Binding Open Season Announced by SCM Crude

The binding open season to solicit binding commitments for priority crude oil interstate gathering and transportation service was announced by SCM Crude, LLC. SCM Crude is a wholly-owned subsidiary of Salt Creek Midstream, LLC.

The binding open season was announced on its proposed Delaware Basin crude oil gathering and transportation system. The binding open season started on 2 August 2019 at 8:00 am CT, and will end on 31 August 2019 at 5:00 pm CT. Based on the results of the open season, the final volume of capacity of the project will be determined by SCM.

An opportunity will be provided by the open season for shippers to demonstrate support for the project by making acreage dedications for priority service, thereby becoming priority shippers for the term of their crude oil gathering agreements.

With interconnects to certain takeaway pipelines, including pipelines with direct, long-haul transportation to the Midland, Texas area and the Corpus Christi, Texas area, the crude oil gathering and transportation project will be constructed and operated by SCM, across multiple segments spanning from various tank battery receipt points in Eddy and Lea Counties, New Mexico, to SCM’s Wink Terminal and Orla Terminal.


Delaware Basin Gathering System Extension Announced by Brazos Midstream

Gathering and processing agreements have been executed between Brazos Midstream and ‘Shell Exploration & Production’ to construct a new natural gas gathering system located in the core of the Delaware Basin.

16 miles of high-pressure pipeline will be constructed by Brazos which will extend from the company’s existing gathering and processing systems. It can be expanded further to support multi-well pad development by current producer customers, as well as other producers in the area.

“We are very pleased to announce the expansion of our relationship with Shell Exploration and Production, one of world’s premier oil and gas companies, as well as the completion of our Comanche III processing plant,” said Brad Iles, Brazos Chief Executive Officer. “These projects are a testament to the strength of our operating team and demonstrate our commitment to aggressively expand our asset base in support of our upstream customers.”

Brazos’ Comanche III plant, a 200 million cubic feet per day cryogenic natural gas processing plant was recently commissioned and is the third plant in Brazos’ natural gas processing complex. The company is anticipating further expansion with a new 200 million cubic feet per day processing plant called Comanche IV and expects to begin construction as early as 2020.


New Pipelines Expected in Coming Months Will Boost Natural Gas Exports To Mexico

U.S. natural gas exports to Mexico by pipeline are expected to jump in the coming months as four major pipelines are scheduled to begin commercial operations by the end of the year, according to U.S. Energy Department reports.

The pipelines will supply Mexico’s power generation and industrial sectors with Mexico emerging as one of the largest customers of U.S. natural gas after overhauling its energy policies five years ago.

The pipelines include Enbridge’s Nueces-Brownsville project in the Rio Grande Valley as well as three projects in Mexico. They are expected to start up in October and November and will help bring gas from West Texas, where there is a pipeline shortage, and elsewhere in the state to central and western Mexico.
Exports have already ramped up in recent months. Last month, natural gas shipments to Mexico by pipeline exceeded a billion cubic feet per day for the first-time.

Houston Chronicle

Enbridge Sells U.S. Gas Pipelines, Renewables for $2.5 Billion to Help Reduce Debt

Enbridge Inc. said Wednesday it will sell a U.S. gas pipelines business and some of its renewable portfolio for a combined $2.5 billion as part of its efforts to reduce debt.

Enbridge has been pressured to sell non-core assets since its $28 billion takeover of Spectra Energy last year. The company has a long-term debt pile of more than $60 billion, which is alarming credit rating agencies.

Enbridge said it will sell its U.S. gas pipelines unit to Midcoast Operating LP for $1.12 billion and sell a 49 percent stake in its wind and solar power assets in North America and Germany to the Canada Pension Plan Investment Board for C$1.75 billion (U.S.$1.37 billion).

Enbridge on Wednesday also filed a formal response to Minnesota judge's recommendation that its Line 3 replacement pipeline be built in the existing right-of-way through the state rather than by way of Enbridge's preferred route.

The pipeline company said building the pipeline through the existing right-of-way would mean the current Line 3 pipeline would have to be shut down for nine to 12 months, which would negatively impact Minnesota's energy supply.


Howard Midstream Partners to go Public with $200 Million IPO

Howard Midstream Partners announced Tuesday that it plans to go public with a $200 million initial public offering.

Howard Midstream operates natural gas, natural gas liquids, and refined product midstream services in Texas, Pennsylvania, and along the Texas Gulf Coast. It operates more than 800 miles of natural gas and natural gas liquids pipelines, most of which are in South Texas.

Howard Midstream said in 2016 it generated $7.7 million of net income but had a net loss of $3.9 million in the first half of this year.

San Antonio-based Howard Midstream Partners is a fee-based limited partnership subsidiary formed by privately-held Howard Energy Partners.

Houston Chronicle

Trump Rolls Back Environmental Rules to Push Forward Infrastructure Permits

U.S. President Donald Trump on Tuesday signed an executive order that would roll back rules regarding environmental reviews and restrictions on government-funded projects in flood-prone areas, which would speed approvals for permits for infrastructure like pipelines.

The executive order is part of President Trump's proposal to spend $1 trillion to fix aging U.S. infrastructure, and it revokes an order put forth by former President Obama that aimed to reduce exposure to flooding and other consequences of climate change.

The executive order also shows that President Trump is making efforts to come through with a promise he made during his election campaign to increase deregulation in order to spur business spending.

The executive order would set a two-year goal for completing permits needed on major infrastructure plans and create a "one Federal decision" protocol where a lead federal agency would work with other agencies to complete the environmental reviews and permitting for infrastructure projects.


Phillips 66: Pipelines, Chemicals to Hold More Promise for Company than Gasoline

Two executives at Phillips 66 said last week that they see financial promise in the company's midstream and chemical business and are waning from the gasoline business.

Arguing that gasoline demand is on a decline, Phillips 66 CEO Greg Garland said at the company's annual shareholder meeting last Wednesday that the company sees "better value creation in the midstream and chemicals business" and that "the Middle East and U.S. Gulf Coast are going to be two best places in the world to make petrochemicals, long-term."

"In 10 years, if we're driving the same, we're going to see less need for transportation fuel," said Garland, adding that millennials are driving less and using ride-share companies more. He also mentioned that cars are becoming more fuel efficient.

As gas demand declines in the U.S., the shale boom is unleashing a large amount of natural gas, a building block for petrochemicals. The U.S. can produce natural gas at some of the cheapest costs in the world, and companies who invest in that can "compete with anybody, any place in the world," according to Garland.

Fuel Fix

Report: Gulf Coast Refineries Need New Canadian Pipelines in Order to Reduce Costs

Gulf Coast refineries are in need of new pipeline transport from Canada in order to cut supply costs, according to a new report by the IHS Markit research firm.

According to the report, most Gulf Coast refineries rely on heavier crude oil and have to turn to costlier Latin American countries for supply. An increase in pipeline transport to carry heavy crude from Canada's oil sands to the Gulf Coast would reduce refineries' supply costs and burdens.

Oil production in Canada is expected to increase by 1 million barrels a day by 2020, which would force much of the oil to be transported by rail if Canada does not increase its already constrained pipeline system.

The report mentioned four major pipelines in line to become solutions for Canada's lack of transportation: TransCanada's resurrected Keystone XL pipeline and Energy East pipeline, Kinder Morgan's Trans Mountain pipeline expansion, and Enbridge's Alberta Clipper expansion project.

These four pipelines would turn Canada's pipeline capacity from shortage to surplus if they all come online. Unfortunately they are years away from completion, which means until they do come online, a revival of crude-by-rail from Canada into the U.S. is likely.

Fuel Fix


Trump to Sign Directive that Eliminates Climate Change from Environmental Reviews

The Trump administration is working on a directive that aims to reverse former President Barack Obama's legacy on climate change approaches, including eliminating the requirements of climate change factors in environmental reviews for pipelines and other energy projects.

According to a person familiar with the administration's plan, the directive could be signed as early as this week.

Supporters of the directive say it will reverse hindering rules and regulations put forth by Obama that were a constraint purposely set up to make it "difficult to utilize coal, oil, and natural gas."

Opponents, such as environmentalists, say the directive will put Americans at great risk and take away the country's once leading role in fighting climate change.

"It also sends a dangerous message to the world that the United States does not care about climate change or protecting front-line communities," said Paul Getsos, national coordinator of the People's Climate Movement.

Further, the directive would suggest that the EPA rescind the Clean Power Plan, which was put forth under Obama to eliminate the use of coal-fired electricity. It would also undo regulation limits on methane emissions from the oil industry as required under Obama.

It is unclear how long it would take for the directive to go into effect if signed, considering bureaucratic work to rescind and rewrite regulations as well as the inevitable appeal suits that will come with the directive from those who oppose it.



FERC to Investigate Kinder Morgan Pipeline Rates

The Federal Energy Regulatory Commission (FERC) said Thursday it will investigate rates on two Kinder Morgan natural gas pipeline systems after several oil companies filed concerns saying the pipelines may be overcharging customers.

FERC reviewed cost and revenue information from Kinder Morgan's Natural Gas Co of America (NGPL) and Wyoming Interstate Co pipelines for 2014 and 2015 and estimated the returns on equity to be between an "unjust" 17 and 30 percent.

In response, Kinder Morgan says FERC is using "stale data in a rapidly evolving environment without a full understanding of the facts and the changing market conditions," and that FERC is interjecting in an "unwarranted and unfair manner in the productive relationships between the companies and their customers."

FERC is requiring Kinder Morgan to file new cost and revenue studies, to which the company said it fully expects the reports to show that rates charged by the pipelines have been and will continue to be fair.

Among some of the major oil companies that requested FERC's intervention are Anadarko Petroleum, Apache, Chevron, ConocoPhillips, Occidental Petroleum, and Royal Dutch Shell.

Fuel Fix

Cascade Natural Gas Agrees to $2.5 Million Settlement After Failing to Provide Documentation on its High-Pressure Lines

Cascade Natural Gas has agreed to pay $2.5 million to resolve a complaint that said the company failed to have proper documentation for nearly 40 percent of its high-pressure pipelines in Washington.

The state's Utilities and Transportation Commission in July filed a complaint against the company when during an investigation it found that Cascade was unable to provide necessary documents for several of its high-pressure pipelines.

The state's Utilities and Transportation Commission filed the settlement agreement on Thursday and said it would suspend $1.5 million of the fine if Cascade Natural Gas completes a compliance program.

The settlement will still be reviewed by a three-member commission which will either accept, reject, or modify it.

Cascade Natural Gas said in a statement that it "recognizes the importance of having accurate records and is committed to achieving compliance through the settlement agreement."



Earthquake near Cushing, Oklahoma Results in Temporary Shutdown of Pipeline Operations

Reported areas that felt the earthquake on November 6, 2016. (  Earthquake Report  )

Reported areas that felt the earthquake on November 6, 2016. (Earthquake Report)

A magnitude 5 earthquake hit near Cushing, Oklahoma on Sunday and prompted the temporary shutdown of some pipeline operations near the site as a precaution.

Pipeline operators who have assets in the area said no operations were impacted as a result of the quake. Some of these operators include Magellan Midstream, Kinder Morgan, Enterprise Products Partners, and Phillips 66.

All pipeline companies that run intrastate pipelines and fall under the jurisdiction of Oklahoma Corporation Commission shut down operations following the quake as a precaution and to check the integrity of their assets.

As a result of the quake, some gas leaks occurred but have been contained and are no longer a threat, according to Jeremy Frazier, assistant city manager of Cushing, Oklahoma. Electricity, which had temporarily gone out in parts of Cushing, is nearly completely restored.

Cushing, Oklahoma, the delivery point for West Texas Intermediate crude, has experienced a sharp increase in earthquakes to the area since 2009, which was the same year oil companies started using fracking methods to retrieve oil and gas from deep rock layers and inject the resulting wastewater into ultra-deep disposal wells.

Fuel Fix