ExxonMobil(NYSE:XOM) has been under pressure to do something to fix its sagging production, which slid 3% during the second quarter and impacted the company’s ability to cash in on higher oil prices. That led it to unveil a bold plan earlier this year that would see it boost its production up to 5 million barrels of oil equivalent per day (BOE/D) by 2025 — a 25% increase from its current level — and more than double its earnings and cash flow. One of the key fuels driving that growth is the Permian Basin, where Exxon expects to boost its output fivefold, to as much as 800,000 BOE/D.
Given the importance of the Permian to Exxon’s future, the company is working to ensure that nothing will impede its progress in the area. That’s why it’s helped spearhead several new pipelines in the region so it has the market access needed to support its growth, especially in light of the region’s recent capacity issues. One of those projects recently took another step closer to becoming a reality after a new partner signed up to join Exxon’s venture.
Getting out ahead of the next problem
Back in June, Exxon and oil pipeline company Plains All American Pipeline(NYSE:PAA) signed a letter of intent to pursue the creation of a joint venture that would build another oil pipeline out of the Permian Basin. Exxon and Plains All American envisioned a more than 1 million barrel-a-day pipeline that would move oil produced by Exxon and others to refining and export markets along the Gulf Coast.
That multi-billion-dollar project recently got a boost after Lotus Midstream agreed to participate. The private equity-backed company recently made waves after sealing a deal to buyOccidental Petroleum‘s (NYSE:OXY) Centurion pipeline system, as well as its Southwest New Mexico oil-gathering system. The sale gave Occidental Petroleum a huge cash windfall that it plans on using to repurchase shares.
Meanwhile, it provides Lotus with a premier midstream business in the heart of the Permian, backed by Occidental Petroleum’s production. That system, which features a long-haul oil pipeline to the nation’s oil storage hub in Cushing, Oklahoma, would be even more valuable to customers if they could also access oil markets along the Gulf Coast, which is why this partnership with Exxon and Plains makes sense.
At the moment, the industry doesn’t seem to need another oil pipeline out of the Permian. Plains All American already has two underway, including one that should start up in about a month. Meanwhile, several more are on pace to begin service by the end of next year, and at least one more should follow by the end of 2020. These pipelines have the potential to boost the Permian’s pipeline capacity from its current level of 3.6 million barrels per day to nearly 6 million BPD by the end of 2020. However, with Permian production expected to surge past 7 million BPD by 2025, it appears as if the region will eventually need Exxon’s pipeline.
Pushing projects over the finish line
In addition to helping drive that oil pipeline forward, Exxon has played a key role in nudging two gas pipeline projects toward their respective finish lines. The company made a statement when it signed up to be an anchor shipper on Kinder Morgan‘s Permian Highway Pipeline, committing to a quarter of its capacity to ensure it moved forward. That commitment helped accelerate the project, which enabled Kinder Morgan to sanction it earlier this month.
Meanwhile, Exxon signed on to be a foundation shipper on Summit Midstream‘s (NYSE:SMLP)Double E Pipeline by committing to a firm transportation agreement for up to half of the pipeline’s capacity. Further, Exxon has the right to acquire up to a 50% interest in the pipeline from Summit, which could help with securing project-related funding. By getting Exxon’s backing, Summit is increasingly likely to move forward with this pipeline.
WASHINGTON – The U.S. State Department on Friday issued an environmental assessment of a revised route for the Keystone XL crude pipeline that concluded it would not harm water or wildlife, clearing a hurdle for the project that has been pending for a decade.
Even if the pipeline spilled crude oil along its revised route through Nebraska, a top concern of environmentalists, there would likely be no impact to groundwater, the nearly 340-page draft review said.
“Prompt cleanup response would likely be capable of remediating the contaminated soils before the hazardous release reaches groundwater depth,” the review said.
Last month, a federal judge in Montana had ordered the State Department to conduct the review of a revised route of the project to take into account new information relevant to a permit it issued for the pipeline last year.
The review also said implementing the revised route would have “no significant direct, indirect or cumulative effects on the quality of the natural or human environments.”
U.S. President Donald Trump is eager to see the building of the pipeline, which was axed by former President Barack Obama in 2015 on environmental concerns relating to emissions that cause climate change.
The project has galvanized environmentalists, tribal groups and ranchers in opposition to the $8 billion 1,180-mile (1,900-km) pipeline that would carry heavy crude from Canada’s oil sands in Alberta to Steele City, Neb. From there the crude would be sent to refineries and potentially for export.
Canadian oil producers, who face discounts for their crude due to transport bottlenecks, U.S. refineries and pipeline builders, support the project.
TransCanada Corp plans to start construction in 2019, spokesman Matthew John said.
The company’s Chief Executive Russ Girling said last month that it could make a final investment decision on the project late this year or in early 2019, pending some regulatory approvals and court challenges.
Robert Kwan, an RBC analyst, said the draft review was a “positive step” for Keystone XL.
Environmentalists said the review was an example of the Trump administration trying to push through a project that would risk harming water resources and increase dependence on crude.
“We’ve held off construction of this pipeline for 10 years, and regardless of this administration’s attempts to force this dirty tar sands pipeline on the American people, that fight will continue until Keystone XL is stopped once and for all,” said Kelly Martin, the Beyond Dirty Fuels campaign director for Sierra Club.
Targa Resources Corp., NextEra Energy Pipeline Holdings LLC, WhiteWater Midstream LLC and MPLX LP announced the execution of a letter of intent (and associated term sheets) for the joint development of the proposed Whistler Pipeline Project, which will provide an outlet for increased natural gas production from the Permian Basin to growing markets along the Texas Gulf Coast.
The Whistler Project is designed to transport approximately 2 Bcf/d of natural gas through approximately 450 miles of 42-inch pipeline from Waha, TX to NextEra’s Agua Dulce market hub, with an additional approximately 170 miles of 30-inch pipe continuing from Agua Dulce and terminating in Wharton County, TX. Supply for the Whistler Project will be sourced from multiple upstream connections in both the Midland and Delaware Basins, including direct connections to Targa plants through an approximately 27-mile, 30-inch pipeline lateral, as well as a direct connection to the 1.4 Bcf/d Agua Blanca Pipeline, a joint venture between WhiteWater, WPX Energy, MPLX and Targa, which crosses through the heart of the Delaware Basin, including portions of Culberson, Loving, Pecos, Reeves, Winkler, and Ward counties, TX.
The Whistler Project would have access to the Nueces Header and premium markets at Agua Dulce, as well as along a northern extension through Corpus Christi to the Houston Ship Channel to serve markets along the Texas Gulf Coast.
Targa, NextEra, MPLX and WhiteWater (and their respective producer customers) would collectively commit volumes in excess of 1.5 Bcf/day to the Whistler Project.The Project would begin operation in the fourth quarter of 2020, subject to execution of definitive agreements and the receipt of necessary regulatory approvals.
The Whistler Project will be constructed by NextEra Energy Pipeline Holdings and operated by Targa. In addition to the commitments of the project sponsors and their producer customers, the Whistler Project is in negotiations for additional firm transportation commitments and is expected to launch an open season in the coming months with respect to any remaining firm intrastate transportation capacity.
RICHMOND, Va. (AP) – Federal officials will allow construction to resume on the Atlantic Coast pipeline, weeks after work was halted when a federal appeals court threw out two key permits for the 600-mile (965-kilometer) natural gas pipeline.
The Federal Energy Regulatory Commission (FERC) announced the change in a letter Monday to Dominion Energy, the project’s lead developer.
Last month, a three-judge panel of the 4th U.S. Circuit Court of Appeals concluded that a U.S. Fish and Wildlife Service permit was “arbitrary and capricious” regarding its effect on five threatened or endangered species. Last week, the service issued a revised opinion and the National Park Service issued a new permit for crossing the Blue Ridge Parkway.
The pipeline is planned to start in West Virginia and run through parts of Virginia and North Carolina.
A coalition of environmental groups had asked the federal appeals court to review FERC’s approval of the pipeline.
The Southern Environmental Law Center and Appalachian Mountain Advocates petitioned the appeals court on behalf of 13 conservation and environmental groups.
SELC Senior Attorney Greg Buppert said in a statement at the time that the groups believe that FERC “rushed through its decision to permit a pipeline that we don’t need.”
Pipeline spokesman Aaron Ruby said in a statement Monday that crews would mobilize immediately to resume construction as authorized.
“The Atlantic Coast Pipeline has been the most thoroughly reviewed infrastructure project in the history of our region,” he said. “The additional scrutiny we’ve recently received from the courts and the agencies are further evidence of the high standard that is being applied to the project.”
Original article by Pipeline & Gas Journal. Source link here
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By Katie Dyl and Jim O’Sullivan, U.S. Energy Information Administration
The U.S. Energy Information Administration (EIA) expects construction of new natural gas pipeline capacity in the United States to continue in 2018, in particular in the northeastern United States.
By the end of 2018, if all projects come online by their scheduled service dates, more than 23 Bcf/d of takeaway capacity will be online out of the Northeast, up from an estimated 16.7 Bcf/d at the end of 2017 and more than three times the takeaway capacity at the end of 2014.
The growth of natural gas production in the Marcellus and Utica basins in Pennsylvania, Ohio, and W.V., is constrained by the lack of available takeaway pipeline capacity to move it to new markets. As new pipeline projects come online, they will create an outlet for increased production, providing natural gas to demand markets in the Midwest, the Southeast, eastern Canada, and the Gulf Coast.
Currently, no major pipeline capacity expansions in advanced development are slated to come online in New England because of stakeholder concerns raised in the development process.
Of the projects scheduled to be in service by the end of 2018, most are associated with four major interstate pipelines: Columbia Pipeline Group (TCO), which includes both Columbia Gas and Columbia Gulf Transmission; Transcontinental Gas Pipeline (Transco); Rover Pipeline; and NEXUS Pipeline.
The Columbia Pipeline Group (TCO) has two expansion projects intended to add 4.2 Bcf/d of takeaway capacity out of the Northeast: Leach Xpress and Mountaineer Xpress. The Leach Xpress project, which entered service on Jan 1, supplies an additional 1.5 Bcf/d of capacity out of West Virginia and Ohio, and the Mountaineer Xpress project, which is scheduled to enter service in late 2018, will increase takeaway out of West Virginia by an additional 2.7 Bcf/d.
As much as 2 Bcf/d of the natural gas from these two pipelines can be sent directly to the Gulf Coast via expansion projects on TCO’s Columbia Gulf pipeline, and the remainder will enter the TCO pool in Boyd County, Ky. Another TCO expansion project, the WB Xpress project, will increase mainline capacity to both the east (500 MMcf/d) and west (800 MMcf/d) when it is completed in late 2018.
Three projects associated with the Transcontinental Gas Pipeline are intended to add more than 3 Bcf/d of capacity out of Pennsylvania and West Virginia: Atlantic Sunrise, Mountain Valley Pipeline, and Equitrans Expansion. Atlantic Sunrise, the first phase of which was completed in 2017, is a nearly $3 billion project that will provide 1.7 Bcf/d of bidirectional capacity on the Transco System.
The Mountain Valley Pipeline (2 Bcf/d), a new pipeline from West Virginia to the Transco system in southern Virginia, and the Equitrans Expansion Project (0.600000 MMcF/d), which brings natural gas from northwest Pennsylvania to an interconnection with the Mountain Valley Pipeline, are also scheduled to come online in 2018.
The first phase of Rover Pipeline was completed in late 2017, and Phase 2 is expected to come online in mid-2018. Phase 2 includes 3.25 Bcf/d of new capacity into Midwestern markets and the Dawn hub in Ontario, Canada.
NEXUS Pipeline, which follows a similar route to Rover, will add 1.5 Bcf/d of new capacity. Natural gas from the Marcellus and Utica basins will be delivered to this pipeline by the 950 MMcf/d Appalachian Lease Project, also scheduled to come online in 2018.
Separately, nuclear, coal and older oil-fired power plants are rapidly being shut down and replaced by more-efficient and cleaner-burning gas-fired facilitiess.
Con Edison, for example, said between 2012 and 2016, more than 5,000 large New York City buildings switched from oil to natural gas for heating. Additionally, according to RBN Energy, the Northeast Gas Association (NGA) 2017 Regional Market report showed natural gas heated homes in the Northeast grew by more than 1million since 2008.
Three projects associated with the Transcontinental Gas Pipeline are intended to add more than 3 Bcf/d of capacity out of Pennsylvania and West Virginia.
RALEIGH, N.C. (AP) — The Federal Energy Regulatory Commission has approved construction of the 600-mile Atlantic Coast Pipeline to proceed in North Carolina.
FERC officials this week approved work to proceed without further steps to protect endangered species. The FERC order issued Tuesday said work could be stopped to protect the environment if ordered by a federal court.
Opponents are trying to force a stop to the $6 billion project after a federal appeals court in Virginia in May vacated a U.S. Fish and Wildlife service approval meant to protect threatened or endangered species.
The pipeline being developed by Dominion Energy, Duke Energy and Southern Company will carry Marcellus Shale natural gas production from West Virginia through Virginia to North Carolina.
OTTAWA – The Canadian federal government is set to become the official owner of the Trans Mountain pipeline expansion after failing to quickly flip the project to another private-sector buyer.
Pipeline owner Kinder Morgan had been working with the government to identify another buyer before July 22.
But with that date set to pass without a deal, it was expected the pipeline company will now take Ottawa’s $4.5-billion offer to purchase the project to its shareholders.
Pending their approval, the sale, which includes the existing pipeline, the pumping stations and rights of way, and the Westridge marine terminal in Burnaby, B.C., will be approved sometime in August or September.
The $4.5-billion purchase price does not cover the construction costs of building the new pipeline, which previous estimates have pegged at around $7.4 billion.
Finding another buyer for the project before Sunday’s deadline was widely considered a long shot because of the project’s risks.
But the government insists it does not plan to own and operate the pipeline over the long term and is expected to continue talking to interested parties.
The government had previously indicated that there were numerous groups interested in purchasing the controversial project, including pension funds and Indigenous groups.
Finance Minister Bill Morneau’s spokesman, Daniel Lauzon, said Ottawa still intends to sell the pipeline, if and when a suitable partner is identified and it’s in the best interests of Canadians.
“We have no interest in being a long-term owner of a pipeline, but we will be the temporary caretaker,” Lauzon told The Canadian Press on Sunday. “We won’t rush that.”
News of the failure to find another partner by July 22 came one day after protesters opposed to the Trans Mountain expansion took to Parliament Hill in hazardous-materials suits and carrying a fake pipeline.
It was the latest in a string of such rallies by environmental and Indigenous groups, which also included the erection of a similar cardboard pipeline outside the Canadian High Commission in London in April.
Lauzon on Sunday defended the decision to purchase the pipeline, saying the project, whose aim is to get Canadian oil to Asian markets, remains in the national interest.
The Trans Mountain expansion will build a new pipeline roughly parallel to the existing, 1,150-km line that carries refined and unrefined oil products from the Edmonton area to Burnaby, B.C.
It will nearly triple the line’s capacity to 890,000 barrels a day. Trans Mountain is the only pipeline carrying Alberta crude to the West Coast and the hope is that most of the oil will end up in tankers bound for Asia.
Ottawa approved the expansion project in November 2016 and British Columbia’s then-Liberal government followed suit two months later.
But four months after that, the provincial Liberals were replaced by the NDP under John Horgan, who has a coalition of sorts with the Green party that includes an agreement to oppose the expansion in every way possible.
The federal government has said its hand was forced by Horgan, who has gone to court for judicial approval to regulate what can flow through the pipeline – a measure of opposition that made Kinder Morgan Canada, the project’s original owner, too nervous to continue.
The company halted all non-essential spending on the pipeline expansion in April pending reassurances from Ottawa that the project would come to fruition.
The federal government had said Canada would cover any cost overruns caused by B.C.’s actions, but in the end that wasn’t enough.
Following the government’s announcement that it planned to purchase the pipeline, Kinder Morgan agreed to start construction this summer as planned.
The comments followed a commitment from the chief executive of LNG Canada on Tuesday that the C$40 billion liquefied natural gas export terminal would be under construction in 2018. A final investment decision, or FID, from the project partners is expected this year.
“We would be looking at constructing in the early part of 2019,” Coastal Gaslink President Richard Gateman told reporters at an LNG conference. “We could be doing a little bit of field work in the fall (of 2018), if there’s an FID decision.”
TransCanada’s 670-km (415-mile) Coastal GasLink pipeline will cross two mountain ranges to connect rich shale fields in Alberta and northeast British Columbia with the proposed LNG Canada export terminal on British Columbia’s northwest coast.
If the project goes ahead, it will be a game changer for Canada’s natural gas producers, which currently face steep discounts for their product because of sagging demand in the United States and a lack of other export markets.
TransCanada expects to award contracts for the construction to four consortiums within the next two months, Gateman said. Those contractors will be a mix of local and international players with experience building in mountainous terrain, he said.
The company also expects to provide a cost update around the same time, he said, adding: “I’ll say that that was an estimate in 2011 dollars and if you take that to 2018 dollars, it’s a little bit more, but it’s not substantially more.”
Bateman also said TransCanada had worked hard to keep costs down on the project, just as the LNG Canada partners have worked to bring down costs on the terminal project.
“We contributed our part in terms of the pipeline budget and they did their part on the facility, which is why it looks like it is successfully coming together,” he said.
LNG Canada is a joint venture between Royal Dutch Shell, PetroChina Co, Mitsubishi and Korea Gas. TransCanada will own and operate the pipeline.