Service Started on 658-Mile Shin Oak NGL Pipeline From Permian Basin to Mont Belvieu

The Shin Oak NGL Pipeline project to move natural gas liquids from the West Texas town of Orla to a processing and storage facility in Mont Belvieu, has its service started, announced on Thursday by Houston pipeline operator Enterprise Products Partners.

Shin Oak is designed and built as a 24-inch diameter 658-mile pipeline and is starting its service with an initial capacity to move 250,000 barrels of ethane, propane, butane and other natural gas liquids per day.

"The Shin Oak Pipeline represents another important addition to our expanding network of integrated midstream assets in the Permian Basin," Enterprise Products Partners CEO A.J. "Jim" Teague said in a statement.

The company is building a third natural gas processing plant in Orla that is expected to be completed by June. Another natural gas processing plant in the Loving County of Mentone is expected to begin service by March 2020. Combined, the Orla and Mentone facilities will give Enterprise more than 1.6 billion cubic feet per day of natural gas processing capacity and more than 250,000 barrels of natural gas liquids production per day in the Permian Basin.


Enterprise's Seaway Pipeline Delayed Until End of Year Due to "Third Party Issues"

Enterprise Products Partners LP’s Seaway crude pipeline will not achieve the targeted 950,000 barrels per day capacity because of issues unrelated to the expansion, the company revealed on Tuesday.

Enterprise and its joint venture partner Enbridge originally expected to begin taking an additional 100,000 bpd in September but that target date was delayed due to what the company described as “third-party issues unrelated to the capacity expansion, an Enterprise spokesman said. No further details were provided.

Recently, the company began adding a friction-reducing agent to increase the potential capacity of the 760-mile pipe.

In the Permian Basin, crude production has outpaced the region’s pipeline capacity, causing bottlenecks and depressing prices in the region. Enterprise and others are building new pipelines or expanding existing lines to soak up the new production.

Seaway’s existing system was expanded several years ago to carry up to 850,000 bpd from the main U.S. crude storage hub in Cushing, Oklahoma, to storage facilities and refineries along the Gulf Coast.


Trans Mountain Pipeline Expansion to Increase Costs by Almost $2 Billion

According to Kinder Morgan Canada documents, expanding the Trans Mountain pipeline would cost the federal government an additional $1.9 billion on top of the company’s original construction estimates. It would also add on another year of work before the project is complete.

The information was provided in a document filed on Tuesday with the United States Security and Exchange Commission discussing the plans to sell the pipeline to the Canadian government for $4.5 billion.

In order to triple capacity by adding a second pipeline parallel to the first, cost would climb to $7.4 billion. Financial documents also show a number of different construction cost scenarios with one option costing $9.3 billion. The documents also suggest that the project won’t be complete until December 2021.

Finance Minister Bill Morneau has not talked about how much final costs would be after the deal is finalized.

Officials say that the numbers do not specifically reflect how much the final project will actually cost, however an independent economist suggested that Kinder Morgan would not evaluate costs that did not represent realistic figures when evaluating the fairness of the sale.

Morneau concluded that as soon as construction contracts were in place, the government would release official cost updates, something he expects to happen no later than next winter.



Enterprise Products Partners Looking at 100,000 Bpd Expansion

Enterprise Products Partners LP said on Wednesday that they have plans for their Seaway crude pipeline system capacity to increase to about 950,000 barrels per day from 850,000 bpd.

The company will add drag reducing agents (DRAs) to boost capacity on the Seaway 2 line by about 100,000 bpd by September. The Seaway system moves crude from Crushing, Oklahoma, to Gulf Coast refineries.

Enterprise said that they are carefully evaluating options to convert natural gas liquids pipelines to crude oil in order to alleviate pipeline constraints in the Permian Basin, among other expansion options.

Enterprise was planning on developing an offshore crude oil export terminal, according to statements made in July. The terminal would load Very Large Crude Carriers (VLCCs) off the Texas Gulf Coast.

U.S. producers and international customers are interested in the project, according to the company.


Oryx Midstream to Increase Capacity of its Permian Oil Pipeline to 650,000 Barrels After Expansion

Midland-based Oryx Midstream Services II is expanding an under-construction crude oil pipeline system in the Permian Basin by adding 180 miles of additional pipeline to its regional pipeline system.

After the expansion is completed, the project’s total system will consist of 400 miles of pipeline capacity, resulting in 650,000 barrels of crude oil with a total of 1.5 million barrels of crude oil storage.

It will serve West Texas’ Permian Basin in New Mexico and Texas by sending oil from the field to larger pipelines that will send the oil further east.

The pipeline is expected to be fully operating by the second quarter of 2019, with Oryx Midstream Services initially announcing the construction of the system in September with 220 miles of pipeline and 400,000 barrels of capacity.

The lack of construction and continued production remains an issue for crude oil leaving West Texas as producers work to increase construction in order to increase transportation and match output.

Houston Chronicle

Syncrude Project to Return to Full Production by Mid-September

The Syncrude oil sands project in Alberta is to return to full production by early to mid-September according to Suncor Energy Inc’s statement on Monday.

According to Suncor, an early investigation is indicating that the cause of last month’s outage is likely to be a transformer trip which resulted in total output being shut.

Although the 360,000 barrels of crude oil a day capacity was originally estimated to stay down through July, one of Suncor’s coker drums is expected to return to service during the second half of July and produce about 150,000 barrels per day.

Coker units convert mined bitumen from the oil sands into synthetic crude oil.

By August, the company expects pipeline shipments to be about 60 percent to 70 percent of total capacity.


Permian Nearing Shut Ins Due to Production Capacity

The Permian is 3 to 4 months from reaching its production capacity and some producers could be forced to shut in wells.

“Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation,” Pioneer’s chairman Scott Sheffield told Bloomberg in an interview outside an OPEC conference in Vienna.

Oil production is the Permian is growing by 800,000 bpd annually, with the current rate of production at 3.3 million bpd. The total capacity is 3.6 million bpd. Producers who don’t have firm pipeline transportation deals will be halted by limits of takeaway capacity.

By July, the Permian pipeline is expected to produce 3.350 million bpd, according to EIA’s latest Drilling productivity Report.

New pipelines are in the progress of being planned and approved, however they are not expected to be up and running before the second half of 2019.

Oil Price

Canada Oil Output Expected to Rise 33 Percent by 2035, Lack of Pipelines Brings Worry

Canada's oil output is expected to rise 33 percent by 2035 due mainly to higher oil sands production, but an industry group says lack of new export pipelines will cause Canadian producers to be excluded from emerging markets.

The Canadian Association of Petroleum Producers (CAPP) said Tuesday that Canada's inability to get new crude export pipelines built was weighing on investor confidence.

Although Canada continues to face difficulties with getting pipelines built amid regulatory uncertainty, its output could rise to 5.6 million barrels per day in 2035.

International oil majors have been pulling out of Canada, casting doubts over whether it can compete with U.S. shale plays.

Canada still has the hope of the Trans Mountain expansion, which the country purchased from Kinder Morgan last month to guarantee its completion. The pipeline is designed to triple capacity of an existing line from Alberta to Vancouver.


Pipeline Companies Using More Additives to Increase Crude Flow Among Bottlenecks

As pipeline bottlenecks continue to burden North American oil producers, some companies are increasing their use of a little-known additive called a drag-reducing agent (DRA) that helps move oil through pipes more quickly.

DRA is injected into pipelines to reduce the contact between the oil and the wall of the pipe, which allows more crude to flow through.

Pipeline companies are increasing their use of DRA due to bottlenecks in booming production regions like the Permian Basin and Western Canada. Bottlenecks are causing crude grades to trade at largely discounted prices because of inadequate pipeline space.

Pipeline companies are looking for anything that cost-effectively allows them to increase capacity or reduce the energy pumping their pipelines, and DRA allows for a boost in flow and reduces power bills for these companies.

The DRA industry is tiny but has seen about $500 million in global sales, with half of that being in the U.S. The industry is also growing about 8 percent annually, according to the VP at Innospec Inc.


Alliance Pipeline Proposes System Expansion in North Dakota

Alliance Pipeline is seeking commitments to expand its pipeline system, which runs through North Dakota, by 25 percent.

The expansion would require three more compressor stations in North Dakota and expects to put the expanded pipeline into service by the end of 2021.

The proposed expansion comes as North Dakota oil and gas regulators are encouraging an increase in infrastructure investment due to rising volumes of natural gas production.

The expansion, which would also include developing more gathering pipelines and processing plants, would help to reduce natural gas flaring, said Justin Kringstad, director of the North Dakota Pipeline Authority.

The Alliance Pipeline is a natural gas transmission system that runs 2,391 miles from the Western Canadian Sedimentary Basin and Williston Basin to the Chicago market hub, with 967 miles existing in the U.S.

Alliance Pipeline is owned by affiliates of Enbridge and Pembina Pipeline Corp.

ABC News
Alliance Pipeline

FERC Rejects Allegations of NatGas Pipeline Capacity Withholding in New England

There is no evidence that gas companies in New England are withholding natural gas capacity as a way to drive up prices, according to the Federal Energy Regulatory Commission (FERC), despite allegations posted by the Environmental Defense Fund last year.

In August 2017, the EDF published a white paper alleging that gas companies in New England were withholding pipeline capacity on the Algonquin system as a way to drive up gas and power prices.

FERC extensively investigated the allegations by reviewing public and non-public data that assessed the accuracy of EDF's claims. After the investigation, FERC found no evidence of any capacity withholding and said EDF's study was flawed.

The Algonquin pipeline system, one of the two largest pipelines in terms of capacity that serves the New England area, is operating at full capacity. Cold weather has caused restrictions at key compressor stations on the system, which has resulted in natural gas price spikes and subsequently electric power price spikes in New England.

The 1,100-mile Algonquin pipeline system connects to the Texas Eastern Pipeline and the Martimes & Northeast Pipeline. It is owned by Enbridge.


Report: Canada's Pipeline Bottleneck Causes Struggle to Stay Competitive

Pipeline projects in Canada are failing to materialize due to strong environmental opposition, causing the country to lose competitiveness as an oil and gas producer, according to a report by the C.D. Howe Institute.

In addition, fuel costs are rising in Canada as a result of the widening gap between supply and demand for pipeline capacity linking Canada and the U.S.

If Canada produced pipelines more expeditiously, its competitiveness would improve greatly, according to the report. Currently, pipeline capacity shortages in Canada are cutting profits by around $5 a barrel.

The report comes just days before Canada said it is planning to create a new system to approve major energy infrastructure projects.

Canada Prime Minister Justin Trudeau said Thursday in a radio interview that the federal government ensures that Kinder Morgan's Trans Mountain oil pipeline expansion will be built as the country is in desperate need to move oil to market.

Oil Price

Enterprise Products Partners Talks of Expanding Capacity of its Midland-to-Sealy Crude Pipeline

Enterprise Products Partners said on Wednesday that plans are underway to potentially expand capacity on its Midland-to-Sealy crude oil pipeline by more than 20 percent as a way to transport even more oil from the booming Permian Basin.

Flows on the pipeline averaged 330,000 barrels per day when it came online in November and are expected to hit 450,000 barrels per day as soon as April when the pipeline is fully operational.

The company said studies are being done to measure exactly how much the pipeline capacity can be increased. Currently the company has an increased estimate of 540,000 to 550,000 barrels per day.

Enterprise's announcement to potentially increase capacity on its Midland-to-Sealy pipeline comes as ExxonMobil and other players map out growth for Permian operations, which would demand more transport to move the crude to refining and export facilities near the Gulf Coast.

Enterprise is also building an ethylene pipeline from Mont Belvieu to Bayport, Texas and expects the project to be in service in 2020.


Keystone XL Construction One Step Closer After Open Season Produces Strong Demand for Capacity

TransCanada is one step closer to starting construction on its Keystone XL pipeline after receiving strong commitments for oil capacity from shippers and closing the window for sign-up as a result.

The company announced Thursday that it has secured 20-year commitments for about 500,000 barrels per day of oil and oil equivalents, a demand that shows interest in the project is still strong despite long delays.

The Keystone XL project overcame its last major objective when Nebraska approved a route for the pipeline through the state in November 2017, although the route was an alternative to TransCanada's preferred proposal.

Some environmental groups, landowners, and politicians in Nebraska are continuing to fight the pipeline, saying it would cause harm to public safety and the environment.

Primary construction is expected to start in 2019, according to TransCanada.


U.S. Expected to Become Net Exporter of NatGas for First Time Since 1950s

The U.S. in 2018 could become a net exporter of natural gas for the first time since 1957 due to increased natural gas and LNG exports to various countries and decreased imported gas from Canada.

The U.S. Department of Energy expects that U.S. LNG capacity will be the third largest in the world by 2019 as terminals on the Gulf Coast continue to reach full capacity and plans begin for construction of additional terminals in Maryland, Georgia, Texas, and Louisiana.

U.S. natural gas exports to Mexico are also on the rise and are expected to double by 2019. But this expected growth will depend on the completion of Mexico's connecting pipelines, which have been experiencing construction delays.

Fuel Fix

NEB Declines Requested Appeal from Kinder Morgan over Trans Mountain Expansion

The National Energy Board (NEB) said Tuesday that it would not review Kinder Morgan Canada's appeal over its Trans Mountain oil pipeline expansion until at least December 4, declining Kinder Morgan's earlier request for an "expedited" timeline.

Kinder Morgan Canada last month appealed to the NEB after not being able to receive construction permits in Burnaby, British Columbia for its Trans Mountain pipeline expansion project.

The pipeline company also asked the NEB to set up a process to make an "expedited determination" for future cases in order to prevent delays in construction for the expansion.

The lack of construction permits adds to hurdles facing Kinder Morgan's US$5.9 billion expansion, including delays to its anticipated online date of December 2019.

The NEB said it would hear oral summaries on December 4 and did not say when it would make a decision.

The Trans Mountain pipeline expansion would nearly triple capacity to 890,000 barrels per day from Alberta to the west coast.


Pembina Announces Plan for Additional Infrastructure, Capacity for Proposed Phase V Pipeline

Pembina Pipeline Corporation announced today that it is adding infrastructure and capacity to its previously announced Phase V pipeline expansion in order to accommodate incremental volume commitments from customers.

Pembina said it is also revising its capital cost estimate for the pipeline by an additional $135 million, bringing the total estimated cost to $385 million.

Since the pipeline expansion was first announced in April of this year, Pembina has received an additional 30,000 barrels per day in additional volume commitments.

Phase V is designed to address capacity constraints between Lator and Fox Creek, Alberta, Canada. Pembina still estimates that the pipeline will be in servce by late-2018.

News Wire

Minnesota Department of Commerce Argues Against Enbridge Proposed Line 3

The Minnesota Department of Commerce said Monday that Enbridge has not established enough need for its proposal to replace its aging Line 3 pipeline across the state and that it might be better to just shut down the existing line.

Enbridge has proposed to replace its Line 3 crude oil pipeline, built in the 1960s, which carries Canadian crude to its terminal in Superior, Wisconsin. The company says the existing line needs replacing because it currently only handles about half of its potential capacity and is constantly in need of maintenance due to its age.

The Minnesota Department of Commerce argues that refineries in Minnesota and the upper Midwest already have enough supply of crude oil and do not have much capacity to process more of it. It also argues that the environmental risks of the proposed Line 3 outweigh the benefits to Minnesota.

The state's Public Utilities Commission will make the ultimate decision whether to grant Enbridge a certificate to build, which is independent from the Department of Commerce.

The Public Utilities Commission is scheduled to make a decision in April on the proposed $2.9 billion, 1,031-mile project after extensive further proceedings and more changes for public comment.

Enbridge calls the proposed infrastructure critical and says the line would be replaced with advanced materials, the latest technology, and would undergo construction with the most superior methods.

Houston Chronicle

Colonial Pipeline to Shutdown Key Fuel Pipeline Due to Harvey Floods

Colonial Pipeline announced it will shut down a key gasoline line that supplies the South due to Tropical Storm Harvey-related refinery shutdowns in Houston and the storm’s effect on Colonial’s facilities in Lake Charles, Louisiana.

The line, which provides nearly 40 percent of the South’s gasoline, will be shut down Thursday, according to the company.

Colonial Pipeline already shut down its other mainline that transports diesel and aviation fuels.

Colonial’s shutdown will surely raise gasoline prices as it did when the line was shut down in September, 2016 due to a leak and gas spill. But prices have been on the rise ever since storm Harvey dumped more than four feet of rain on southeastern Texas over the last week.

Harvey caused shutdown of over 20 percent of the Gulf Coast’s oil refining capacity due to floods.

At least eight refineries in the area were also shut down, according to AAA.

Colonial Pipeline said its system would resume operations once the company can ensure that its facilities are safe and able to move product.

The Colonial Pipeline runs from Houston to New York and makes up more than 5,500 miles of pipeline.


Tropical Storm Harvey Shuts Down Nearly a Fifth of U.S. Fuel Output Due to Flooding

Massive flooding from Tropical Storm Harvey has shut down nearly a fifth of U.S. oil-refining capacity, or about 3.6 million barrels per day, as the petrochemicals industry still deals with the aftermath of the days-long tempest.

Reuters estimates that about 20 percent of total U.S. capacity is offline in Texas and Louisiana, and restarting plants could take more than a week.

Lack of supply has caused major pipelines to adjust deliveries or shutdown completely as massive outages continue.

Texas has received more than 4 feet of rain during the tropical storm, causing fuel prices to rise as refining capacity remains down and pipelines run short.

Exxon, Marathon Petroleum, Valero Energy, and Motiva Enterprises are among companies that have shut major refineries in Texas due to flooding.

Motiva Enterprises’ Port Arthur refinery is the largest in the nation, which the company began shutting down on Tuesday evening. The nation’s second largest refinery, operated by Exxon in Baytown, also shut down due to high water in the plant.