News – September 2019

September 2019

NuStar Energy Receives Permian Crude from Cactus II Pipeline


NuStar Energy received its first shipment of Permian crude at its Corpus Christi, Texas, North Beach Terminal, and the terminal has loaded the first cargo of the long-haul Permian crude onto a ship for export.
The shipment comes on the heels of NuStar’s recent completion of a project connecting the partnership’s existing 16-inch pipeline in South Texas to the Plains Cactus II pipeline that transports WTI volumes from the Permian Basin to South Texas.
NuStar is nearing completion of connections of its South Texas Pipeline System to two other long-haul pipelines that will also move WTI volumes from the Permian to South Texas.
The second stage of the export project, an 8-mile, 30-inch pipeline to transport WTI volumes from a connection to Cactus II in Taft to the Corpus Christi terminal, is also on-schedule to be in the third quarter.
Houston-based Plains has filled about half the crude line, which runs from the Permian Basin in West Texas to the U.S. Gulf Coast. It plans to start full operation by the first quarter of 2020.
The Plains pipeline would be the first of three new lines beginning operations in the next few months that is expected to ease a bottleneck in West Texas that has weighed on regional oil prices.

EQM Stops Some Work on Mountain Valley Pipeline


EQM Midstream Partners told U.S. federal regulators the company would discontinue some on the Mountain Valley natural gas pipeline from West Virginia to Virginia as the U.S. Fish and Wildlife Service reviews a couple of permits.
EQM told the U.S. Federal Energy Regulatory Commission (FERC), it was suspending work on the pipeline in areas where such activities might risk endangered species or critical habitat areas.
EQM said it will continue activities in other areas along the route and still expects the $5 billion pipeline to be in full service by mid-2020.
EQM’s decision to suspend work came as a lawsuit was filed by the Sierra Club in the U.S. Court of Appeals for the 4th Circuit. In that case, the Sierra Club asked the court to vacate Mountain Valley’s biological opinion and incidental take statement, which allow construction of the pipe in areas inhabited by threatened or endangered species.
The 303-mile (488-km) pipeline is designed to deliver 2 Bcf/d of gas.

Cajun-Sibon III Expansion Begins Operations

The Cajun-Sibon III NGL pipeline expansion became operational during the second quarter of 2019, increasing liquids transportation capabilities from the Mont Belvieu NGL hub region to EnLink’s fractionation facilities on the Louisiana Gulf Coast.
Cajun-Sibon III expands EnLink’s NGL transport capacity to 185,000 bpd. Growth capital expenditures for Cajun-Sibon III were $50 million.
EnLink experienced record NGL volumes of 178,000 bpd during the second quarter of 2019, and the Cajun-Sibon III expansion being in full-service will be a key growth driver during the second half of 2019.

BP May Ship Non-Diluent Products on US-Canada Pipeline

BP Midstream Partners is considering shipping other products besides diluent on its 135,000 bpd Diamondback pipeline, which helps transport diluent from the United States to Canada.
The Diamondback pipeline ships diluent from BP Plc’s 430,000-bpd Whiting, Indi., refinery through a junction in Gary, to a pipeline in Illinois. The diluent is used in transporting heavy Canadian crude.
“The heavy oil crowd is long heavy oil, so diluents will still make sense,” Chief Executive Rip Zinsmeister told analysts and investors on the company’s second quarter earnings call. “We’ll see growth over time … (but) we are looking at shipping opportunities of products other than diluent.”
Any shift in products transported on the pipeline will not occur in 2019, he added.

Caliber Midstream Buys N.D. Assets from American Midstream

Caliber Midstream Holdings acquired the North Dakota assets previously owned by American Midstream Partners.
The acquisition expands Caliber’s crude oil gathering and transportation service lines and widens Caliber’s area of operations within McKenzie County, ND.
The acquired assets include a FERC-regulated crude oil gathering and pipeline transportation system consisting of a 47-mile pipeline and related facilities with the ability to transport crude oil to the Tesoro High Plains Pipeline and the Energy Transfer Dakota Access Pipeline.
The system provides regional producers with flexibility and access to refinery, rail and pipeline markets. The system also has the capability to receive volumes through its truck rack.
With the acquisition, Caliber now owns and operates 368 miles of pipeline across its four service lines in McKenzie County, N.D. In addition, Caliber is scheduled to add 11 miles to its crude gathering and transmission system by year-end.

EPIC Ships First Crude on New Permian-Gulf Coast Pipeline

EPIC Midstream began shipping crude oil on its 400,000-bpd pipeline from the Permian Basin to the U.S. Gulf Coast, pushing Midland crude prices higher, traders said.
Terminal operator Moda Midstream confirmed it accepted the Permian crude from the EPIC line at its facility in Ingleside, Texas. Oil prices in Midland, the heart of the Permian shale field.
The new pipeline will help alleviate a crude oil bottleneck that has weighed on prices in the Permian of West Texas and New Mexico for more than a year. Crude inventories in West Texas rose last week to almost 20.5 million barrels, using more than 60% of the region’s storage capacity monitored by market intelligence firm Genscape.

Kenyan Pipeline Project May be One Step Closer to Reality

The Kenyan government and Tullow Oil signed a crude oil export deal with ChemChina UK, creating more incentive to construct a proposed $1 billion pipeline.
Earlier this year, the government confirmed its commitment to build a 510-mile (821-km) pipeline from a processing facility in northern Kenya to an export facility on the coast near Lamu. The pipeline is expected to have a capacity of 80,000 bpd.
Almost as soon as the project was announced, it began to face delays from within the Kenyan government. A final investment decision (FID) was expected this year, but Tullow has said that permitting setbacks have pushed the FID to 2020.
The Tullow-led group pioneering the project, which includes France’s Total and Africa Oil, announced a deal with ChemChina UK to purchase the first exports of the project, pending completion of the pipeline.
Although the initial purchase will be small-scale, Reuters reported that larger commercial purchases will begin once the pipeline is finished. The project group is currently running a pilot scheme to test flow rates and address technical issues. The scheme is currently transporting about 2,000 bpd by truck to the port city of Mombasa.
Tullow estimates that Kenya’s onshore fields in Turkana hold 560 million barrels of oil and expects them to produce up to 100,000 bpd from 2022.

Pipeline Construction,  LNG Terminal Start-Up Delayed in India

Indian natural gas company H-Energy will delay the start of its LNG import terminal at Jaigarh until the fourth quarter, company CEO Darshan Hiranandani told Reuters.
When completed the project will connect to the national gas grid at Dabhol through a 36-mile pipeline, which is expected to also be ready by the fourth quarter.
H-Energy, a unit of real estate group Hiranandani, initially planned to start full commercial operations at the new floating LNG terminal on India’s west coast, by the fourth quarter of 2018, but later pushed this back to the first quarter of this year.
The terminal is a floating storage and regasification unit (FSRU) capable of handling 4 mtpa of LNG.
The company is also building a 400-mile pipeline connecting Jaigarh to Mangalore, which will likely be ready by 2023, Hiranandani said. Work on that pipeline has been moving slower than expected due to a road highway widening in the region.

Meritage Doubling Powder River Processing as Pipeline Nears Completion

Meritage Midstream will more than double the natural gas processing capacity on its supersystem in Wyoming’s Powder River Basin with the construction of a new, cryogenic processing plant located in Converse County, Wyo.
The plant will be served by a 20-inch trunk line that is nearing completion and will connect to Thunder Creek’s gathering system.
With a capacity of 200 MMcf/d, the plant is expected to come into service early in the third quarter of 2019, bringing Meritage Midstream’s total processing capacity in the basin to 380 MMcf/d. The complex is large enough to handle two additional 200 MMcf/d cryogenic processing plants, the company said.
The Steamboat I plant will also be connected to the Wyoming Interstate pipeline system for residue gas. NGLs currently flow to Phillips 66 and Oneok.
Strategically located in the southern portion of the basin, the Steamboat I plant complements Denver-based Meritage’s 50 Buttes Processing Plant, located in Campbell County near Gillette, Wyo., 100 miles north of the Steamboat complex.

Permian Basin Natural Gas Prices Rise as GCX Nears Completion

Natural gas spot prices at the Waha Hub in West Texas closed at their highest price since March as the 2 Bcf/d Gulf Coast Express (GCX) pipeline is preparing to enter service, according to the U.S. Energy Information Administration (EIA).
Limited natural gas pipeline takeaway capacity in the region has kept prices low or negative in recent months. In the first eight months of 2019 (through Aug. 19), the Waha spot price averaged just 65 cents per MMBtu.
GCX will provide much-needed additional natural gas take-away pipeline capacity in the Permian Basin, and prices have begun to anticipate this new capacity, closing at $1.55/million on Aug. 15. Initial deliveries into the pipeline began Aug. 8.
The Waha spot price has been consistently lower than the Henry Hub spot price, the national benchmark price for natural gas. However, that differential has significantly decreased.
The movement supports industry reports that GCX is packing its lines in anticipation of entering service late next month, ahead of its announced in-service date of Oct. 1.
Once fully operational, the pipeline will transport up to 2 Bcf/d of natural gas to the Agua Dulce receipt point near Corpus Christi, on the Texas Gulf Coast.

INGAA Responds to Proposed Methane Rule

The Interstate Natural Gas Association of America (INGAA) responded to the EPA’s proposed methane rule by citing its members’ strong commitment and “history of minimizing methane emissions from their operations.”
INGAA President and CEO Don Santa spoke on behalf of the group via a statement issued in response to proposed “New Source Performance Standards” for the oil and natural gas industry.
“In 2018, INGAA’s board of directors took the further step of adopting voluntary commitments that prioritize continuously improving existing practices to minimize methane emissions from interstate natural gas transmission and storage operations,” Santa said. “Members of INGAA have agreed to these voluntary commitments because reducing methane emissions is socially and environmentally responsible, and good business for natural gas transmission and storage companies.
“Members of INGAA will stand by these commitments, maintain pipeline integrity and safe operations, and minimize impacts to customers and communities irrespective of any regulatory changes,” he added.