GAS USE FUELS E. HEMISPHERE LINE PROJECTS

Sept. 10, 1990
Growing demand for gas will fuel much of the pipeline construction in the Eastern Hemisphere in the 1990s. Operators plan to lay 1,986 miles of gas line in that region during 1990, compared with 1,715 miles planned in 1989, Oil & Gas Journal's latest pipeline construction survey shows (OGJ, Feb. 5, p. 19). The survey covers only pipeline work outside the former Communist bloc. For 1990 and beyond, operators plan to lay 8,574 miles of gas line in the Eastern Hemisphere vs. 8,429 planned for

Growing demand for gas will fuel much of the pipeline construction in the Eastern Hemisphere in the 1990s.

Operators plan to lay 1,986 miles of gas line in that region during 1990, compared with 1,715 miles planned in 1989, Oil & Gas Journal's latest pipeline construction survey shows (OGJ, Feb. 5, p. 19).

The survey covers only pipeline work outside the former Communist bloc.

For 1990 and beyond, operators plan to lay 8,574 miles of gas line in the Eastern Hemisphere vs. 8,429 planned for 1989 and beyond.

An expected jump in gas consumption in Europe will generate much of the new Eastern Hemisphere pipeline business the next few years. Gas lines planned for 1990 and beyond total 4,281 miles in western Europe vs. 3,107 miles planned for 1989 and beyond.

That is the reverse of the situation for Asia-Pacific region gas lines, with 3,028 miles planned for 1990 and beyond vs. 4,332 miles planned for 1989 and beyond.

Activity is strong in the U.K. onshore and offshore sectors as a result of deregulating the gas and power industries there.

Strong European gas demand growth also is rekindling interest in northern Africa/trans-Mediterranean pipeline projects.

Efforts are under way to establish national gas grids in India and Thailand, in addition to a huge multination project under consideration in the Far East.

In Australia and New Zealand, studies are proceeding on feasibility of projects to extend gas service to more cities and to utility and industrial customers.

Crude oil pipeline projects are rare in the Eastern Hemisphere, with Papua New Guinea a notable exception.

U.K. NORTH SEA

Offshore, the current center of activity for pipelines is the North Sea. Contractors face 2-3 years of full order books as operators invest in substantial new long distance gas projects. There is also limited business from new crude pipelines.

A study of pipeline prospects off the U.K. the next 3 years by County Natwest Woodmac, Edinburgh, shows that more than 1,500 miles of new pipelines are likely to be commissioned there.

This year, BP Exploration has begun laying a 105 mile, 36 in. replacement for the Forties crude oil line in the U.K. North Sea to increase its capacity to handle third party business and to solve corrosion problems on the existing 32 in. line. At a cost of $292 million, it is scheduled for completion in the fourth quarter.

BP also plans to move liquids from its new Bruce gas/condensate development through a 150 mile, 24 in. link into the Forties system. This line, handling as much as 80,000 b/d, is due to start up in 1993.

In addition, BP started work this year on a 150 mile, 30 in. line to transport sour gas from Miller field to St. Fergus, Scotland. The gas line and a 5.6 mile, 18 in. liquids line from Miller to Brae will be completed this summer.

The other major U.K. gas line started this year is Mobil North Sea's 210 mile line from Beryl field to St. Fergus. The $540 million project is scheduled to start deliveries in October 1992. Marathon Oil U.K. has agreed to take a 50% interest in the project and will use the line to move gas from its Brae area fields.

Amoco U.K. Exploration is set to break the St. Fergus monopoly on landing gas from the central and northern North Sea by laying the Central Area Transmission System (CATS) from Everest and Lomond fields to landfall at Teesside in Northeast England. The 266 mile, 36 in. line will have capacity of 1.4 bcfd but in the first phase will move about 320 MMcfd to a new power station planned by ICI and Enron Corp. at Teesside.

The CATS project is a direct result of the new era of competition in the U.K. gas industry and privatization of the U.K. electrical power industry, which has opened the door to burning gas in power stations.

Companies with North Sea gas have won access to British Gas plc's extensive U.K. distribution system at reasonable tariffs, allowing them to enter the industrial gas supply business.

OTHER NORTH SEA

From the 1991 spring/summer laying season on, activity will pick up in the Norwegian and Dutch sectors of the North Sea.

Norway's Den norske stats oljeselskap AS will begin laying pipe on the Zeepipe system from Sleipner gas field to Zeebrugge, Belgium.

Zeepipe, to start up in 1993, involves a 500 mile, 40 in. segment from Sleipner to Zeebrugge and a 25 mile, 30 in. line from Sleipner to the Statpipe riser platform in Block 16/11.

Associated with the Sleipner project is a 140 mile, 20 in. line to transport as much as 130,000 b/d of condensate to the Karsto gas plant north of Stavanger, starting in 1993. A second phase of the project will connect Troll field into the Zeepipe system for start-up in 1996.

Norske Shell will transport Troll wet gas to an onshore terminal at Oygarden near Bergen through twin 37 mile, 36 in. lines. A 184 mile, 40 in. line will be needed to transport dry gas from Oygarden to Sleipner.

Statoil also is studying two routes for a pipeline from the southern Norwegian sector to landfall in either Netherlands or West Germany to handle an expected increase in demand for Norwegian gas in the mid to late 1990s.

Action also will pick up in the Dutch North Sea in 1991. Elf Petroland and NAM plan a 161 mile gas pipeline from the F3 gas/condensate field in the northern part of the sector to Den Helder.

The line will be laid in two seasons.

In the first year, a 93 mile, 36 in. section will be laid north to the L2 development, and the remaining section of 24 in. line to F3 will be completed in 1993.

ONSHORE EUROPEAN GAS LINES

Independent operators are starting to venture into the U.K.'s onshore pipeline business in competition with British Gas.

Kinetica, a joint venture of Conoco U.K. Ltd, and Powergen, has disclosed plans for two pipeline projects totaling 208 miles that will move gas from the Theddlethorpe gas terminal on the Lincolnshire coast to a nearby new cogeneration plant and to the London area.

Another independent, U.K. Gas Transmission Ltd., plans a 180 mile line from the Bacton terminal to the London area.

Independent operators also are starting to challenge established gas pipeline operators in continental Europe.

Wintershall AG has won approvals for a 360 mile pipeline from the North Sea coast to Ludwigshaven. Existing pipeline operators have been reluctant to accept third party business, and the Mid-German link (Midal) is intended to cash on this market.

Wintershall plans to link Midal with the newly opened East German gas business.

Ruhrgas also is connecting its transmission and distribution system into the East German network.

The other significant development on the European gas pipeline scene was completion of formalities to allow Enagas, the Spanish state gas company, to lay a pipeline across the Pyrenees to tie the expanding Spanish gas system into the European trunk distribution system through France.

AFRICA

The growing market for gas in Europe has rekindled Algerian and Libyan interest in boosting exports.

Algeria, one of Europe's major external suppliers, is investigating expansion of the trans-Mediterranean pipeline system linking Algeria with the Italian mainland through Tunisia and Sicily. In addition, Algeria is involved in detailed studies of a separate pipeline system into Europe through Morocco and a Mediterranean crossing into Spain.

Libya is considering a 360 mile submarine pipeline crossing of the Mediterranean with landfall in Italy. Cost of the project would be about $3.5 billion.

The other major gas producer in Africa is Nigeria. The basis for a domestic grid is now in place, and future pipeline construction will center on gathering and delivering gas for the proposed Bonny LNG project to export gas to Europe and North America in the mid-1990s.

NEAR EAST

In the Near East, Turkey is turning to gas to meet its growing energy demand.

Gas from the Soviet Union is being imported through a pipeline from the Bulgarian border to Ankara. Turkey is studying feasibility of a second pipeline from the U.S.S.R.

Iraq's takeover of Kuwait and the consequent military buildup in Saudi Arabia have again emphasized vulnerability of supplies from the area. Iraq's main crude oil export pipeline outlets to the Mediterranean and the Red seas have been sealed by the United Nations embargo on Iraqi and Kuwaiti oil.

Tension in the region and a continuing threat to supplies have emphasized the importance of Saudi Arabia's project to cut dependence on tanker shipments through the Strait of Hormuz by expanding capacity of the Petroline system to the Red Sea to 5 million b/d from 3.2 million b/d.

The project calls for boosting capacity of the line's 11 pump stations.

PAPUA NEW GUINEA

Papua New Guinea could become a new center for pipeline activity following the Chevron Niugini group's decision to proceed with the Kutubu development project in the southern highlands.

Moving oil from the Kutubu development-covering Iagifu, Hedinia, and Agogo fields-will require a 93 mile pipeline through heavily jungled mountain terrain to the coast and a 12.5 mile offshore segment to a tanker loading buoy.

The Kutubu pipeline is expected to cost $235-275 million and will have initial capacity of about 170,000 b/d, although Kutubu throughput probably will not exceed 120,000 b/d.

Spare capacity in the line could provide the basis of an oil gathering system to serve other prospective field developments in the southern highlands.

Work has begun on Papua New Guinea's first pipeline project, a short link in the southern highlands to supply gas from BP's Hides field to a power station at a gold mine.

PACIFIC RIM GAS PROJECTS

The biggest potential development in the Pacific Rim is a gas pipeline network to link some of the biggest producing and consuming countries in the region.

The 5,000 mile line, costing as much as $10 billion, would link Indonesia, Brunei, Malaysia, Thailand, and Philippines and open opportunities to boost the use of gas in those rapidly growing economies.

Feasibility studies, funded partly by the European Community and Association of South East Asian Nations, are under way on the proposed trans-Asian line by Gaz de France and Italy's ENI group.

Indonesia, which would be one of the main gas exporters, is talking of building its own internal high pressure transmission system that would expand gas use domestically and link into the trans-Asian line.

A group led by ARCO is in final stages of negotiating a deal to develop Pagerungan field in the Flores Sea, calling for a 310 mile pipeline to a proposed 900,000 kw power station at Gresik in East Java.

Regional gas producers view Singapore as a potential market. Imports from Malaysia are to start next year through a 450 mile line moving as much as 150 MMcfd of natural gas for power generation.

Indonesia also wants to supply gas to Singapore from its offshore Natuna area fields through a 350 mile pipeline but still needs a final supply contract and a firm financing deal.

There also are plans to link Natuna gas to facilities at Arun, where it could be liquefied or fed into the proposed domestic distribution system.

Thailand is trying to develop a domestic distribution grid to boost gas use. A 242 mile, 24 in. line has been approved by the Petroleum Authority of Thailand to tie in northeastern Thailand to the central plain around Bangkok.

Gas already is delivered from the Gulf of Thailand. PTT has been talking to Petronas about jointly developing gas reserves in a disputed area in the southern gulf. An extension of the gulf pipeline system would be needed to bring the natural gas to market.

Gas also is likely to provide impetus for more pipeline construction in India. The government is looking at a massive, multistage development of a nationwide gas grid to supplement the meager 1,600 miles of natural gas pipeline.

The new system would take gas from the Bombay High area and the Krishna Godavari basin.

AUSTRALIA, NEW ZEALAND

Expanding gas use dominates pipeline construction in Australia and New Zealand as well.

Construction was completed in Queensland last June on 150 miles of trunk line and 10 miles of gathering line to deliver gas from Denison Trough gas fields to the government trunk line for delivery to Gladstone.

Operator AGL Petroleum Ltd. and Oil Co. of Australia NL are 50-50 owners of the $40 million Denison Trough project.

Davy KcKee Pacific Pty. Ltd. was engineering consultant on the project.

Also last June, Gas & Fuel Corp. of Victoria began studying feasibility of laying a transmission line to Portland, Victoria, to take gas from North Paaratte and Wallaby Creek fields, north of Port Campbell, at a cost of $20 million. Those fields currently supply natural gas to Warnambool and Allansford, Victoria.

Northern Territory Gas Pty. Ltd., Palmerton, Northern Territory, is considering construction of a 375 mile, 12 in. spur from its main line to Gove, Northern Territory.

The spur would deliver gas for power generation at Nabalco's bauxite mining and alumina plant. Under Northern Territory Energy Strategy guidelines, this project could be complete by 1991.

In New South Wales, the state pipeline authority is studying feasibility of an 82 mile, 12 in. gas transmission pipeline from Wagga Wagga to Albury.

In New Zealand, the Ministry of Energy is considering a gas pipeline from a point near Huntly to the Marsden power stations near Whangare. The lines would be 13-19 in. and about 140 miles long.

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