A.D. Koen
Gulf Coast News Editor
Warren R. True
Pipeline/Gas Processing Editor
Construction of petroleum and natural gas pipelines worldwide this year and beyond will continue at a pace set in recent years.
This prospect seems likely despite upstream uncertainties caused by war in the Middle East.
Again leading in projected mileage are gas gathering and transmission lines, especially in the U.S., Canada, Europe, and the countries of the Asia-Pacific region. Additionally, petroleum product pipeline construction in the Asia-Pacific region looks very strong.
Latest Oil & Gas Journal data show pipeline companies plan to lay 43,498 miles of crude oil, petroleum product, and natural gas line this year and beyond.
By comparison, there were 49,781 miles of projected pipelines at this time last year (OGJ, Feb. 5, 1990, p. 17).
According to OGJ's 1991 survey of pipeline operating companies and other industry data, 13,860 miles of line either were being laid as the year began or are part of projects expected to begin this year, all to be completed by yearend 1991. At this time last year, 10,091 miles were planned to be laid in 1990.
Cost of this year's work is an estimated $11.5 billion, compared with last year's estimate of $8.4 billion. For 1991 and beyond, total land and offshore construction costs will exceed $36 billion, compared with $41.5 billion last year.
The mileage differences in the two categories of planned 1 991 construction and planned 1991 and beyond construction reflect how pipeline companies change construction plans during the course of a year as business climates for different markets change.
As usual, the U.S. will account for the largest share of construction-29% of the mileage scheduled for 1991 and beyond.
THE PROJECTIONS
Projections for 1991 mileage include only projects expected to be completed by yearend. Those figures include mileage in progress at the first of the year or scheduled to begin during the year.
Projections for mileage in 1991 and beyond combine this planned 1991 mileage with additional mileage set to begin this year but likely to be finished in 1992 or later.
Excluded are projects only under study. In addition, projections are adjusted to eliminate mileage duplications caused by competing projects where only one or two are likely to be built.
OGJ's projections, which involve transmission and gathering lines 4 in. OD and larger, are based on an annual pipeline construction survey, semiannual worldwide construction surveys, and compilations of published industry and government data.
Cost estimates are based on U.S. average cost per mile for onshore and offshore construction as determined by OGJ's most recent annual pipeline economics report (OGJ, Nov. 26, 1990, p. 41).
The cost projections assume that 90% of all construction will be onshore and 10% offshore. The exceptions are pipelines 32 in. in diameter or larger, which are assumed to be solely onshore projects.
Here is a breakout of costs by line diameter:
- Total land construction for 1991 will reach almost $10.7 billion-$3.5 billion for 4-10 in. pipelines, $2.3 billion for 12-20 in., $1.9 billion for 22-30 in., and $3 for 32 in. and larger.
- Total construction offshore for 1991 will reach $854.1 million-$388.7 million for 4-10 in., $257.7 million for 12-20 in., and $207.7 million for 22-30 in.
- Total land construction for 1991 and beyond will reach $33.9 billion-$6.6 billion for 4-10 in., $7.4 billion for 12-20 in., $6 billion for 22-30 in., and $13.9 billion for 32 in. and larger.
- Total construction offshore for 1991 and beyond will reach $2.2 billion-$738.9 million for 4-10 in., $826.6 million for 12-20 in., and $673.1 million for 22-30 in.
NORTHERN BORDER EXPANSION
Among a long list of U.S. construction projects, Northern Border Pipeline Co. expects to begin service by November 1992 on an extension and expansion capable of delivering as much as 1.8 bcfd of gas in to Ventura, Iowa, and 600 MMcfd to Tuscola, Ill.
To that end, Northern Border has refiled an optional certificate application with FERC proposing to acquire from Natural Gas Pipeline Co. of America (NGPL) the 30 in. Iowa Line, running 147 miles from Ventura to Harper, Iowa, and lay 231 miles of 30 in. line from Harper to Tuscola.
The company also would add five 20,000 hp compressor stations to its existing 822 mile, 42 in. line, two 12,000 hp compressor stations between Ventura and Harper, and four 6,000 hp stations between Harper and Tuscola (OGJ, Jan 28, p. 46).
Under its revised plan, Northern Border could deliver added volumes of 315 MMcfd from western Canada and 90 MMcfd from the Williston basin and have enough flexibility to serve customers in a more market responsive manner.
The rate structure for the expanded system would reduce by 9% transportation costs of existing customers. Cost of firm transportation service from the Canadian border would be about 330/Mcf to Ventura and 480/Mcf to Tuscola.
The $424 million expansion includes $78 million to acquire Iowa Line.
WYOMING-CALIFORNIA
Construction began early in January in Southwest Utah and southern Nevada on spreads 5 and 6 of Kern River Gas Transmission Co.'s 904 mile pipeline from Southwest Wyoming to a point near Bakersfield, Calif. All construction contracts have been let for the eight spread project (OGJ, Dec. 3, 1990, p. 34).
The system will consist of 676 miles of 36 in. line from Opal, Wyo., to near Barstow, Calif. From there, 121 miles of 42 in. pipe will be laid into Kern County, Calif., southeast of Bakersfield, where the system will spilt into two 30 in. laterals, 55 miles and 48 miles long.
The $934 million project is to be the largest gas pipeline built in the U.S. since the groundbreaking of Northern Border in 1981. When complete, Kern River will be California's only direct link with Rocky Mountain region gas.
Last November, Kern River told Napa Pipe Corp., Napa, Calif., a subsidiary of Oregon Steel Mills Inc., Portland, Ore., to start production of 251,000 tons of 36 in. line pipe (OGJ, Nov. 12, 1990, p. 37).
Mojave Pipeline Operating Co. also has notified Napa to start production of 38,000 tons of 30 in. pipe. Shipments to construction sites are to begin during the first quarter of this year (OGJ, Nov. 12, 1990, p. 37).
In December 1990, Mojave let a construction contract worth $63 million to Murphy Bros. Inc., East Moline, Ill., for its 220 mile western segment from Daggett, Calif., to near Bakersfield, which it will own jointly with Kern River.
Mojave also let a $27 million contract to Gregory & Cook Inc., Houston, to lay the project's 162 mile eastern segment from Topock, Ariz., to Daggett (OGJ, Dec. 31, 1990, p. 27).
Kern River officials expect to be transporting 700 MMcfd by Jan. 1, 1992. Capacity can be expanded to 1.2 bcfd by adding two compressor stations.
At first, 500 MMcfd of gas will originate from Wyoming, with remaining volumes coming from Utah and from Canada via the Altamont line.
In mid-December 1990, Coastal Corp., Houston, shelved its $576 million plan to build the Wyoming-California Pipeline Co. (WyCal) pipeline, a system that would have competed with Kern River (OGJ, Dec. 17, 1990, p. 31).
CIG Western Pipeline Co., the Coastal Corp. unit that proposed to build WyCal, said the project permit application has not been withdrawn from FERC.
WyCal would have transported 600 MMcfd of mostly Rocky Mountain gas 670 miles from Hams Fork, Wyo., to connect with intrastate systems operated by Southern California Gas Co. and Pacific Gas & Electric Co. at Piute Junction, near Needles, Calif.
Kern River and Mojave are to merge near Needles.
Coastal officials declined to say whether the project might be revived later. But WyCal's FERC certification is good for 5 years.
SAN JUAN BASIN
If FERC issues a favorable environmental order during second quarter 1991, Transwestern Pipeline Co. could start service by the 1991-92 heating season on a 520 MMcfd lateral pipeline from the San Juan basin and a 340 MMcfd expansion of its mainline system.
Transwestern intends to lay about 100 miles of 30 in. pipe to connect with its mainline near Thoreau, N.M. The $93 million plan includes installation of a compressor station near Blanco, N.M.
For its $165 million mainline expansion, Transwestern will lay 20 miles of 30 in. mainline loop and make minor changes at compressor stations.
FERC is allowing Transwestern to proceed with business and financial decisions, following a preliminary determination that the project is in the public interest.
FERC's preliminary decision on Transwestern's Section 7(c) application filed last September covers all nonenvironmental issues and is subject to issuance of a final order after completion of FERC's environmental review. Transportation contracts supporting the San Juan project include 213 MMcfd by PG&E, 200 MMcfd by Southern California Gas Co. 50 MMcfd by Sunrise Energy Co., and 25 MMcfd by Southern Union Gas Co.
PG&E with 200 MMcfd, Sunrise with 50 MMcfd, and Southern Union with 25 MMcfd anchor Transwestern's mainline expansion.
ARKOMA BASIN LINES
Arkla Energy Resources (AER), division of Arkla Inc., Shreveport, La., on Nov. 1, 1990, began deliveries of Arkoma basin natural gas to interstate markets on its 42 in. and 36 in. Line AC (see story, p. 46).
Without compression, Line AC is moving 800 MMcfd of gas 221 miles from Arkla's Chandler compression station west of Wilburton, Okla., to Mississippi River Transmission's Glendale compression station south of Pine Bluff, Ark.
By late summer 1991, Arkla will expand capacity to 1 bcfd when it brings on line 14,750 hp of compression at a site near Malvern, Ark.
Shares of capacity on Line AC after compression is added are ANR Pipeline Co. 250 MMcfd, Texas Gas Transmission Co. 300 MMcfd, Arkla 280 MMcfd, and Tennessee Gas Pipeline and Columbia Gulf 85 MMcfd each.
NGPL hoped to begin service earlier this month on its $51 million Arkoma Basin pipeline in southern Oklahoma.
A mid-December 1990 start-up had been delayed by bad weather.
NGPL last September began construction of the 24 in. line, which extends 105 miles from Amoco Production Co.'s Red Oak gathering system in Latimer County to NGPL's AG line near Bennington, Okla., in Bryan County (OGJ, Dec. 3, 1990, p. 34).
Initial capacity of the pipeline will be 100-125 MMcfd. Amoco holds a contract covering 100 MMcfd of firm transportation.
Capacity will be expanded to about 300 MMcfd in late May or June, when NGPI starts up a 4,000 hp compressor station about 30 miles south of McAlester in northern Atoka County.
Elsewhere, construction is expected to begin in mid-1991 on a $230 million onshore and offshore pipeline system to transport as much as 1.2 bcfd of natural gas from Mobile Bay off Alabama to various interstate markets.
The proposed Alabama system is a consolidation of competing plans of six interstate pipeline companies. The companies last month filed offers of settlement seeking FERC approval to proceed with the compromise plan (OGJ, Feb. 4, p. 62).
Mobile Bay gas reserves are estimated at 10 tcf by the Gas Research Institute.
YUKON LINE
Yukon Pacific Corp. (YPC) late last year kicked off the first phase of a plan to build an 800 mile gas pipeline, a natural gas liquefaction plant, and export facility to transport as much as 14 million metric tons/year of Alaskan North Slope LNG.
The Trans-Alaska Gas System (TAGS) would move natural gas to Anderson Bay, Alas., for liquefaction and shipment to markets outside the U.S.
Under a contract awarded last November by YPC, Bechtel Corp., Houston, is designing a liquefaction plant and marine terminal to be sited 3 miles west of Prudhoe Bay oil storage and loading facilities at Valdez.
YPC budgeted $300 million to design the export facility and the 800 mile pipeline from the North Slope to Anderson Bay.
When all phases of the $11 billion project to liquefy and export North Slope natural gas are complete, YPC's LNG plant will be the largest of its kind.
To break ground in 1993 for the $3 billion plant, YPC is attempting to sign up customers to take 7 million tons/year of LNG. To assure the project will be profitable, it will have to increase export rates within 5 years to 14 million tons/year, nearly twice the export volume of the world's largest LNG plant of today.
Markets in Japan, Korea, and Taiwan, which expect to require another 24 million tons/year of LNG by 2000, are prime candidates to take North Slope exports. If, as planned, TAGS can provide access by 1998 to 37 tcf of gas reserves on Alaska's North Slope, it would be a likely source of supply.
VANCOUVER ISLAND LINE
Westcoast Energy Inc., Vancouver, B.C., and Alberta Energy Co., Edmonton, expect to start gas deliveries by early fall through a 366 mile pipeline system from near Vancouver to customers on Vancouver Island.
The $330 million pipeline system will receive gas from a Westcoast line at Coquitlam, B.C.
Contractors expect to complete span adjustments and testing by the end of this month on the Strait of Georgia marine crossing to Vancouver Island, one of the deepest subsea crossings on record.
Most of the land line, which traverses mountainous terrain and includes about 250 streams and river crossings, is complete. Work will resume on a few isolated sections after the snow clears next spring.
Most of the stream and water crossings have been installed on Vancouver Island.
Stena Construction's Apache reel ship finished installing the marine segments of the system about last October. Stena and construction partner Northern Construction assembled the marine line at a staging area in Richmond, B.C, across the north arm of Frazier River from Vancouver.
First deliveries to seven pulp mills and, through local distributions companies (LDCs), to 14 communities along the pipeline's route will amount to about 37 MMcfd. According to projections, by the end of the first decade of service deliveries will surpass 65 MMcfd.
Consumption by pulp mills during that period is expected to remain fairly level, with LDC customers accounting for market growth.
About 5 years after deliveries begin, LDC loads will surpass pulp mill consumption.
TRANSCANADA EXPANSION
If Canada's National Energy Board (NEB) approves, during the next 2 years TransCanada Pipelines Ltd. will spend about $2.6 billion to add more than 990 miles of loop, expand system capacity by 832 MMcfd, and increase compression by more than 300,000 hp.
The first part of that expansion will occur during 1991.
On Nov. 15, 1990, NEB approved facilities applications that will allow TransCanada to build more than 242 1/2 miles of loop system-wide and relocate two portable compressors at a cost of more than $534 million.
Loops to be laid in 1991 include 47.7 miles of 48 in. in Saskatchewan, 21.6 miles of 48 in. and 7.6 miles of 42 in. in Manitoba, 4.7 miles of 36 in. on the Montreal Line in eastern Ontario, and 131 miles of 42 in. and 29.9 miles of 42 in. in northern Ontario.
Portable compressors will be installed at Stations 43 and 62 in northern Ontario.
NEB also will allow TransCanada to spend $12.2 million to lay a 2.8 mile, 30 in. pipeline to connect with the proposed Iroquois Gas Transmission System, enabling TransCanada to step up Canadian gas exports to the U.S. Northeast.
FERC recently approved Iroquois' plan to spend $582.6 million to lay a 575.9 MMcfd pipeline from near Waddington, N.Y., through New York State and Connecticut to Long Island (OGJ, Nov. 19, 1990, p. 40).
Supplying all the natural gas for Iroquois could generate an $800 million revenue stream for Canadian producers.
OTHER CANADIAN EXPORTS
Last month FERC gave final approval to Pacific Gas Transmission Co. and Pacific Gas & Electric Co. to lay an 845 mile, 42 in. and 36 in. pipeline to transport as much as 755 MMcfd of Canadian gas to California and 148 MMcfd to the U.S. Pacific Northwest (OGJ, Jan. 28, p. 46).
Construction of the $1.2 billion PGT-PG&E expansion is to begin early in 1992, with completion expected during fourth quarter 1993, pending a favorable final FERC environmental review of the project (OGJ, Dec. 31, 1990, p. 24).
FERC commissioners also gave preliminary approval to Altamont Gas Transmission Co.'s plan to transport 719 MMcfd of Canadian gas to Kern River Gas Transmission system near Opal, in southwestern Wyoming. Altamont's 30 in., 620 mile gas pipeline, would receive gas at Port of Wild Horse, Mont., on the Canadian border.
Bechtel, PGT-PG&E project manager, ordered 400,000 tons of mainline pipe at a cost of $400 million, from Napa and from Ipsco Inc., Regina, Sask. It was the world's largest mainline pipe order since the Yamal Soviet gas export line in the early 1980s.
Pipe from both orders is to be delivered in 1992 and 1993.
Contracts also have been let for the project's turbines and compressors.
Last December, the California Public Utilities Commission certified its environmental review and approved the California segment of the PGT-PG&E expansion (OGJ, Jan. 7, p. 25), and company officials expect FERC's final environmental approval by this spring.
Altamont expects FERC's environmental reviews of its project also to be completed this year. Federal regulators have said the plan would enhance competition for markets in southern California.
Besides providing California customers with a wider array of choices and greater diversity of supplies, Altamont's project would reduce transportation costs of Wyoming gas producers competing for markets on the West Coast, project sponsors said.
MACKENZIE DELTA PIPELINE
Sponsors of the Polar Gas Project are laying plans to apply to NEB for permission to build and operate a large diameter pipeline to transport gas from the Mackenzie Delta area in Canada's arctic frontier to markets in southern Canada and the U.S.
PGP sponsors-TransCanada, Tenneco Gas, and Panarctic Oils Ltd.-propose to lay a 36 in., 1,421 mile, line from gas fields on the Mackenzie Delta along the Mackenzie River Valley to Caroline, Alta. The Mackenzie Valley Gas Pipeline would move as much as 1.2 bcfd of gas for 20 years after completion.
In August 1990, Mackenzie Delta producers-Esso Resources Canada Ltd., Shell Canada Ltd., and Gulf Canada Resources Ltd.-submitted to the NEB conclusions of environmental screenings of the project's export proposals.
Those companies own proved, combined Mackenzie Delta gas reserves of about 10.5 tcf.
Once NEB approves its plan, Polar Gas sponsors estimate the eight spread project could be completed in 3 years at a cost of $4.166 billion.
Sponsors believe it would take 7 years to obtain necessary regulatory approvals, and design and construct the pipeline and related facilities.
PROJECTS IN EUROPE
In Europe, Norway's Den norske stats oljelskap AS last November began urging installation by 1995 of Europipe, the third Norwegian gas trunkline linking Troll and Sleipner gas fields in the North Sea to continental Europe.
Initial capacity of the 450 km, 36 in. and 40 in. pipeline would be 12 billion cu m/year of gas. The $1.4 billion system would originate at Statpipe's riser platform in Block 16/11 in the Norwegian North Sea, with its terminus either in Netherlands or Germany.
Portugal is expected to begin construction this year of a gas pipeline system the government hopes to have on stream in 1995 (OGJ, Dec. 3, 1990, p. 33).
Plans for the first stage of the proposed system, which would link with the European network through the Spanish system, call for laying a pipeline from Setubal, south of Lisbon, to Braga in northern Portugal near the Spanish border.
Included in the project would be construction of an LNG reception terminal at Setubal, a trunkline, and distribution lines. When operational, the system would supply gas to about 2 million residential, 80,000-100,000 commercial, and 4,000-5,000 industrial customers.
The Soviet Union last fall started shipments through a major new gas line from Surgut, in the Middle Ob district of western Siberia's Tyumen Province, to Novosibirsk in the southern part of the region (OGJ, Nov. 12, 1990, p.38).
Future construction is to extend the line southeast to Kuznetsk industrial area.
A 48 in. segment of the line, from Surgut to Omsk, was completed in 1988; a segment believed to be 40 in., from Omsk to Novosibirsk, was completed far behind schedule, partly because a severe shortage of funds forced the U.S.S.R. to curtail construction of large diameter lines during 1989-90.
Last December the U.S.S.R. signed a contract with Greece for Soviet crews in 1993 to begin laying a 500 km line that will deliver gas from Izmail on the Soviet-Romanian border through Romania and Bulgaria to Thessalonika in northern Greece.
Greece in 1988 signed a 25 year deal agreeing to accept initial Soviet natural gas deliveries amounting to 35 bcf/year.
MALAYSIA GAS LINE
Elsewhere, Malaysia's state owned Petroliam Nasional Bhd. (Petronas) is nearing completion of its Peninsula Gas Utilization (PGU) project pipeline system (OGJ, Dec. 3, 1990, p. 52).
Initially, the 452 mile, mostly 36 in. PGU system will transport 750 MMcfd of gas from Malaysia's eastern coast to a power plant on the western side of the Malaysian peninsula near the capital city of Kuala Lumpur, down the western coast to Johor Bahru in southern Malaysia, and to Singapore by way of a water crossing.
PGU throughput is expandable to 1 bcfd.
PGU project manager Novacorp (Malaysia) Sdn. Bhd. hopes to begin testing by midyear 1990 of the PGU segment linking Kerteh on Malaysia's eastern coast to the western coast.
By October 1990, it will test the entire system from Kerteh to Johor Bahru.
Novacorp Malaysia, which took over as project manager in December 1986, will operate the system for 2 years after completion.
MMC Gas consortium is contractor on the PGU project.
Copyright 1991 Oil & Gas Journal. All Rights Reserved.