NEW YORK (Reuters) — BP Midstream Partners LP is considering expanding its Mars crude oil pipeline to accommodate new volumes from offshore oil fields, Chief Financial Officer Craig Coburn said on Tuesday.
The Mars pipeline, which has a mainline capacity of about 400,000 bpd, would potentially be expanded to ship increased crude volumes from Gulf of Mexico fields such as Vito and Power Nap, Coburn told analysts and investors on the company’s third quarter earnings call.
More details about any plans will be given early next year, Coburn said. BPMP owns a 28.5% interest in Mars, according to its website.
BP Midstream’s total third quarter pipeline gross throughput was more than 1.6 million barrels of oil equivalent per day, slightly lower than the previous quarter, Coburn said.
The decline was due, in part, to disruptions in service caused by Hurricane Barry in July.
Caesar, a crude oil pipeline, Cleopatra, which carries natural gas, and the Ursa oil pipeline all reported lower throughput for the quarter due to the hurricane and maintenance activity by offshore producers, Coburn said.
The gross throughput impact of Barry was approximately 100,000 barrels per day of oil equivalent, he added.
Offsetting the disruptions was record throughput on the BP 2 pipeline, Coburn said. He said throughput on the pipeline during the third quarter was a record 316,000 barrels per day, the highest achieved on BP 2 since its initial public offering.
“We expect pipeline gross throughput in the fourth quarter to be higher than first quarter,” Coburn said.
(Reuters) — Enbridge Inc, said on Friday it plans to seek the Canada Energy Regulator’s approval to auction off rights to ship crude on its Mainline system, more than a month after the watchdog said the company will not be allowed to offer contracted space on the pipeline to shippers.
In a highly unusual move, the regulator halted the auction after major producers in the country protested Enbridge’s plans to switch to longer-term contracts from monthly allocation.
Enbridge, which also reported better-than-expected third quarter profit on Friday, said it expects to place the Canadian portion of the Line 3 replacement into service on Dec.1 after delays due to tribal and environmental challenges.
Line 3 is part of Enbridge’s Mainline network that transports western Canadian oil to Midwest refineries and the replacement project would double capacity to 760,000 barrels per day, providing much-needed relief from congestion on existing Canadian pipelines.
The company had earlier reached a deal with crude shippers for an additional charge till the U.S. portion of the Line 3 oil pipeline is completed.
The company also said on Friday it expects several of its growth projects to be operational in 2019, including the $700-million Gray Oak pipeline – the biggest of three new pipelines connecting the U.S. Permian basin to the Texas Gulf Coast.
Canada’s oil producers are desperate for new export pipelines as rising production and tight capacity on existing pipelines and rail have led to the Alberta government curtailing output.
The company’s adjusted profit of 56 Canadian cents per share in the third quarter, beat analysts estimate of 52 Canadian cents as it moved 5% more crude on its Mainline system.
Net income attributable to common shareholders was C$949 million ($719.43 million), or 47 Canadian cents per share, in the three months ended Sept. 30, compared with a loss of C$90 million, or 5 Canadian cents per share, a year earlier.
The year-ago quarter included some charges, including a non-cash expense of C$1.02 billion.
(Reuters) — U.S. oil export terminal operator Moda Midstream LLC said on Thursday it has begun to enhance its Moda Ingleside Energy Center (MIEC) in Ingleside, Texas, to allow the docking of larger-sized vessels and is considering a new pipeline as well.
Moda has begun structural enhancements and dredging to Berth 5 and improvements to Berth 4, which will allow for the docking of Suezmax class vessels and Very Large Crude Carriers (VLCCs), respectively, the company said in a statement.
The company said it was evaluating construction of an additional pipeline called the Moda Ingleside Express Pipeline, which would be bi-directional and run between MIEC and Moda Taft Terminal, located in Taft, Texas.
MIEC receives crude from the Cactus Pipeline, the Cactus II Pipeline and the EPIC Crude Oil Pipeline, while the Taft Terminal is connected to the EPIC Crude Oil Pipeline and Moda’s 20-inch pipeline between the Inner Harbor and MIEC, the statement said.
BROOMFIELD, Colo. (CBS4)– It has been a tough year for the oil and gas industry as presidential candidates call for a ban on fracking and the state legislature overhauls regulations. But one Colorado operator is leading the way in the new world.
Extraction Oil and Gas company began implementing cutting-edge mitigation techniques long before the new law which prioritizes health and safety.
“We have to really bring it,” said Brian Cain with Extraction. “As oil and gas companies we have to step-up.”
Cain said Extraction has the most at stake as a Colorado-only operator. The company was one of the first to switch from diesel power to electric.
“It’s a step change for our industry. It runs basically like a Tesla,” said Cain.
The change eliminates the smell and noise associated with diesel generators, but the company didn’t stop there. It erected sound walls and a berm around its drilling pad and began using a special synthetic drilling mud to eliminate the odor of oil and gas.
“Part of what we wanted to do is make our operations as little impact as possible.”
Which is why the company does extensive air monitoring and water testing as well.
“Here in Broomfield, we actually agreed to water testing that is above and beyond the law.”
Cain said they also signed a contract with Broomfield to do 24-7 air monitoring, measuring 50-60 chemicals at a time.
“As part of our operator agreement, we give money to the City and County of Broomfield and let them do their own air monitoring and that way we’re maximizing the credibility. They have an independent third party air consulting firm conducting it. They’re experts. Everything we’ve seen is well below any levels of concern, well below. So we’re very excited about that and we think that’s a game changer for Colorado. It’s important to be adaptable and that’s what you have to be in the new world here.”
Despite all the best practices Extraction has in place, Broomfield City Councilwoman Guyleen Castriotta says they still get complaints about odor, construction noise and health concerns. For her, like many opponents of oil and gas, no level of mitigation is enough. She said her goal is to ban drilling in residential areas.
But the director of the Colorado Oil and Gas Conservation Commission, which is charged with implementing the new law, says his goal is to mitigate the impacts to the extent possible while allowing drilling to continue.
Medallion proposes through the open season to construct an operational loop of its existing Howard Lateral and an expansion of its Midkiff Lateral from Garden City Station to the Midkiff Station, adding crude oil delivery capacity to downstream pipelines and markets.
The existing Medallion pipeline system includes 800 miles of 6-inch and larger-diameter crude oil pipeline spanning some of the most prolific crude oil producing counties in the Permian Basin: Crane, Glasscock, Howard, Irion, Martin, Midland, Mitchell, Reagan, Scurry and Upton.
Its eight segments serve as an intra-basin header system that provides diversified market access to 10 downstream pipelines that interconnect at Medallion’s Crane, Midland and Colorado City hubs. Medallion’s system also includes facilities that are smaller than 6 inches in diameter, typically to connect the system to individual tank batteries in the field.
The open season, which ends at 4 p.m. CDT on Oct. 18, is an opportunity for interested shippers to acquire long-term firm capacity under binding transportation services agreements, as a committed firm shipper on one or both expansion segments.
Medallion said existing committed firm shippers will have the option to participate in the open season to 1) amend an existing transportation services agreement for transportation on the Howard Lateral to obtain the lower expansion rates offered on the Howard expansion in return for an extension of the primary term of the existing transportation services agreement, and 2) add the Midkiff Station as a destination point to an existing transportation services agreement for committed firm transportation on the Midkiff Lateral.
Canada’s second-largestoilproducer, Suncor Energy, believes the political situation in the United States has increased the risks to companies counting on construction of TC Energy Corp’s proposed Keystone XLoilpipeline, its chief executive said on Wednesday.
A legal fight between TC, previously known as TransCanada, and environmental activists has delayed the Canada-to-Texas pipeline for a decade. A court in Nebraska last month affirmed an alternative route through the state, raising hopes the project might proceed and provide badly needed transport capacity for Alberta’s crude.
U.S. President Donald Trump, a supporter of Keystone XL, faces an election in 2020 and candidates for the Democratic nomination are critics of the fossil fuel industry who favor government support for renewable energy and other steps to fight climate change.
“Keystone XL is a massive investment and the political situation in the U.S. is I think increasing the risk associated with that,” Suncor CEO Mark Little said at a Barclays investor conference in New York. “That’s one that a lot of people are doing soul-searching about right now because it’s also a very substantial investment. Now we still believe it will go ahead. But time will tell.”
A Suncor spokeswoman could not be immediately reached to clarify Little’s comments.
“We are committed to Keystone XL and will continue to carefully obtain the regulatory and legal approvals necessary before we consider advancing this commercially secure project to construction,” TC Energy spokesman Matthew John said.
Little said he believes plans to expand the Canadian government-owned Trans Mountain pipeline are “in pretty good shape,” and noted there is still ongoing work by Enbridge Inc to replace its Line 3 in Minnesota.
Congestion on export pipelines prompted the government of Alberta, Canada’s main oil-producing province, to impose crude production curtailments this year to help drain a glut of oil in storage and support prices.
Last month the Alberta government said it would extend curtailments into 2020 because of delays getting new pipelines built.
Government-mandated production quotas have weighed on investor sentiment toward Canadian energy stocks, but Husky Energy’s chief executive, also speaking at the Barclays investor conference, said curtailments would likely ease.
“I think quotas will become less of an issue going forward as we see incremental pipeline and rail capacity coming on. I don’t think they’ll bite as hard,” Husky CEO Rob Peabody said.
Canadian crude-by-rail volumes have increased this year as companies look for alternatives to congested pipelines, even though it is a more expensive way of transporting crude.
CALGARY/WINNIPEG (Reuters) – An indigenous-led group plans to offer to buy a majority stake in the Trans Mountain oil pipeline from the Canadian government this week or next, a deal that could help Prime Minister Justin Trudeau mitigate election-year criticism from environmentalists.
The group, called Project Reconciliation, aims to submit the $5.26 billion offer as early as Friday, managing director Stephen Mason told Reuters, and start negotiations with Ottawa two weeks later.
Project Reconciliation said the investment will alleviate First Nations poverty, a watershed for indigenous people who have historically watched Canada’s resources enrich others.
The expansion would triple the capacity of the pipeline carrying crude from Alberta to British Columbia’s coast, helping resuscitate an industry depressed by low prices and congested pipelines.
Trudeau’s government, which bought the pipeline last year after its owner, Kinder Morgan Canada, gave up on trying to get the expansion approved, has already been touting First Nations participation. A deal ahead of an October election could ease criticism from voters who have complained of broken promises on the environment and aboriginal rights.
Still, not all First Nations groups are on board. Some in British Columbia have pledged to keep fighting expansion of Trans Mountain, even with blockades and protests, saying ownership makes no difference to the risk of oil leaks.
“The greatest hope the government can have is they neutralize this topic. Imagine if a multinational gets ownership of the pipeline, or an indigenous consortium. The indigenous (option) is way less provocative,” said Ken Coates, professor of public policy at University of Saskatchewan.
When Trudeauapproved the pipelinein June, he said his government would immediately consult indigenous communities on how they can benefit, including potentially buying the pipeline.
Mason declined to say how many communities support Project Reconciliation.
“There is a vocal minority (against the project). The majority are in favor especially if they have material ownership and a place at the table that allows them to be involved with environmental aspects,” Mason said. “If we own it, chances are we can quiet down the opposition.”
Project Reconciliation hopes to buy 51% of the pipeline this year for $1.75 billion and roughly half the expansion project for $3.5 billion. It would finance the deal through bank loans underwritten by commitments from oil shippers. The government would retain 49%.
Once expansion is complete, it intends to invest $150 million of annual proceeds into an indigenous sovereign wealth fund.
“We have conversations about climate change. But tell me at what level climate change is a discussion when we have a lot of our people who are starving,” Delbert Wapass, Project Reconciliation’s executive chairman told a packed crowd at Calgary’s Petroleum Club.
FOR AND AGAINST
Indigenous people who support buying Trans Mountain say it offers a rare opportunity to own money-making oil infrastructure.
Before Chief Tony Alexis was born, Trans Mountain was built underground on Alexis Nakota Sioux Nation traditional land near Edmonton, Alberta, where the pipeline starts.
In the 66 years since, the community has received no benefits, Chief Alexis said, only risk. Now it could cash in.
“Our people have been ready to be in business for a long time,” Alexis said. “If we do this right, this is going to be a template for the future.”
Alexis is part of Iron Coalition, another indigenous group seeking to buy between half and 100% of the pipeline once it is built in 2022. It is discussing options with banks and plans to direct future profits to Alberta indigenous groups that join.
At the other end of the pipeline 715 miles away, British Columbia indigenous communities are digging in for a fight.
“Our sacred obligation is that we are stewards of this land, this water and our people,” said Chief Leah George-Wilson of Tsleil-Waututh First Nation, based along Burrard Inlet opposite Westridge Marine Terminal where Trans Mountain ends.
Tsleil-Waututh plans to appeal Trudeau’s approval of Trans Mountain’s expansion over concerns about spills and tanker traffic, George-Wilson said.
Coates, the University of Saskatchewan professor, said indigenous participation in the pipeline could allow Trudeau’s Liberals to retain more urban votes that will be critical to the election’s outcome.
The government is already promoting Trans Mountain as a means to improve aboriginal lives.
“Meaningful economic participation by indigenous peoples is an important way to respect … people who are actually impacted along the line,” Finance Minister Bill Morneau said last month.
Conservatives have not decided how they would sell the pipeline if they win the election, said MP Shannon Stubbs of Alberta who has criticized the government over natural resources issues.
The Alberta provincial government said it welcomed interest from indigenous communities in becoming partners in the energy sector. British Columbia opposes the pipeline expansion, however, and Environment Minister George Heyman said indigenous ownership would not change its concerns about spills.
Opponents are planning litigation, blockades and protests, said Grand Chief Stewart Phillip of the Union of BC Indian Chiefs.
“Who owns the pipeline is not the issue. It’s what goes through the pipeline,” he said.
LANSING, Mich. (AP) — Michigan’s attorney general sued Thursday to shut down dual oil pipelines in the Great Lakes, saying they pose an “unacceptable risk.”
Democrat Dana Nessel’s move came the same day she also sought to dismiss pipeline operator Enbridge’s request for a ruling on the legality of a deal it struck last year with former Republican Gov. Rick Snyder to put replacement pipes in a tunnel beneath the Straits of Mackinac.
“I have consistently stated that Enbridge’s pipelines in the Straits need to be shut down as soon as possible because they present an unacceptable risk to the Great Lakes,” she said in a written statement.
Nessel said she acted after it became clear talks between Enbridge and Democratic Gov. Gretchen Whitmer stalled.
“The continued operation of Line 5 presents an extraordinary, unreasonable threat to the public because of the very real risk of further anchor strikes, the inherent risks of pipeline operations and the foreseeable, catastrophic effects if an oil spill occurs at the Straits,” Nessel said.
The pipelines are part of Enbridge’s Line 5, which carries 23 million gallons of crude oil and natural gas liquids daily between Superior, Wisconsin, and Sarnia, Ontario.
Whitmer ordered her administration not to implement the tunnel plan after Nessel said authorizing legislation enacted in December violated the state constitution.
Enbridge insists the twin pipes, which have been in place since 1953, are in sound condition and could operate indefinitely. But the company, based in Calgary, Alberta, said it is willing to install a tunnel in bedrock 100 feet beneath the lakebed and foot the estimated $500 million bill to eliminate virtually any possibility of a leak.
Talks broke down earlier this month, with Whitmer pushing to finish the tunnel in two years and Enbridge insisting it could not be done before 2024.
Enbridge spokesman Ryan Duffy said the company needed time to evaluate Nessel’s suit but was disappointed the state chose not to accept an offer to advance talks on the tunnel project. Shutting down Line 5, he said, would result in a “serious disruption” of the energy market.
“We remain open to discussions with the governor, and we hope we can reach an agreement outside of court,” he said. “Enbridge is deeply committed to being part of Michigan’s future. We believe the Straits tunnel is the best way to protect the community and the Great Lakes while safely meeting Michigan’s energy needs.”
Opponents contend Enbridge’s refusal to shut down the pipeline until the tunnel is completed means the straits area would be endangered for at least another five years. They point to a vessel anchor strike in April 2018 that dented both pipes while damaging three nearby electric cables, which leaked 800 gallons of insulating mineral oil.
(Reuters) – EQM Midstream Partners LP said it had raised the estimated cost of its Mountain Valley natural gas pipeline from West Virginia to Virginia to $4.8-$5.0 billion and delayed the projected completion to mid-2020 due to ongoing legal and regulatory challenges.That is up from the company’s last estimate of $4.6 billion and a target to complete the project in the fourth quarter of 2019.
EQM made the comments in a federal regulatory filing in which the company said it had submitted a land exchange proposal to the federal government in an effort to enable the pipe to cross the Appalachian Trail.
Crossing the trail became an issue after the U.S. Court of Appeals for the 4th Circuit in December said the U.S. Forest Service lacked authority to issue a permit for another gas pipe, Dominion Energy’s $7 billion to 7.5 billion Atlantic Coast, to cross the Appalachian Trail on federal land. That case is on appeal to the U.S. Supreme Court.
EQM’s land exchange proposal would grant the federal government full ownership of private lands crossed by the Appalachian Trail, including certain private land located adjacent to the Jefferson National Forest.
In exchange, the government would grant Mountain Valley a right-of-way to cross the trail using the pipeline‘s previously planned underground method at an existing crossing location approved by FERC in 2017.
The 303-mile (488-km) pipeline is designed to deliver 2 Bcf/d of gas.
SAN RAMON, Calif. (AP) — Chevron will buy Anadarko Petroleum for $33 billion in a cash-and-stock deal as the company seeks to grow stronger in deep water exploration in the gulf and the energy-rich southwest region of Texas called the Permian Basin.
The companies put the enterprise value of the deal at $50 billion. The deal, announced Friday, arrives with U.S. crude prices up 40% this year.
“This transaction builds strength on strength for Chevron,” said Chairman and CEO Michael Wirth. “The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deep water Gulf of Mexico capabilities and will grow our LNG business.”
With the deal announced Friday, it gets access to Anadarko’s LNG operations in Mozambique. The combined company will also control a 75-mile-wide corridor across the Delaware Basin, just beside the Permian Basin, a region bountiful with natural gas that has been exploited through shale drilling.
There has been some pressure in energy markets as OPEC tries to push prices higher through production cuts.
When the organization of oil-producing states released its monthly report this week, it revealed that energy output from OPEC had declined to levels not seen since early 2015.
That is largely being driven by the energy powerhouse Saudi Arabia, which last month removed another 324,000 bpd from the market.
Still, U.S. crude was selling for less than $65 per barrel Friday. That’s far from levels well above $100 per barrel reached just before the economic downturn in 2008, and there are signals that global economic growth is slowing.
The acquisition of Anadarko could give Chevron a little more breathing room when crude prices do fall.
With savings the companies plan to book and rising cash flow, Chevron said it will bump up annual stock buybacks to $5 billion, from $4 billion a year, once the transaction is complete.
Chevron plans to divest $15 billion to $20 billion of assets between 2020 and 2022, with proceeds being used to lower debt and to return additional cash to shareholders, the company said.
Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each share they own, or $65 per share. Chevron will issue about 200 million shares and pay approximately $8 billion in cash. It will also assume about $15 billion in debt.
Chevron Corp. will keep its headquarters in San Ramon, California. Anadarko Petroleum Corp. is based in The Woodlands, Texas.
The deal is expected to close in the second half of the year. It still needs approval from Anadarko Petroleum Corp. shareholders and regulators.
Shares of Anadarko jumped 30.3% before the market opened, while Chevron’s stock fell 3.2%.