May 2021, Vol. 248, No. 5

Global News

Global News May 2021

Industry Poll Finds Widespread US Support for Pipelines 

The Association of Oil Pipe Lines (AOPL) released new polling data measuring the sentiment of the American public toward pipelines, climate change, and the energy transition. By wide margins across key audiences, Americans support pipelines to move their energy, and they want to avoid addressing climate change in ways that increase their energy costs. 

“The American public understands we need pipelines to deliver affordable energy safely and reliably,” said Andy Black, AOPL president and CEO. 

The survey of 3,000 U.S. consumers found: 

  • 70% of Americans have a positive impression of pipelines, with their intensity of support increasing.
  • Americans are worried about climate change, with concern steady at 68% in the past year.
  • Americans want to minimize financial impacts to their energy bills to combat climate change.
  • Nearly three-quarters of Americans want to avoid energy industry disruptions when combating climate change.
  • Three in five Americans rank safety, affordability and reliability as their Top 3 most important aspects of energy.
  • The majority of Americans believe canceling pipelines is not a good way to combat climate change. Similarly, 74% of Americans oppose forcing oil and gas workers out of work and 71% oppose forcing oil and gas workers to take a pay cut.

The independent polling firm Wakefield Research conducted an online quantitative survey of 3,000 U.S. consumers between February 11 and February 24, 2021, using an email invitation and online survey. The margin of error for this study is +/-1.8 percentage points at the 95% confidence level for the total sample. The survey included at least 200 participants from each of the following eight audiences: Gen Z, STEM professionals, rural landowners, urban renters, millennial moms, blue-collar, seniors, and older millennials.

Aramco Selling $12.4 Billion Stake in Pipelines 

Saudi oil producer Aramco has agreed to a $12.4 billion deal to sell a 49% stake in its pipelines to a consortium led by U.S.-based EIG Global Energy Partners. 

The agreement includes a 49% stake of newly formed Aramco Oil Pipelines Co. and rights to 25 years of tariff payments for oil carried on Aramco’s pipelines, it said. Aramco will retain a 51% stake in the new company. 

Aramco will retain operational control of the pipeline network and assume all operating and capital expense risk, the companies said. Aramco will also offer so-called “staple financing,” which the buyers can use to back their purchase, sources told Reuters. 

EIG, which has invested more than $34 billion in energy and energy infrastructure, was the deal’s underwriter. 

Abu Dhabi’s National Oil Co. (ADNOC) has signed similar deals over the last two years, raising billions of dollars through sale-and-leaseback agreements tied to its oil and gas pipelines. 

Germany Prepares for Gas Imports with Pipeline Expansions, Conversions 

German gas pipeline companies have completed 28 of the 201 system expansions and conversions planned between 2020 and 2030, putting them on track to handle the increased imports expected by the end of the decade, industry group FNB reported. 

Germany’s northwest and the Netherlands are already phasing out production of their local, low-calorific gas type, meaning transport, storage infrastructure and boilers must be changed to accommodate imported gas that is high-calorific. 

The 28 completions so far include compressor stations, meters and fittings under an 8.5 billion euro ($10 billion) investment plan that calls for 1,746 km (1,085 miles) of new pipelines. 

The measures specifically included one or two LNG terminals and Eugal, a 480-km (298-mile) pipeline for gas from the yet-to-be-completed Nord Stream 2 (NS 2) subsea pipeline, to run onshore from north Germany to the Czech Republic. Eugal project leader Gascade said it already has increased the pipeline’s capacity to 55 Bcm (1.94 Tcf). 

FNB members include Gascade Gastransport, Ontras Gastransport and Open Grid Europe. 

Investors Press EU for Methane Emissions Standard 

A group representing European investors managing 36 trillion euros ($42.3 trillion) in assets renewed pressure on the European Commission to introduce mandatory methane emissions standards for natural gas, according to a letter seen by Reuters. 

“We reiterate the call to establish a mandatory performance standard, requiring a minimum of 0.25% intensity of upstream supply covering all gas sold in the EU by 2025, striving to achieve 0.2% where possible,” the letter said. 

The EU is the world’s biggest gas importer, buying around 80% of the fuel from elsewhere. The largest chunk of the imported gas comes from Russia, where satellites have detected big methane leaks along gas pipelines. 

Currently, there are no rules in place in the EU to disincentivize importing gas from methane-leak-prone infrastructure situated outside the EU. The Commission has said the legislation will require companies to monitor and report methane emissions and repair leaks. It has said it will consider imposing methane standards for gas. 

Enbridge Asks Canada for Support in Line 5 Dispute 

Calgary’s Enbridge has asked the Canadian government to champion its Line 5 oil pipeline in a legal battle with the state of Michigan, which is trying to shut down the pipeline. 

Calgary-based Enbridge is also asking Ottawa to provide support for its U.S. federal court filings on Line 5, Vern Yu, Enbridge executive vice president of liquids pipelines, told a federal parliamentary committee. 

The 540,000-bpd Line 5 is a key part of the Enbridge pipeline network supplying refineries in eastern Canada and the U.S. Midwest with western Canadian crude.  

Late last year, Michigan Gov. Gretchen Whitmer ordered Line 5 to cease operating by May over concerns a 4-mile (6.4-km) section running along the lakebed of the Straits of Mackinac could leak. Enbridge, which has proposed building a $500 million underwater tunnel to protect the pipeline beneath the Straits, is challenging that order in U.S. federal court. 

Canadian Prime Minister Justin Trudeau’s government has already said it will look at all options to keep Line 5 operating, including invoking the 1977 Transit Pipelines Treaty. 

Gas Pipeline Leak Shuts Hilcorp Platforms in Alaska 

Hilcorp Energy Co. announced that it had shut down two oil platforms in Alaska’s Cook Inlet in response to a natural gas pipeline leak. 

The affected platforms account for roughly an eighth of the total Cook Inlet basin oil production of a little more than 11,000 bpd, according to state data. Cook Inlet, a wide channel that runs from the Anchorage area to the Gulf of Alaska, has more than a dozen oil and gas platforms. 

The gas leak occurred last month in a pipeline that supplies fuel for the platforms’ operations, but it was not carrying any hydrocarbons produced by the platforms, said state officials and officials with privately held Hilcorp. The leak was spotted by a pilot flying over the inlet, the Alaska Department of Environmental Conservation said. 

Divers installed a temporary clamp on the line until permanent repairs could be made, Hilcorp Alaska spokesperson Luke Miller said, adding that no sheen was observed, and no personnel or wildlife were impacted.

EIA: US Oil Output to Rise for Third Straight Month 

U.S. oil output from seven major shale formations is expected to rise for a third straight month in May, the U.S. Energy Information Administration (EIA) said, with the biggest increase set to come from the Permian Basin. 

The top-producing basin in the country, Permian output is expected to rise by 52,000 bpd to about 4.47 MMbpd, the highest since April 2020, EIA said. 

Output from other top producing basins, such as the Bakken and Eagle Ford, are expected to slide by 12,000 bpd and 9,000 bpd, respectively. Production in the Bakken of North Dakota and Montana is expected to drop to 1.1 MMbpd, the lowest since July 2020, according to the data. Total output from all seven shale formations is projected to increase by about 13,000 bpd in May to 7.61 MMbpd. 

Natural gas production from the major shale basins was expected to decline about 0.1 Bcf/d to 82.8 Bcf/d (2.83 MMcm/d to 2.34 Bcm/d) in May, according to EIA. Gas output in Appalachia, the biggest shale gas basin, was expected to decline 0.1 Bcf/d to 34.1 Bcf/d (2.83 MMcm/d to 966 MMcm/d) in May, its lowest since October 2020. 

Cheniere Completes Train 3 at Corpus Christi Liquefaction Project 

Cheniere Energy has announced the substantial completion of Train 3 at its Corpus Christi liquefaction project. Commissioning is complete and Cheniere’s EPC partner Bechtel Oil, Gas and Chemicals has turned over care, custody and control of Train 3 to Cheniere, the company said. 

Including the new Train 3, Cheniere, its subsidiaries and Bechtel have now declared substantial completion on a total of eight liquefaction trains at the Corpus Christi facility and the Sabine Pass liquefaction project. 

All were ahead of their guaranteed completion dates and within project budgets, Cheniere said. 

Annova Abandons Plans for Texas LNG Export Facility 

Annova LNG announced that it has canceled plans for the construction of a liquefied natural gas (LNG) export facility in Brownsville, Texas, due to “changes in the global LNG market.” 

The Annova LNG project was being developed by majority owner Exelon Corporation and minority owners Black & Veatch Corporation, Kiewit Energy Group and Enbridge. 

The project had proposed building a 6.5-MTPA LNG export facility at the Port of Brownsville.   

Canada’s Pipeline Leaders See Long-Term Role for Natural Gas through Energy Transition 

Pipeline construction in Canada. Photo: Trans Mountain Corporation
Pipeline construction in Canada. Photo: Trans Mountain Corporation

Canada’s largest pipeline companies TC Energy and Enbridge Inc. see opportunities in their extensive natural gas businesses through a transition to cleaner energy, their chief executives said at the recent Sotiabank CAPP (Canadian Association of Petroleum Producers) Energy Symposium. 

“Transition can’t come fast enough from our perspective, but we have to pace it appropriately,” said François Poirier, CEO of TC Energy, which operates the largest natural gas pipeline system in North America. “I believe natural gas and liquids will continue to play a prominent role in the energy economy for decades to come. 

“I believe our existing assets will continue to be used and be useful for quite a long time, and they will generate a tremendous amount of cash flow that we will be able to deploy into the energy transition,” Poirier added. 

Enbridge CEO Al Monaco said he sees gas as the “great enabler” for the energy transition because it provides reliable power that can backstop renewables. 

“It’s low-cost, abundant, and it’s important in reducing utilization of coal, but it’s equally important in fostering renewables,” Monaco said. “You’ve got to be able to create baseload capability, and it addresses the enormous intermittency challenges,” he said. 

The two Calgary-based companies, which are among North America’s largest energy infrastructure firms, also are investing in clean energy projects and looking into developing technology to transport hydrogen. 


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