december 2015 · compressor technology 80. advancing reciprocating compressors amin almasi...
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The faster, safer, smarter way to handle heavy-duty pipe. v a c u w o r x . c o m
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Volume 15 Number 12 - December 2015
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ON THIS MONTH'S COVER
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The faster, safer, smarter way to handle heavy-duty pipe. v a c u w o r x . c o m
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Volume 15 Number 12 - December 2015
WORLD PIPELINES | VOLUME 15 | NUMBER 12 | DECEMBER 2015
A Vacuworx RC 10 Vacuum Lifting System handles 400 mm (16 in.) pipes at a staging point for the VNIE project in Australia. A global leader in innovative lifting solutions, Vacuworx manufactures heavy-duty lifting equipment for the oil, gas, water, sewer, utility, and road
construction industries. A global inventory of Vacuworx Lifting Systems is available for immediate rental or purchase with parts and service available 24 hr/d, 365 days of the
year. Lift faster, safer and smarter with Vacuworx. Learn more about the full line of Vacuworx products at vacuworx.com
40. Making it on the big screenOle Kristensen, EIVA, Denmark.
MENTORING47. The forgotten art of mentoringMichelle Unger, ROSEN Group, and Phil Hopkins, Phil Hopkins Ltd.
FLOW METERING55. Implementing leak detection strategiesDr. Gregor Brown, Cameron, UK.59. Tracking lost gas levelsBenjamin Fuentes, Thermo Fisher Scientific, and Toby O’Brien, Enable Midstream Partners.
PROCESS INSTRUMENTS63. Rethinking interface detectionPaul Limpitlaw, Siemens AG, USA.
SOFTWARE AND DATA MANAGEMENT67. A new era of monitoringNigel Jones, VAE Controls, Czech Republic.
76. Reducing the impact of cyber attacksTony Berning, OPSWAT, USA.
COMPRESSOR TECHNOLOGY80. Advancing reciprocating compressorsAmin Almasi discusses reciprocating compressor technologies for pipeline compression stations.84. Fouling compressorsStephen Hiner, CLARCOR Industrial Air, UK.
PRODUCT NEWS87. HDD and crossings equipment product newsVermeer, USA and Tracto-Technik, Germany.
03. Editor's commentDrilling demand in Australia.
05. Pipeline newsCelebrating France's 40th anniversary of its first contract for gas supply; the TAPI pipeline is finally under contruction; Energy East pipeline provides a new hope for Canada; plus an IPLOCA convention report.
REGIONAL REVIEW12. Roundup, roundup: global pipeline projectsOil and gas prices have fallen drastically in 2015. Due to an abundance of supply and reduced consumption, global energy markets have had to find more economical ways of transporting oil and gas and put an abundance of pipeline projects on hold. Dr. Hooman Peimani seeks to summarise the major global pipeline projects and how they have been affected.
CONSTRUCTION PROJECTS ROUNDUP21. Haute pipeline projectsThomas Garcon, Max Streicher GmbH & Co. KG aA, Germany.26. Working hands-freeJames Woodall, Intoware, UK.
COVER STORY31. Raising the barTodd Razor, Vacuworx, USA.
OFFSHORE OPERATIONS35. Scanning for subsea integrityScott Gray, Seatronics, UK.
PAGE
12
ROUNDUP, ROUNDUP: ROUNDUP, ROUNDUP: ROUNDUP,
Oil and gas prices have fallen drastically in 2015. Due to an abundance of supply and reduced consumption, global energy markets have had to find more economical ways of transporting oil and gas and put an abundance of pipeline projects on hold. Dr. Hooman Peimani seeks to summarise the major global pipeline projects and how they have been affected.
global pipeline projects
12
Perhaps 2015 will be remembered as an exceptional year in the contemporary history of the global energy markets. Starting from the preceding year, oil and gas prices have fallen to atypical levels after experiencing about one and a half decades of increase. The phenomenal price decline has been caused in short by an abundance of oil and gas supplies, way above the global demand, thanks to a large and growing number of
suppliers and lower-than expected global consumption. Lowering economic activities, sluggish growth or recession in the decade-long troubled European countries, recession in Japan, below-projected growth rate in China, and poor economic performance of many energy-producers such as Canada and Venezuela have negatively affected energy demand. Economic meltdown in many Arab countries due to inter-state – but mainly intra-state – armed conflicts and various sanctions on more than a handful of countries to include Iran have all decreased their purchasing power. This has been translated to lower economic activities in the major western economies; declining energy consumption with a varying extent has been the logical outcome.
13
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DRIVING DEMAND IN AUSTRALIA
A new gas pipeline in Australia is to be built connecting the Northern Territory (NT) and the east coast. Jemena has won the contract to
construct the 623 km pipeline, which will run from Tennant Creek, NT to Mt Isa in Queensland. Proposed routing of the pipeline followed two distinct camps: the northern route won over a potentially more costly and time-consuming southern route. The southern option would have sent the pipeline on a longer journey from Alice Springs to Moomba and would have incurred extra costs of up to AUS$1.3 billion.
So, with the northern route decided upon and Jemena (jointly owned by the State Grid Corporation of China and Singapore Power) signed up to construct, gas flow is expected to begin in 2018.
Dubbed as the North East Gas Interconnector (NEGI), the AUS$800 million pipeline has been designed to spur development of the NT gas sector, which brings to mind a certain ‘which comes first, the chicken or the egg?’ question. By building NEGI, it is hoped that untapped gas reserves in NT will be exploited and will move the territory into a new phase of economic strength. The theory holds that the pipeline will be a conduit for giant untapped offshore NT gas fields, delivering NT gas to customers in the southeast. Critics argue that any gas extracted from these fields will go to export markets from Darwin in the form of LNG (more on that later) and that the pipeline will probably transport gas from closer-to-shore fields and existing onshore fields near Alice Springs.
The NT is estimated to have over 200 trillion ft3 of gas, which the government has been heralding as sufficient to power Australia for more than 200 years. Jemena has pledged to build a further pipeline link, between Mt Isa and the Wallumbilla hub in Queensland, once the NT gas reserves have been proven and established. At the moment, Moomba is the main hub for gas supply: the northern route decision could mean extra costs for building up processing infrastructure at the new end-point of the pipeline. The east coast of Australia’s gas
market is changing significantly, with LNG exports on the increase, rising gas prices and declining future gas demand expected from industrial users.
It is hoped that NEGI will fill a gap in the national grid and revitalise the east coast market.
A final thought on NEGI: it will be built at no cost to taxpayers, due to commercial contracts already in place that secure the volumes required to support the project. The foundation customer is Incitec Pivot, which has committed to buying 30 TJ/d of gas (as part of a 10 year contract), which amounts to
a quarter of the pipeline’s capacity. Incitec is Australia’s biggest manufacturer of fertiliser and will use the gas at its Mt Isa plant. For the last few years, gas supply has been a problem for the company, as well as rising gas costs.
In other Australia news, Inpex has completed its subsea pipeline that forms part of the Ichthys LNG project. The pipeline connects the offshore Ichthys gas condensate field to an LNG processing facility near Darwin, NT and has been labelled a record breaker, as it is the longest subsea pipeline in the southern hemisphere (889 km) and the third longest in the world, albeit a fair way behind the holders of first and second position, Nord Stream (1224 km) and Langeled (1166 km) respectively. The Ichthys project is expected to have an operational life of 40 years, during which it will produce 8.9 million tpy of LNG and 1.6 million tpy of LPG, plus 100 000 bpd of condensate. Operations are now underway to connect up the pipeline to the onshore plant, and to establish and moor offshore facilities at the field (which sits in the Timor Sea off the northern coast of Western Australia).
These mega projects aren’t without risk: how will the global fall in LNG prices affect Ichthys? Will gas reserves in the NT stand up to the scale of NEGI and will the financing structure on NEGI pipeline mean higher tariffs? We shall see whether Ichthys, and the untapped NT gas reserves, can come good for Australia.
THE EAST COAST OF AUSTRALIA’S GAS MARKET IS CHANGING SIGNIFICANTLY
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Tougher environmental assessments in store for Canada
For existing oilsands pipeline proposals, Canada’s Environment Minister Catherine McKenna has promised tougher environmental assessments, amongst comments on climate change and greenhouse gas emissions targets.
McKenna was in Paris the week of 9 November for a ministerial meeting to prepare for the United Nations (UN) conference, stated that Canada is bringing a more constructive outlook to the international negotiations.
“People are extraordinarily happy to see that Canada is seated at the table, and that Canada accepts the scientific evidence that climate change is one of the greatest threats of our time and will be doing our part,” McKenna explained.
McKenna said the federal government will make climate change a diplomatic priority at upcoming world meetings. Canada’s newly appointed Prime Minister Justin Trudeau has promised to put a price on carbon, establish national emissions-reduction targets, and add more teeth to environmental reviews for energy projects.
The new Liberal government has so far refused to set a carbon reduction target and will consult with the provinces before putting in place a national plan.
McKenna, an international trade lawyer who worked with the UN in negotiating a peace agreement in East Timor, has hinted that any target the Liberals set could potentially include greenhouse gas regulations on the nation’s oil and gas industry, and that the government’s promise to adopt grittier environmental assessments could apply to pipeline projects already under review. McKenna has stated that oil and gas companies are “recognising that they need to be doing more.”
Joint interest in crude pipeline
Saddlehorn Pipeline Company, LLC announced that it is combining projects with Grand Mesa Pipeline, LLC for the construction of a 20 in. undivided joint interest pipeline, which begins approximately 20 miles north of Saddlehorn’s Platteville, Colorado origin at a junction near Grand Mesa’s Lucerne, Colorado origin. The joint interest pipeline will deliver various grades of crude oil from the DJ Basin to storage facilities in Cushing, Oklahoma.
As part of the joint interest, Saddlehorn and Grand Mesa will share the costs for the pipeline that is currently under construction. The initial capacity of the pipeline is expected to be 340 000 bpd, with Saddlehorn owning 190 000 bpd and Grand Mesa owning 150 000 bpd. The companies will be responsible for their own commercial activities, including customer relationships, contract terms and tariff structure, with respect to their interest in the pipeline.
Saddlehorn is able to expand the maximum capacity of the pipeline to exceed 450 000 bpd in the future at its sole discretion and cost. Saddlehorn would own all the incremental capacity from any expansion. Grand Mesa will retain ownership of its previously acquired pipeline easements from Lucerne to Cushing for the potential future development of transportation projects, involving petroleum commodities other than crude oil and condensate. With the consent and participation of Saddlehorn, the parties may consider future opportunities using these easements for projects involving the
transportation of crude oil and condensate.Saddlehorn will own origin points at Platteville – including
1 million bbls of storage – and Carr (Colorado), as well as the pipeline segment from Carr to the Lucerne junction. Grand Mesa will own origin points both at Lucerne and Riverside (Colorado), as well as the pipeline segment between Lucerne and Riverside.
Magellan is serving as construction manager and operator of the pipeline system. Saddlehorn expects to spend approximately US$650 million on the undivided joint interest pipeline and the additional assets it will own, compared to previous spending estimates of up to US$950 million. When the pipeline is in service, operating costs will be allocated to Saddlehorn and Grand Mesa based on their proportionate ownership interest and throughput.
“Combining projects makes strong economic sense by reducing overall construction and operating costs and better aligning pipeline capacity with current DJ Basin production while allowing for future growth when market conditions improve,” said Michael Mears, Magellan’s Chief Executive Officer, on behalf of Saddlehorn.
Pipeline installation began in early October for the Platteville-to-Cushing segment of the pipeline, which is expected to be operational during mid 2016. Right-of-way acquisition is currently in progress for the Carr-to-Platteville segment, which is expected to be operational in the 4Q16.
Bakken pipeline update
Testifying at a hearing for the proposed Bakken pipeline, Monica Howard – Director of Environmental Services for Energy Transfer Partners – told state regulators there would be “no net loss of wetlands” as a result of the proposed pipeline. She testified that there will be “very robust” post-construction monitoring to ensure restoration of lands in Iowa where the pipeline is constructed.
“There is no anticipated long-term effect” on water quality and fish communities, Howard said. She added, “We are going above and beyond regulation” in protecting the environment.
Some rivers will be crossed using HDD, while in other cases there will be an “open cut” or a ditch dug across streams and other waterways, Howard said. Restoration work would be done afterward and the environmental impacts from such crossings are “extremely miniscule,” she said.
The three member Iowa Utilities Board met on 16 November at the Boone County Fairgrounds in Boone for the start of evidentiary hearings over several days. Comments will be heard from representatives for Dakota Access LLC, the company that wants to build the pipeline. Parties opposed to the pipeline are also scheduled to speak, including affected landowners. The board is expected to issue a decision in December or early next year.
In related news, fresh figures from the North Dakota Pipeline Authority show that, for the first time in several years, more oil is leaving Bakken well sites by pipeline and that trend is expected to continue. An estimated 441 644 bpd of oil left well sites by truck in April, while 725 743 bpd were transported by gathering pipelines to either a transmission pipeline or a rail-loading terminal.
6 World Pipelines / DECEMBER 2015
IN BRIEF
UKThe largest ever controlled release of carbon dioxide from an underwater pipeline will be conducted at DNV GL’s Spadeadam centre as part of an international JIP called Sub-C-O2.
SwedenThe munitions object seen near the Nord Stream 2 pipeline on 6 November has been successfully cleared and disposed of by the Swedish Armed Forces.
AustraliaCentral Petroleum Ltd. praised the decision to build the North East Gas Interconnector as a huge step forward for the Northern Territory gas industry and the development of a more competitive gas supply into a critically tight Australian domestic gas market.
NorwayStatoil has received consent from the Petroleum Safety Authority Norway to use the Edvard Grieg oil pipeline. The oil pipeline system was designed and built to transport stabilised oil from the Edvard Grieg facility to the Grane oil pipeline.
USAMagellan Midstream Partners have resumed operations of its crude oil pipeline after 42 000 gal. spill in Oklahoma on 5 November.
World NewsFOR MORE NEWS VISIT HTTP://WWW.ENERGYGLOBAL.COM/PIPELINES/
International Pipe Line and Offshore Contractors Association convention: a recap
The 49th IPLOCA Convention saw the leading global players in the pipeline construction industry gather in Singapore. The event takes place over five days and registration is restricted to IPLOCA Regular Members, Associate Members, Academic Members, Honorary Members, Media Partners and guests of IPLOCA.
The convention, attended by 510 participants, was the second to be held in Singapore; the convention met there for the first time in 1989.
The Open General Meetings on Thursday and Friday included presentations on a wide variety of subjects including the history of Singapore; the feasibility of new pipeline projects in the new macro-economic environment; trends in international upstream M&A in a depressed oil price market; efficient deepwater seabed intervention; pipeline projects in Saudi Arabia and high pressure water transmission pipelines.
Members also attended the Annual General Meeting and presentations of three industry Awards (see sidebar).
The popular tour programme this year focused on the highlights of this cosmopolitan and culturally diverse city. There was a cultural tour; a morning visit to Singapore Zoo and a night safari; visits to the Gardens by the Bay with their award winning horticulture domes and awe-inspiring architectural design; tours to the Botanic Gardens and Sentosa Island, including the world’s largest aquarium.
New board members for 2016
EUROPE CENTRAL: Jan Koop (Bohlen-Doyen) {Treasurer} and Mesut Sahin (Technip).EUROPE EASTERN: Iosif Panchak (Stroygazmontazh) and Haldun Iyidil (Limak).EUROPE MEDITERRANEAN: Oliviero Corvi (Bonatti) and Bruno Guy de Chamisso (Spiecapag).EUROPE NORTHWEST: Andrew Ball (Land and Marine) {2nd VP} and Adam Wynne Hughes (Pipeline Induction Heat).ASSOCIATE MEMBERS: Marco Jannuzzi (Caterpillar), Steve Sumner (The Lincoln Electric Co.) and Doug Fabick (PipeLine Machinery International).LATIN AMERICA: Ruben Kuri (ARENDAL) {1st VP} and Ebbo Laenge (Conduto).MIDDLE EAST & AFRICA: Georges Hage (The C.A.T. Group) and Najib Khoury (CCC). EAST & FAR EAST: Atul Punj (Punj Lloyd){President} and Ma Chunqing (China Petroleum Pipeline).AMERICA NORTH: Larry
Bolander (Fluor) and Scot Fluharty (Mears Group). DIRECTORS-AT-LARGE: Doug Evans (GIE), Willem Maats (Maats), Jim Frith (McConnell Dowell), Bruno Maerten (Entrepose), John Tikkanen (ShawCor) and Jean-Claude Van de Wiele (Spiecapag) {Immediate Past President}.
And the award goes to..
The 2015 IPLOCA Health and Safety Award, sponsored by Chevron, was presented to Max Streicher S.p.A., represented by Harald Dresp and Giovanni Muriana, in recognition of their Belt system.
The third IPLOCA Corporate Social Responsibility Award, sponsored by Total, was presented to Technip, represented by Mesut Sahin and Yasar Pakel, in recognition of their work on their Encouraging a Fair Return for All policy.
The 2015 IPLOCA New Technologies Award, sponsored by BP, was presented to Denys and Selmers, represented by Luc Hoppenbrouwers, Johan van Wassenhove and Bart Appelman, in recognition of their work on their onshore automatic vacuum field joint blasting.
(Left to right) Front row: Jan Koop, Rubén Kuri, Atul Punj, Andrew Ball, Jean Claude Van de Wiele, Juan Arzuaga. Second row: Jim Frith, Mesut Sahin, Haldun Iyidil, Georges Hage, Bruno Maerten, Marco Jannuzzi, Ma Chunqing. Third row: John Tikkanen, Iosif Panchak, Doug Evans, Adam Wynne Hughes, Wilhelm Maats, Oliviero Corvi. Fourth row: Ebbo Laenge, Steve Sumner, Larry Bolander, Scot Fluharty, Doug Fabick, Najib Khoury, Bruno Guy de Chamisso.
Two trains with 8.9MM tons of LNG are heading from the depths of the Indian Ocean to the coast of Western Australia—and only one service provider can get them there.
INTEGRITY DRIVES EVERYTHING WE DO.
And our offshore partnerships are no exception. That’s why when a leading multinational energy corporation embarked on a $29 billion LNG plant development project, they trusted us to protect their trunklines and flowlines with our own advanced, customized pipeline coating systems—which in turn, protected the health of their environment and workers.
For 85 years, we’ve protected the integrity of our customers’ assets by operating with integrity of our own. And that’s what we’ll continue doing for you—both now and for the entirety of your operation.
See our video at Shawcorsuccess.com to learn more about what we did for one of the top liquefied natural gas providers in the world.
8 World Pipelines / DECEMBER 2015
FOR FURTHER INFORMATION ON EVENTS VISIT WWW.ENERGYGLOBAL.COM/EVENTSEvents DIARY
19 - 21 January 2016
European Oil and Gas Conference
Vienna, Austriahttp://www.europeangas-conference.com/
8 - 11 February 2016
PPIM
Houston, USAhttp://www.clarion.org/
24 - 26 February 2016
AOG
Perth, Australiahttp://aogexpo.com.au/
6 - 10 March 2016
NACE Corrosion
Vancouver, Canadahttp://nacecorrosion.org/
20 - 24 March 2016
2016 No-Dig Show
Dallas, USAhttp://nodigshow.com/
4 - 8 April 2016
Tube Düsseldorf 2016
Düsseldorf, Germanyhttp://www.tube.de/
25 - 29 April 2016
Hannover Messe
Hannover, Germanyhttp://www.hannovermesse.de/
2 - 5 May 2016
Offshore Technology Conference
Houston, USAhttp://2016.otcnet.org/
23 - 25 May 2016
Pipeline Technology Conference
Berlin, Germanyhttp://www.pipeline-conference.com/
29 May - 2 June 2016
Pipe Line Contractors Associaton of Canada
Charlottetown, Canadahttp://www.pipeline.ca/
World News
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Energy East pipeline: a new hope?
Following US President Barack Obama’s rejection of TransCanada Corp.’s Keystone XL pipeline project, attention is turning to the chances that another pipeline will get built.
According to industry analysts, the prospects for Energy East – a 4600 km pipeline running between Alberta and New Brunswick (both Canadian provinces) – have never looked better. New Brunswick’s Premier Brian Gallant says he is hopeful that Obama’s rejection of Keystone XL will give added impetus to an east-west pipeline that flows to his province.
Gallant has been promoting the pipeline during meetings with Saskatchewan Premier Brad Wall. Gallant has stated that the pipeline project would create thousands of jobs across the country and diversify exports to markets around the world.
Wall says they hope the project moves quickly through the regulatory stages, including consulting with First Nations and meeting economic and safety tests.
The Canadian Liberals under Prime Minister Justin Trudeau were supportive of TransCanada’s Keystone project, and seem to support Energy East pipeline; another TransCanada crude export proposal.
Save the date: TAPI construction
Turkmenistan and Afghanistan have come to an agreement to launch the construction of TAPI – a proposed 1735 km natural gas pipeline that will transport its 33 billion m3/y of flow from Turkmenistan through Afghanistan, Pakistan, and India.
Though Turkmenistan is said to hold the fourth largest gas reserve in the world, at present its exports are primarily transported to China.
Gurbanguly Berdymukhamedov – the President of Turkmenistan – had discussed the construction of the TAPI pipeline with Afghanistan’s President Ashraf Ghani during a phone conversation that occured on Monday 9 November.
Berdymukhamedov had requested Ghani’s presence at the ceremony to mark the construction of the pipeline. Ghani has accepted Berdymukhamedov’s invitation to attend the ceremony, which is set to take place on 13 December.
Doubts of construction have been previously made due to price-fixing debates and the lack of security in the areas where the pipeline will pass through.
However, while the construction of the TAPI pipeline is set to begin soon, it has been predicted that the pipeline will not be operational for another two yers – expected in December 2018.
Additionally, Dragon Oil – an independent international oil and gas exploration, development and production business based in Dubai – has discussed the possibility of investing US$10 billion in a natural gas pipeline from Turkmenistan to India.
Dragon Oil’s General Manager in Turkmenistan, Faisal Rabee Al Awadhi, stated that discussions on the TAPI project have “been ongoing for a long time. But now it’s very serious, things have been signed between the countries. That’s why we have shown our interest to go in.”
➤ Trans Mountain price tag report: project still viable?
➤ NEB stops HDD operations at NGTL
➤ Pembina: closing the deal
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10 World Pipelines / DECEMBER 2015
Fugro provides underwater services to Total E&P
Under the contract – which runs from July 2015 and includes extension options for a further two years – Fugro is providing a full range of ROV services to conduct inspection, repair and maintenance activities on TEP UK pipelines, subsea assets and jackets.
Prior to this significant contract award Fugro demonstrated its ability to support such a contract with a range of quality services, following the successful completion of both platform and vessel-based campaigns for TEP UK.
In July 2015, Fugro undertook the Central Graben area ROV inspection campaign, utilising the ROV support vessel Atlantis Dweller and its two permanently mobilised ROV systems. The workscope included cathodic protection, flooded member detection and high-pressure water jetting services.
The inspection campaign was completed ahead of schedule and TEP UK has noted the excellent safety culture and efficiency demonstrated by Fugro.
New contract for subsea vessel
Farstad Shipping ASA has been awarded a three year contract with further up to three years options for CSV Far Sentinel by Subtec S.A. de C.V. for delivery of light construction work, IMR and other subsea related activities in the Gulf of Mexico.
“This is an important and significant contract for Farstad Shipping. It proves that even in a very challenging market, we are able to conclude long-term contracts for our vessels. This contract secures valuable competence and activity for our employees,” says CEO Karl-Johan Bakken.
“By this, we have now signed important contracts for both our subsea new buildings delivered in 2015. We hereby confirm Farstad Shipping’s strong position into the subsea market, which is vital for us in the time ahead,” Bakken states.
Commencement of the contract will be within December 2015. The commercial terms of the agreement will be kept private and confidential between the parties.
Farstad Shipping’s fleet currently consists of 61 vessels (30 anchor handling tug supply, 25 platform supply and and six subsea), with one subsea vessel under construction. The company’s operations are managed from Aalesund, Melbourne, Perth, Singapore, Macaé and Rio de Janeiro with a total of 2100 employees engaged onshore and offshore. The company’s strategy is to be a leading quality provider of large, modern offshore service vessels to the oil industry.
TransCanada to build Mexico’s Tuxpan Tula pipeline
TransCanada has won a contract to build, own and operate a US$500 million natural gas pipeline for Mexico’s state-owned power company. The Tuxpan-Tula pipeline will help meet Mexico’s increasing demand for natural gas as the country shifts to the cleaner-burning fuel.
The company says the pipeline should be completed by 4Q17 and it has a 25 year contract with the Comision Federal de Electricidad to operate the line.
The 250 km, 36 in. pipeline will run from the state of Veracruz to natural gas power plants in central and western Mexico, supplying up to 886 million ft3/d of gas.
TransCanada already owns and operates the Tamazunchale and Guadalajara pipeline systems in Mexico and is working to complete the Topolobampo and Mazatlan pipelines.
“The Tuxpan-Tula Pipeline demonstrates our continued commitment to developing Mexico’s energy infrastructure to meet the need for increased natural gas supply,” said Russ Girling, TransCanada’s President and Chief Executive Officer.
The pipeline will originate in Tuxpan in the state of Veracruz and extend through the states of Puebla and Hidalgo, supplying natural gas to CFE combined-cycle power generating facilities in each of those jurisdictions as well as to the central and western regions of Mexico.
The pipeline will serve new power generation facilities as well as those currently operating with fuel oil, which will be converted to use natural gas as their base fuel. Construction is expected to start in 2016.
Contract NewsTO KEEP UP-TO-DATE ON CONTRACTS VISIT WWW.ENERGYGLOBAL.COM
40th anniversary of first contract for gas supply to France
Tsarskoye Selo (Pushkinsky District of St. Petersburg) hosted a ceremony dedicated to the 40th anniversary of signing the first contract for Russian gas supply to France. Taking part in the event were Alexey Miller, Chairman of the Gazprom Management Committee and Gerard Mestrallet, Chief Executive Officer of ENGIE.
“Today we celebrate the 40th anniversary of our co-operation, 40 years of stable supplies of Russian gas to France. This is a clear testament of constructive, mutually beneficial relations between two world class companies. We proceed in our co-operation with ENGIE based on long-term contracts, which constitute an important element of energy security in France.
“We also celebrate another jubilee – five years ago ENGIE became a partner in Nord Stream. Today the success of the project is known to everyone, so in September we and our European partners, including of course ENGIE, made a decision to construct Nord Stream 2. The project will bring to the European market additional 55 billion m3 of Russian gas,” said Alexey Miller.
“We are happy to celebrate with Gazprom the anniversary of the long-term solid partnership uniting our companies. It has considerably contributed to developing the European gas industry. ENGIE’s participation in the Nord Stream 2 project bespeaks our faith in continuing this co-operation. Natural gas is of key importance for upgrading the energy sector, particularly, for reaching the European Union targets to reduce greenhouse gas emissions by 2030,” said Gerard Mestrallet.
During the ceremony Alexey Miller and Gerard Mestrallet signed an Addendum to the Sales and Purchase Agreement for shares of the Nord Stream 2 joint project company (JPC), which executes the Nord Stream 2 project.
The document provides for increasing ENGIE’s stake to 10%. Thus, once the deals for the purchase of JPC shares by foreign shareholders are closed, the shareholding structure will be as follows: Gazprom – 50%, BASF, E.ON, ENGIE, OMV, and Shell – 10% each.
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ROUNDUP, ROUNDUP:
Oil and gas prices have fallen drastically in 2015. Due to an abundance of supply and reduced consumption, global energy markets have had to find more economical ways of transporting oil and gas and put an abundance of pipeline projects on hold. Dr. Hooman Peimani seeks to summarise the major global pipeline projects and how they have been affected.
global pipeline projects
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Perhaps 2015 will be remembered as an exceptional year in the contemporary history of the global energy markets. Starting from the preceding year, oil and gas prices have fallen to atypical levels after experiencing about one and a half decades of increase. The phenomenal price decline has been caused in short by an abundance of oil and gas supplies, way above the global demand, thanks to a large and growing number of
suppliers and lower-than expected global consumption. Lowering economic activities, sluggish growth or recession in the decade-long troubled European countries, recession in Japan, below-projected growth rate in China, and poor economic performance of many energy-producers such as Canada and Venezuela have negatively affected energy demand. Economic meltdown in many Arab countries due to inter-state – but mainly intra-state – armed conflicts and various sanctions on more than a handful of countries to include Iran have all decreased their purchasing power. This has been translated to lower economic activities in the major western economies; declining energy consumption with a varying extent has been the logical outcome.
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Phenomenally low prices after years of three (or nearly three) digit prices have reduced concerns over possible major oil supply interruptions, as the large number of suppliers have practically rendered such a scenario unrealistic. Led by Canada and the USA, the so-called unconventional oil and gas revolutions have been a major contributing factor to global over-production, dwarfed by just about all suppliers maximising their conventional oil and gas production at the same time as newcomers emerge in previously unthinkable locations (Cuba and Israel).
Certain factors have contributed to the vast availability of gas supplies, which is set to last in the foreseeable future. A large and growing amount of piped gas, a major increase in LNG production thanks to ongoing global capacity expansion projects (designed to raise annual production capacity by 100 million t by 2018), and the rise of current (e.g. Papua New Guinea since 2014) and future (Canada and USA) exporters have all contributed.
This certainty about supply availability even under the worst case scenarios has caused the freefall of oil and gas prices, despite wars in exporting nations such as Iraq, Yemen and Libya, and emerging polarisation in the Persian Gulf pitting the Saudi-led Arab coalition of oil/gas exporters (UAE, Qatar, Kuwait and Egypt) against Iran over Yemen, Syria and Iraq.
Falling prices has prompted a growing number of cancelled, delayed, suspended and slowed-down conventional oil and gas developments, repair, maintenance and LNG liquefaction projects now spilling over to shale gas and oilsands projects in North America. Of course, lowering investment in new projects and the inevitable lowering production at currently operating fields will likely cause shortages in about a decade or so if the current trend continues.
ProjectsA slow down in pipeline projects, especially in the three major energy-consuming regions – Asia, Europe and North America – has been an unsurprising by-product of this situation. Respective examples include China’s cold feet about signing a firm agreement with Russia for the Power of Siberia II project, the delayed Trans-Adriatic Pipeline (TAP) set to start next year, three years after the Nabucco project was aborted in its favour, and the unknown fate of the Keystone XL.
Politically-motivated measures have also aggravated this situation, as reflected in Russia’s cancellation of the South Stream project in December 2014, when the EU stopped the construction of its Bulgarian segment on technical grounds (violation of the EU competition rules), which convinced Moscow on ending a losing battle with Brussels.
Yet, many other projects have been envisaged, discussed, agreed and implemented. Russia has been involved in many of them, even in Europe, notwithstanding the EU’s worsening ties with Russia, particularly over Ukraine and Syria.
The main arena, however, especially for major interstate projects, has been Asia. China has remained the major protagonist as the engine of global growth, whereas India’s domestic projects have been significant. However, other parts of the world’s largest and most populous continent have been less active, particularly West Asia, including the Persian Gulf and Southern Caucasus.
The Americas have been active mainly in intra-state projects. The USA has also been pursuing inter-state projects with Mexico. Its large joint project with Canada (Keystone XL Pipeline) is frozen only partly on environmental grounds. The recent increase in domestic conventional and unconventional (shale) oil production is set to continue its upward course to make the US question the wisdom of committing the country to long-term imports of more expensive and pollutive oilsands-based Canadian oil.
Europe has also had its share of pipeline activities, but at a much lower extent compared to Asia. Added to the previously discussed factors, the continental ageing population, loss of economic supremacy to Asia and the Americas late in the 20th century and growing use of more pollutive, but much cheaper coal explain this reality. The bulk of its ongoing and future projects concern gas, namely to replace Russian gas with that of another supplier, and to decrease its CO
2 emissions. The recent
conclusion of the Russian-led Nord Stream II and the growing continental consumption of coal seem to serve the opposite objectives.
Pipeline activities have been modest in Africa. Excluding Algeria, all other North African oil and gas rich countries (such as Egypt, Libya, Sudan and South Sudan) have been shaken by the 2010 - 2011 Arab Spring and its aftershocks, giving rise to new dictatorial regimes and growing terrorist groups.
Asia
China
The East Route gas pipelineKnown as the East Route gas pipeline, the Russian-Chinese Gas Pipeline (38 billion m3/y) is the largest and most important ongoing pipeline project of Russia and China, but only forms a component of their US$400 billion energy deal of 2014. The project involves constructing a gas transportation system in each country to be connected at a border. It will aid Russia in developing its East Siberian gas fields, and will consequently help sell gas to China for 30 years (38 billion m3/y).
The Russian pipeline for exporting gas to China, the Power of Siberia GTS (POS), will facilitate gas transportation from the Irkutsk and Yakutia gas production centres to the existing pipelines in eastern Siberia, ending in Russia’s Port of Vladivostok as well as China. As a joint venture of CNPC and Gazprom, the construction of its first segment – the 3200 km Yakutia-Khabarovsk-Vladivostok line – will be operational in late 2017. The second segment – an 800 km Irkutsk Region-Yakutia leg – will be constructed at a date that has yet to be announced. The POS is approximately 4000 km, 52 in., transports 61 billion m3/y, and is being built along the route of the East Siberia Pacific Ocean (ESPO). China started constructing its extension on 30 June 2015 near the Chinese city of Heihe in the northern province of Heilongjiang bordering Russia. The CNPC undertaking consists of northern, southern and central sections passing through six Chinese provinces (Heilongjiang, Jilin, Liaoning, Hebei, Shandong and Jiangsu), the Inner Mongolia Autonomous Region, Tianjin and Shanghai. Beijing will reportedly spend at least US$20 billion on it.
14 World Pipelines / DECEMBER 2015
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China will start receiving Russian gas in 2018 when the entire East Route gas pipeline is scheduled to go online.
The Central Asian gas pipeline system The Central Asian gas pipeline system is the world’s largest ongoing pipeline project consisting of four sections through which Central Asian gas (mainly Turkmen, but also Kazakh and Uzbek) will be exported to China. Once fully operational by 2018, it will supply 85 billion m3/y of gas to China, equal to around 40% of its gas imports.
Lines A and B (each 1830 km; 42 in.; 30 billion m3/y) of the CNPC’s undertaking became operational in December 2009 and October 2010, respectively. The parallel lines connect Turkmenistan to southern Kazakhstan through Uzbekistan, and cross the Kazakh-Chinese border at the border pass of Horgos in China’s Xinjiang Uyghur Autonomous Region. Line C (1830 km; 48 in.) – which begins on the Turkmenistan-Uzbekistan border – runs through Kazakhstan and ends in Xinjiang; it went online in May 2014 as a means of adding 25 billion m3/y to the CAGPS’s capacity.
Line D (1000 km; 48 in.) – construction of which started in September 2014 in Tajikistan’s Roudaki district linking Turkmenistan across Uzbekistan, Tajikistan and Kyrgyzstan to China – will increase the Central Asian gas pipeline system’s capacity by 30 billion m3/y once completed in 2016.
India The construction of the first phase of GAIL Limited’s 2050 km Jagdishpur-Phulpur-Haldia gas pipeline began in October. The US$2 billion project will connect eastern India to the national gas grid by transporting gas to West Bengal, Bihar, Jharkhand, and Uttar Pradesh. The pipeline consists of a 36 in. 922 km mainline, and 1128 km of spur lines and feeder lines (12 - 30 in.). Its second phase will double the capacity to 32 million m3/d. The pipeline will supply gas to industrial sites, such as the Barauni refinery and the Barauni fertiliser plant.
IranIran will reportedly start constructing three pipelines in the current Iranian calendar year (started on 21 March 2015) as part of its plans to increase gas transfer capacity by 300 million m3/d, while developing more phases of its Persian Gulf South Pars Gas Field (SPGF). Thus, the sixth cross-country gas pipeline (611 km; 110 million m3/d; US$2 billion) whose first and second sections have been completed, is the first priority designed for gas exports to Iraq, Syria, Lebanon and Europe.
The ninth cross-country gas pipeline (1863 km; 110 million m3/d; US$6 billion) is being built towards Iran’s northwestern borders, aimed at increasing Iran’s existing gas exports to Turkey for supplying Europe in the future.
The eleventh cross-country gas pipeline (1100 km; 100 million m3/d; US$4 billion) will connect the SPGF to Iran’s northeastern region to enable it to stop relying on the import of Turkmen gas (30 million m3/d).
Iran-Iraq gas pipelinesIran’s pipeline project to supply Bagdad was set to go online in August 2015, but there is no news on its operation. The pipeline
(100 km; 48 in.) stretches from Charmaleh in Iran’s Ilam province to Naft-Shahr bordering Iran and Iraq. Reportedly, its extension to the Iraqi Mansourieh power plant is also finished, leaving a 7 km stretch to Baghdad for completion. Iran will initially export 4 million m3/d of gas to Iraq, to gradually increase to 35 million m3/d. In February, Iran started the construction of a second gas pipeline to Iraq’s southern city of Basra – scheduled for operation in 2016 – to export an additional 5 million m3/d of gas to Basra, rising to 30 million m3/d within six years.
Iran-Oman Gas PipelineThis is the most important future project for both countries, and would export 28 million m3/d of Iranian gas to Oman for 15 years, reportedly worth of US$60 billion. The project could become a reality if the P5+1 Group nuclear agreement is implemented to lift sanctions on Iran’s energy exports. Iran and Oman have signed an agreement to study its construction to feed Oman’s LNG plants. Head of the National Iranian Gas Export Company Alireza Kameli announced in September that a contract had been signed with two Iranian gas companies for the project.
The Iranian Offshore Engineering and Construction Company is in charge of its offshore section, whose contract was also signed by Director General of Planning and Projects Evaluation of the Omani Ministry of Oil and Gas, Saif Bin Hamad Al Salmani. Pars Consulting Engineers deals with the onshore section.
Europe
Russia
Nord Stream IIGazprom and major European energy companies – Germany’s E.ON and BASF/Wintershall, Austria’s OMV, France’s ENGIE and Royal Dutch Shell – signed an agreement in Vladivostok on 4 September 2015 to double the Nord Stream gas pipeline’s current capacity of 55 billion m3/y by constructing a new gas pipeline system (Nord Stream II), intended to be completed by 2019. The Nord Stream II will transport gas from Russia to Germany via twin offshore pipelines – each 1200 km transporting 27.5 billion m3/y – through the Baltic Sea. The New European Pipeline AG joint venture will implement it, in which Gazprom’s share is 51%. E.ON, Shell, OMV and BASF/Wintershall each have 10%, with a 9% share for ENGIE.
Nord Stream II is a surprising project as it runs against Brussels’ policy of decreasing the EU’s dependency on Russia and, in fact, it questions the logic of building the Trans-Adriatic Pipeline in 2016 to serve that very purpose. In helping Russia to bypass Ukraine for gas exports to the EU, the pipeline project has been called by Ukrainian Prime Minister Yatsenyuk “anti-Ukrainian and anti-European”.
Czech Prime Minister Sobotka echoed this by saying the project would help Russia destabilise Ukraine. Slovak Prime Minister Fico suggested it was a betrayal, which cost Ukraine and Slovakia billions of Euros. Finally, the European Commission’s Vice-President, Maros Sefcovic, questioned how the project fits with the EU’s energy security and regulatory priorities. In reply, OMV CEO Seele stressed that the project would increase security of supply to the EU through “our trustful partnership” with Gazprom.
16 World Pipelines / DECEMBER 2015
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The Turkish Stream Gas Pipeline The Nord Stream II has affected Russia’s Turkish Stream Gas Pipeline project, which was designed to replace the South Stream Pipeline (cancelled by Moscow in December 2014). Gazprom’s Chairman Alexey Miller and Botas Petroleum Pipeline Corporation’s Chairman Mehmet Konuk signed an MoI in December 2014 to enable Russia to increase gas exports to the EU without requiring Brussels’ approval.
In October, Gazprom announced it was reducing the project’s capacity from 63 billion m3/y to 32 billion m3/y in favour of the Nord Stream II, of which 50% would be for Turkey and the rest for exporting to Europe. Russia seemingly intends to use the South Stream’s allocated resources. The estimated US$12.5 billon pipeline will run across the Black Sea from the currently under-construction Russkaya compressor station near Anapa on the northern coast of the Black Sea, to Kiyiköy village in the European part of Turkey. It will further run, via Luleburgaz (delivery point for the Turkish customers), to the Ipsala border checkpoint on the Turkish-Greek border, the delivery point for the European customers. Consisting of four offshore strings (each 910 km), the pipeline will pass 660 km under the Black Sea within the decided corridor of the South Stream Pipeline, followed by 250 km within a new corridor towards the European part of Turkey. The length of the Turkish onshore line is reportedly 180 km, while that of Greece is unknown.
It is unclear whether the pipeline will become operational in December 2016 as planned, given a delay in beginning its Turkish part for which Ankara and Moscow are negotiating.
Norway Norway completed the Polarled Pipeline (482.4 km, 36 in.; 70 million m3/d) in September to increase its gas exports from the Norwegian Sea to Europe. It is the deepest pipeline (1260 m) on the Norwegian continental shelf and the first one on that shelf to cross the Arctic Circle. The pipeline (approximately US$0.9 billion) extends from Nyhamna in Møre og Romsdal, western Norway, to the Aasta Hansteen field in the Norwegian Sea.
Americas
Canada TransCanada is working on the proposed Eastern Mainline Pipeline (4600 km) to increase mainly oilsands-based exports to the USA by converting an existing gas pipeline.
The US$12 billion project would transport 1.1 million bpd of oil from Alberta and Saskatchewan to refineries and port terminals in Eastern Canada by converting an existing west-east gas pipeline and adding an extension to connect it to Canada’s Atlantic ports, from where oil could be shipped to the US by tankers. The extension would link Canada’s Ontario-Quebec border to the port of Saint John, New Brunswick.
TransCanada expects to amend its application for the Eastern Mainline project by adding a new natural gas pipeline in the Toronto-Montreal corridor (250 - 300 km) to reflect its agreement with three Canadian gas distributors opposing the project as it is affecting their operation.
USA
Permian-Mexico PipelineAmerican ONEOK Partners and Mexican Fermaca Infrastructure have entered into a 50/50 joint venture to construct a pipeline for transporting gas from the Permian Basin in West Texas to Mexico. The US$450 million project connects ONEOK Partners’ ONEOK WesTex Transmission gas pipeline system at Coyanosa, Texas, to a new international border-crossing connection at the US-Mexico border near San Elizario, Texas, to be connected with Fermaca’s Tarahumara gas pipeline. The project includes approximately 320 km of 30 in. pipeline for transporting up to 640 million ft3/d of gas with no less than 570 million ft3/d being transported to Mexico. ONEOK Partners will manage its construction and operate the pipeline.
The project’s first phase will provide 170 million ft3/d of capacity, which is scheduled for completion in 1Q16. The second phase is to increase the pipeline’s available capacity to 570 million ft3/d in 1Q17. The final phase is to realise the projected capacity of 640 million ft3/, which is set for completion in 2019.
Africa
Algeria
Galsi Gas Pipeline Algeria and Italy agreed in February to work on the Galsi Gas Pipeline, whose construction has been delayed for over a decade due to uncertainty about Italy’s gas demand. Algeria’s Sonatrach leads the Galsi project consortium with a 41.6% equity interest in partnership with Edison (20.8%), Enel (15.6%), Hera Trading (10.4%) and the Sardinia Autonomous Region’s Sfirs (11.6%). Worsening EU-Russian relations, and uncertainty about Russian gas in the future, have made Italy committed to the Galsi Gas Pipeline. With an estimated cost of US$2.5 - 3.96 billion, the project will enable Algeria to supply gas (8 billon m3/y) to Italy and the rest of Europe through an approximately 856 km pipeline, of which 565 km will be offshore. A 285 km offshore line connects Algeria’s Kouduet Draouche on the Mediterranean coast to Porto Botte in Italy’s Sardinia. This will be connected to an onshore north-south Sardinian section (300 km) to link to a 280 km offshore section that will deliver gas to Piombino on the Italian mainland.
Ethiopia and Djibouti The two neighbours have agreed to construct the Horn of Africa Pipeline (550 km; 20 in.; 240 000 bpd; US$1.4 - 1.55 billion) to connect the Djiboutian ports via Dire Dawa to a fuel depot in Awash, Ethiopia. Planned for completion in three years, Africa’s Black Rhino Group is expected to manage the pipeline for transporting refined oil products between the two countries. The project also includes an import storage facility (950 000 bpd) in Damerjog, Djibouti linked to a storage terminal in Awash, Ethiopia, near Addis Ababa. A final investment decision on the project is expected in 2016.
18 World Pipelines / DECEMBER 2015
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