

U.S. President Donald Trump has signed a new permission for TransCanada Corp to build the long-delayed Keystone pipeline for imports of Canadian oil, replacing his previous permits in a fresh attempt to get around the blocking of the $8 billion project by a court in Montana.

In granting the permission in an executive order, he revoked a previous permit for the pipeline issued in March 2017 and an executive order approving the project he issued in January of that year.

According to Reuters, it was not immediately clear whether if the pipeline, which would carry 800,000 bpd of crude from Canada’s oil sands to refineries along the U.S. Gulf of Mexico, would have to undergo new environmental reviews as a result of the move.

The Keystone XL pipeline has been pending for more than a decade due to environmental reviews and after former President Barack Obama rejected the project saying it would do little to benefit U.S. motorists and would contribute to global warming.

TransCanada President and CEO Russ Girling said in a release that Trump “has been clear that he wants to create jobs and advance U.S. energy security and the Keystone XL pipeline does both of those things.”