World pipeline construction continues a recovery led by gas transmission projects in the U.S.
U.S. pipeline companies plan to lay 3,226 miles of gas line this year, compared with 1,978 miles planned for 1989, according to Oil & Gas Journal's latest pipeline construction survey (OGJ, Feb. 5, p. 17).
The survey covers only countries outside the former Communist bloc.
Gas line projects planned in the U.S. for 1990 and beyond total 13,005 miles, an increase of more than 3,700 miles from the level planned for 1989 and beyond.
In all, pipeline operating companies in countries outside the former Communist bloc plan to lay 7,659 miles of gas line this year, up from 7,046 miles in 1989.
Planned crude oil pipeline construction outside the former Communist bloc has fallen to 652 miles for 1990 from 1,093 miles planned for 1989.
However, a strong program in Latin America has helped boost the estimate of crude pipeline projects planned for 1990 and beyond to 5,307 miles from 3,309 miles planned for 1989 and beyond. Crude pipeline mileage covered by Latin American near and long term projects soared to 1,653 miles from 311 miles projected in 1989.
In all countries outside the former Communist bloc, products pipeline construction is expected to jump to 1,780 miles in 1990 from 1,175 miles planned for 1989. Strong gains in Asia-Pacific and western European regions paced an increase to 4,976 miles for 1990 and beyond from 3,055 miles for 1989 and beyond.
The focus of near term pipeline construction in North America is on projects to serve California and the U.S. Northeast, where gas demand growth is expected to be strongest in the 1990's.
Operators also plan a batch of projects to hike deliverability of Rocky Mountain, Midcontinent, and Gulf Coast gas supplies.
In Canada, one major project will introduce gas supplies to consumers on Vancouver Island. However, most large volume pipeline construction planned in Canada involves projects to deliver gas to U.S. East and West coasts.
Despite ambitious plans, some of the projects planned in the U.S. and Canada to bring more Canadian gas to U.S. markets are swathed in controversy.
The growing importance of natural gas in the U.S. energy mix has even revived talk of the long-moribund Alaska Natural Gas Transportation System (Angts).
Latin American action focuses on efforts in Ecuador and Colombia to deliver increasing crude production to market, Brazil's push to economize on refined products transportation, and Argentina's efforts to sell gas to Brazil.
CALIFORNIA MARKET
Much of the planned U.S. pipeline construction centers on efforts to deliver more U.S. and Canadian gas to California.
Bechtel Corp. expects to begin construction in 1991 on a $1.2 billion, 875 mile, 36-42 in. expansion of the Pacific Gas Transmission Co.-Pacific Gas & Electric Co. system that delivers Canadian gas from British Columbia to northern California.
Project manager Bechtel is developing a prequalified bidding process for construction related work. A joint venture of Gulf Interstate Engineering Co., Houston, and ICF-Kaiser Engineers (California) Corp., Oakland, has the contract for engineering design of the PGT-PG&E expansion as well as for compressor station work on the interstate portion of the project. Bechtel let contract to Fish Engineering & Construction Inc., Houston, for engineering design work related to expansion of five compressor stations, construction of a sixth compressor station, and expansion of two metering stations for the intrastate portion of the project. Completion is scheduled for yearend 1993.
Wyoming-California Pipeline Co., a unit of Coastal Corp., earlier this summer let contract to Harris Group Inc. for engineering work on six compressor stations for its planned 670 mile line to deliver gas from Southwest Wyoming to California. Last month, WyCal bought seventeen 5,500 hp Dresser Rand industrial compressors from Allison Gas Turbines to be installed in six compressor stations for the project.
During a 45 day FERC open season this year, shippers signed firm 15 year minimum transportation contracts covering 1.2 bcfd of WyCal capacity. WyCal expects to start transporting gas by April 1992.
The competing Kern River Gas Transmission Co. project, sponsored by Tenneco Inc. and Williams Cos. Inc., received FERC certification earlier this year. The 837 mile Kern River line from Southwest Wyoming to southern California would merge near Barstow, Calif., with the Mojave Pipeline and then continue as a single line to its terminus in Kern County. The 385 mile, 20 in. Mojave line would extend from the Needles station near Topock, Ariz., to San Ardo, Calif. Mojave is a joint venture of Enron Corp. and El Paso Natural Gas Co.
Kern River has commitments to transport 370 MMcfd of gas and letters of intent for another 565 MMcfd. The latter could become firm transportation contracts by the end of January 1991.
Kern River officials expect to begin construction in the fourth quarter and complete it by yearend 1991.
GULF COAST
Much of the Gulf Coast pipeline construction work centers on projects supporting increased gas deliverability in the Gulf Coast area and the deepwater oil play in the Gulf of Mexico.
Five companies filed a settlement proposal with FERC this summer to lay a $48 million, 900 MMcfd gas gathering system in southern Alabama.
Pending FERC approval, Florida Gas Transmission Co., Southern Natural Gas Co., Tennessee Gas Pipeline Co., Texas Eastern Transmission Corp, and ANR Pipeline Co. will withdraw proposals for separate onshore pipelines in the area.
The 36 in. Mobile Bay pipeline will gather gas from onshore processing plants in the Mobile Bay area for delivery 52 miles north to link with the existing Florida Gas system near Citronella, Ala.
Florida Gas, Tennessee Gas, and Sonat each will have 200 MMcfd capacity in Mobile Bay, with Texas Eastern and ANR each owning 150 MMcfd. ANR, Sonat, Tennessee Gas, and Texas Eastern will lease capacity in the Florida Gas system equal to their Mobile Bay capacities, through which they will connect with their own systems.
A unit of McDermott International Inc., New Orleans, will set a record for deepwater pipelines in the Gulf of Mexico under contracts let last month by Shell Offshore Inc. for work on the Auger project tension leg platform (TLP).
McDermott Inc.'s DB 50 derrick barge will start laying pipeline in 2,860 ft of water on Garden Banks Block 426 and finish with connections in 1,200 ft of water. McDermott says it will be the first commercial use of the vertical J-laying technique. Installation is scheduled for early 1993.
ARKOMA SUPPLIES
Sizzling gas plays in Oklahoma's Arkoma basin have spurred a series of pipeline projects in the Midcontinent.
Customers in the U.S. Northeast are receiving up to 240 MMcfd of Arkoma basin gas by way of the Lebanon lateral owned jointly by Trunkline Gas Co. and ANR.
The 98 mile lateral between Grand County, Ind., and Lebanon, Ohio, began offering transportation service earlier this summer through two metering stations connected to interstate systems of CNG Transmission Corp. and Texas Eastern. A third station linking the lateral with Columbia Gas Transmission Corp.'s system is to go on line this month.
Officials of Triumph Natural Gas Inc. hope to begin this month laying the 191 mile, 24 in. Delta pipeline in eastern Oklahoma and western Arkansas.
FERC earlier this summer recommended approval of the project on all nonenvironmental issues.
With timely approval on environmental issues, by next spring the $82.1 million line could begin delivering more than 250 MMcfd of Arkoma basin gas from Wilburton and Red Oak-Norris fields in Oklahoma via Yell County, Ark., to Texas Eastern and Natural Gas Pipeline Co. of America systems at a point south of Malvern, Ark.
Triumph has received requests for more than 1.2 bcfd of firm transportation service on the line.
As much as 500 MMcfd of Arkoma basin gas could move via a 30-36 in. pipeline that extends 352 miles from Pittsburgh County, Okla., to Tate County, Miss. Oklahoma-Arkansas Pipeline Co. partners have begun preconstruction engineering along the route, and hope to begin laying pipe by next spring with start-up planned for fall 1991.
Partners in the $273 million projects are Panhandle Eastern Corp., Williams Cos., Texaco Inc. unit Sabine Pipe Line Co., CMS Energy Corp, International Paper, National Fuel Gas Co., and Reliance Pipeline Co.
ARCO, Panhandle Eastern, International Paper, National Fuel Gas, CMS, and Reliance have signed precedent contracts for 535 MMcfd of firm transportation service on the line.
Ozark Gas Pipeline Corp. is seeking FERC permission to almost double throughput of a 20 in. line extending 266 miles from eastern Oklahoma through the Arkoma basin to its terminus near Searcy, Ark.
Ozark would increase capacity to 330 Mcfd from 170 MMcfd with compressor stations in Franklin and Pope counties Ark. Tennessee Gas and Columbia Gulf Transmission Co. could tie into Ozark's line with connections to their systems passing through northwestern Mississippi. Both already have rights to increase firm capacity on Ozark under existing contracts. Construction of those connections could begin early next year.
OTHER U.S. PROJECTS
Transwestern Pipeline Co. is spending $90 million on a 100 mile, 30 in. project to deliver as much as 520 MMcfd of coalbed methane gas from the San Juan basin near Blanco, N.M., to the company's main line near Thoreau, N.M. The line is expected to go on stream by mid-1992.
Tying in coal seam gas spurred Transwestern to expand by 320 MMcfd capacity of its 4,500 mile system from Texas and southern Oklahoma to the California border. The company will spend $160 million on main line improvements, looping 200 miles of 30 in. line and modifying compressor stations.
Northern Border Pipeline Co. is seeking an expedited certificate from FERC to add compression to its 822 mile, 42 in. pipeline and extend the line by 368 miles in Iowa. It plans to add five compressor stations to hike capacity on the main line and to add 368 miles of 30 in., 450 MMcfd line from Ventura, Iowa, to link with Panhandle Eastern's line at Tuscola, III. The project will boost overall capacity on the Northern Border system to 1.7 bcfd.
The project is expected to cost about $373 million.
The Northern Border extension will move gas from Canada, the Williston basin, and the Great Plains Coal Gasification Project to a Midwest interconnect with Panhandle Eastern's system. Scheduled for completion in November 1991, the Northern Border extension will cross the ANR, NGPL, Northern Natural Gas Co., and Trunkline Gas Co. interstate systems.
TransColorado Gas Transmission Co., Denver, has proposed a 310 mile, 22-24 in. system to deliver gas from western Colorado and the Rocky Mountains to existing and proposed systems of El Paso, Transwestern, Questar Pipeline Co., WestGas, and Rocky Mountain Natural Gas Co.
With proposed interconnects, the company could serve markets in the Southwest, Midwest, and eastern U.S.
TransColorado asked FERC for optional certificate approval, an open access transportation certificate, and a blanket certificate to allow future expansions. The company is trying to dual track its application so certification can be granted pending environmental clearance.
TransColorado plans to begin laying the $152 million line in 1991, with start-up scheduled for mid-1992.
CONTROVERSIES
Controversy abounds on both sides of the border over U.S. and Canadian projects to bring more Canadian gas to U.S. markets.
FERC recently deferred until late November a full regulatory decision on the proposed $582.6 million Iroquois Gas Transmission System.
FERC, which approved the Iroquois project on all other matters, will hold an expedited hearing on market demand and pipeline rate issues.
The project has aroused a storm of protest by U.S. independent producers, fuel oil marketers, and environmentalist groups.
Iroquois would move 575.9 MMcfd of western Canadian gas from Waddington, N.Y., through Connecticut to South Commack, N.Y., on Long Island. Local gas distribution companies in Connecticut, Massachusetts, New York, New Hampshire, New Jersey, and Rhode Island would receive about 80% of that volume, with the rest going to power plants.
Iroquois Pres. Robert Reid said the line probably won't be completed by the November 1991 target date because of delays in right of way acquisitions. But the line could go on stream during the 1991-92 winter. TransCanada Pipelines Ltd., with a 29% interest, is majority owner in the project.
Also in question is TransCanada's push to serve northeastern U.S. markets.
An application by TransCanada for a $2.6 billion expansion is facing a challenge in the Federal Court of Canada by the Industrial Gas Users Association (IGUA).
IGUA won an earlier ruling that requires Canada's National Energy Board to examine how it sets pipeline tolls.
In May, NEB agreed to help speed the hearing process with a verbal ruling on the toll issue. IGUA's new suit challenges that decision on grounds that it would prevent widening the inquiry on tolls to include previously approved expansions of pipelines shipping gas from western Canada to eastern markets.
TransCanada expansions during the past 3 years costing $2 billion could be affected by the appeal.
VANCOUVER ISLAND PROJECT
Elsewhere in Canada, Westcoast Energy Inc., Vancouver, and Alberta Energy Co. Ltd., Edmonton, have begun construction of a 366 mile pipeline that will allow gas to compete with fuel oil on Vancouver Island.
The $506 million pipeline will receive gas from a Westcoast line at Coquitlam, B.C. The route to the island traverses mountainous terrain,
about 250 rivers and streams, and one of the deepest subsea crossings on record.
Banister Pipelines, Edmonton, received a $55 million contract to lay the Vancouver Island part of the project, a 186 mile system consisting of 10 in. line and 4 in. laterals.
Banister also is laying 21 miles of 12 in. and 24 in. pipeline for the Greater Vancouver Water District section of the project.
ANGTS REVIVAL?
The resurgent prospect that Alaskan North Slope (ANS) gas might be needed this decade has revived interest in efforts in Canada and the U.S. to bring that resource to market.
Foothills Pipe Lines Ltd., Calgary, is seeking authority to extend the prebuild portion of Angts about 400 miles north to link with the proposed $4.4 billion (Canadian), 1.2 bcfd Mackenzie Valley pipeline.
Foothills earlier this year acquired United Gas Pipeline Co.'s 22% interest in the Alaskan portion of the proposed 4,783 mile Angts system, conceived in the 1970's to deliver ANS gas to the Lower 48 through Alaska and Canada.
Angts partners Williams Cos., PG&E, and TransCanada say the acquisition could expedite the long shelved project.
Foothills subsidiaries hold permits for laying the incomplete portion of the project in Canada.
In Alaska, Angts involves a 746 mile, 42 in. line from Prudhoe Bay to central Alaska, where it will veer eastward to link with Foothill's proposed northern Angts prebuild line in western Canada.
The southern prebuilt 1,500 mile portion of Angts was completed in 1982 and delivers more than 1.3 bcfd of Canadian supplies to the Lower 48.
Foothills thinks that ANS gas reserves, about 15% of the U.S. total, will be needed by 2000.
Competing with Angts is the Trans-Alaska Gas System, an $11 billion project to lay an 800 mile, 36 in. gas line from Prudhoe Bay to Valdez, Alas. It would deliver ANS gas to tidewater for liquefaction and export to Far Eastern markets. Depending on the viability of those markets, pipelaying could begin as early as 1993.
COLOMBIAN PROJECTS
Oleoducto de Colombia-a joint venture of Colombia's state oil company Empresa Colombiana de Petroleos, Royal Dutch/Shell Group, and five other companies-expects to complete by yearend a 50,000 b/d pipeline in the Upper Magdalene basin to deliver oil discovered there the past 4 years to market.
The 248 mile, 20 in. line extends from the Upper Magdalene Valley to Puerto Salgar.
Ecopetrol plans eventually to expand that capacity to 100,000 b/d.
Ecopetrol officials estimate the Upper Magdalene basin will be producing 160,000 b/d in 1991 and perhaps 200,000 b/d by 1993. Operators have discovered nine fields in the Upper Magdalene basin with reserves estimated at a combined total of 600 million bbl of oil.
Oleoducto de Colombia also plans a 150,000 b/d pipeline to be laid from Puerto Salgar to the export terminal at Covenas on the Caribbean coast. It will carry surplus Upper Magdalene production, as well as oil from fields in the eastern Meta and Casanare provinces.
Substantial potential oil production from Meta and Casanare fields has been shut in for several years due to lack of pipelines.
Some pipeline construction work in Colombia involves repair work to the Cano Limon-Covenas oil pipeline. Guerrilla attacks continued through last spring, suspending 230,000 b/d of crude exports and causing a substantial oil spill. The ninth bombing of the pipeline in 1990 ruptured the line between the Bonadia and Samore pump stations.
ECUADOR
Two parallel 100 mile pipelines are included in plans by a Conoco Ecuador Ltd. group for a $500 million, five field, heavy oil project in Ecuador's Oriente region.
One proposed pipeline will move lighter crude from the Petroleos del Ecuador/Texaco Inc. Shushufindi joint venture to a planned production facility in Block 16. Shushufindi crude will be blended with Block 16 crude to reduce viscosity for shipping.
The second line will move the blended crude to Ecuador's main trunk line for shipping to Lago Agrio and then Balao.
No start-up date is scheduled.
Petroecuador also let contract earlier this year to Institut Francais du Petrole for a study that includes determining feasibility of a new trunk line to move crude from the Oriente area.
BRAZIL
Brazil's Petroleos Brasileiros is studying feasibility of a 580 mile multipurpose products pipeline linking Replan refinery in Paulinia, Sao Paulo, with Brasilia in the central state of Goias.
Approval is expected within the next 2 months.
The 129,000 b/d, $300 million line is expected to trim petroleum product transportation costs to West Central Brazil to $1.50/bbl for a savings of $100-150 million/year. Currently, product transport costs can be as high as $4/bbl by train and $10/bbl by truck.
In the state of Minas Gerais, the new system will serve the cities of Uberlandia, Uberaba, and Araxa. In Goias state, the new system will deliver products to Brasilia, Goiana, and areas along the Belem-Brasilia highway. A large area of Mato Grosso state also will be served by the line, which will deliver products to the state capital of Cuiaba.
Petrobras will transport gasohol, gasoline, diesel, jet fuel, and LPG on the system after completion in 1993. Petrobras estimates current demand for those products at a combined 86,000 b/d.
BRAZIL-ARGENTINA GAS LINE
Brazil and Argentina still are talking about a gas pipeline linking the two countries.
The 336 mile line would deliver gas from San Jeronimo field in Argentina's Sud province to Porto Alegre, capital of Brazil's Rio Grande do Sul state. Each country would pay the costs of laying the $200 million pipeline to their respective borders. The construction timetable is put at about 2 years.
After 3 years of talks, negotiators still disagree about how much gas should be moved and its costs. A feasibility study undertaken for Rio Grande do Sul estimated that the state immediately could take 88 MMcfd of gas, mainly to back out fuel oil, wood, and coal burned in cogeneration power plants. The state is lobbying hard for the pipeline because the fuel substitution would slash air emissions of sulfur compounds by about 22 tons/day.
But a Petrobras official involved in the negotiations said Argentina wants to sell a minimum volume of 176 MMcfd to Rio Grande do Sul.
A second study, by a Finnish consultant's Brazilian subsidiary Jaakko Poyry Engeharia Ltda., concluded that a 390 mile, $290 million Argentina-Brazil gas system involving a trunk line and seven spurs would be needed to serve consumers around Puerto Alegre. Both countries reportedly have asked the Inter-American Development Bank to undertake a third study.
Another stumbling block is that Argentina's state oil companies, Yacimientos Petroliferos Fiscalis and Gas del Estado, are being revamped to conform to the country's liberalization of oil and gas laws.
Generally, Brazil has pushed for an interconnecting continental gas grid for South America. Brazilian President Fernando Collor de Mello and Argentine President Carlos Menem signed a memorandum last March to study feasibility of Brazil importing Argentine gas.
However, Petrobras Pres. Luis Octavio da Motta recently told Brazilian press that Argentina's gas was too expensive. "The project proposed by Argentina would not be viable even if Rio Grande do Sul's state economy grew by 10% within the next 5 years," he said.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
