June 2022, Vol. 249, No. 6


Czechs Ready to Invest in Pipeline Upgrade to Replace Russian Oil

Czechs Ready to Invest in Pipeline Upgrade to Replace Russian Oil 

The Czech Republic is preparing to increase its investment in a key pipeline to boost its capacity and bring an end to the country’s partial dependence on Russian oil, Industry and Trade Minister Jozef Sikela told Reuters.

The Transalpine Pipeline (TAL) carries oil from the Italian port of Trieste to Austria and Germany, from which another pipeline links it to the Czech Republic. 

Currently, Czech refineries, owned by PKN Orlen, receive half their crude oil shipments through TAL, with the rest coming from Russia’s Druzhba pipeline. 

The Czech government holds a stake of 5% in TAL, which is also owned by major European and other oil companies. 

The European Commission recently proposed exempting the Czech Republic from the ban until mid-2024.  

Sikela said TAL could now raise capacity slightly by pumping more oil, but a larger expansion project to install more powerful turbines was needed. That could be completed by the end of 2024 if other shareholders agreed. 

Genesis to Build 105-Mile Pipeline to Expand Deepwater GOM Footprint 

Genesis Energy will spend about $500 million over the next three years to increase its footprint in the deep-water Gulf of Mexico (GOM) by expanding a pipeline system and building a new line, according to a first-quarter  earnings report. 

The CHOPs system, which transports oil from deep-water oilfields to markets on the Texas Gulf Coast will be enhanced with a new 105-mile (169-km) pipeline called SYNC. 

Genesis recently entered into agreements to transport the crude from two deep-water developments with a total production capacity of about 160,000 bpd. 

Production of oil from both deep-water developments is expected in late 2024 or 2025. 

According to Reuters, Genesis is in discussions with operators regarding further opportunities representing about 150,000 bpd of incremental production, and these operators would seek to access at least a portion of the company’s new pipeline capacity starting as early as 2024. 

Leader Confident MidCat Gas Pipeline Will Be Built This Decade 

The regional government chief of Catalonia, Spain, expects a pipeline will be built this decade to transport gas from northeast Spain to France, amid Europe’s ongoing effort to curb  its reliance on Russia. 

The shift in European policy has bolstered support in Spain for the Midi-Catalonia (MidCat) pipeline project, previously rejected in 2019 by French and Spanish regulators.  

Spain’s Prime Minister Pedro Sanchez has suggested the Midcat could be financed with European Union (EU) funds, although France has stayed largely quiet in recent weeks on whether it would support the project, according to Reuters. 

Some analysts have suggested the region can be a key energy hub, in part because Canalonia hosts the largest terminal in continental Europe to unload liquefied natural gas (LNG) and convert it back into gas. 

The Midcat would connect to a pipeline from Algeria and run from the town of Hostalric, about 62 miles (100 km) from the French border and continue into France. 

MPLX Advancing with Pipeline Expansions in Permian, Bakken 

MPLX LP will increase its Permian and Bakken natural gas pipeline capacity in a move that should lessen an anticipated lack of takeaway from the top U.S. shale region, the company said. 

MPLX announced it would increase the Whistler pipeline mainline capacity by 500 MMcf/d to 2.5 Bcf/d (14.16 MMcm/d to 70.8 MMcm/d), beginning service in September 2023. 

The Whistler expansion follows the signing of sufficient transportation agreements with shippers, which serves as a sign that they expect increased volumes. 

The 450-mile (724-km), 42-inch Whistler transports natural gas from the Waha Header to Agua Dulce, Texas, providing direct access to South Texas and export markets.  

An approximately 85-mile (137-km), 36-inch lateral provides connectivity to the Midland Basin. 

The company said during an earnings call that it would add crude gathering systems in the Bakken. 

Williams Secures Tieback Deal for Deepwater GOM Connector Pipeline 

Williams has secured another tieback to Discovery’s Keathley Canyon Connector (KCC) pipeline, providing deepwater natural gas infrastructure services to operator LLOG Exploration Offshore LLC, for its new Salamanca development in the Keathley Canyon area of the Gulf of Mexico (GOM). 

Williams owns and operates 3,500 miles (5,366 km) of natural gas and oil gathering and transmission pipeline, along with 1.8 Bcf/d (51 MMcm/d) of cryogenic processing capacity and 60,000 cf/d (1,699 m3/d) of fractionation capacity that span the GOM. 

The Salamanca development marks the seventh tieback to Williams’ deep-water offshore assets over the past two years. The Salamanca platform will handle production from the Leon and Castile fields and will be located 200 miles (322 km) off the coast of Louisiana. Initial production is expected in the second quarter of 2025. 

Salamanca will be the third deep-water production tieback to the KCC pipeline, which went into service in 2015 as a primary natural gas corridor through the central Gulf of Mexico, and fifth overall tieback to the Discovery system over the past two years. 

“Williams provides critical infrastructure to gather and transport the Gulf of Mexico’s low carbon intensity natural gas for U.S. consumption,” Alan Armstrong, Williams president and CEO, said. 

The 30-mile (48-km) tieback to KCC is expected to be constructed, owned and operated by LLOG, an investment vehicle managed by ArcLight Capital Partners LLC, and other co-owners. KCC is part of the Williams-operated Discovery system, which is jointly owned by Williams (60%) and DCP Midstream LP (40%).  

Chesapeake Utilities to Construct Pipeline to Serve Delaware, Maryland 

Chesapeake Utilities said it is in the final preconstruction stage associated with a $6.3 million capital project that would expand infrastructure to serve new customers from Sussex County, Delaware, to northern Ocean City, Maryland, while also increasing the reliability of the existing distribution system in those areas. 

As part of the planned project, Chesapeake Utilities will construct a new pipeline to extend existing infrastructure through Fenwick Island, Delaware, to northern Ocean City to serve residences and businesses. 

“Customer demand continues to support long-term growth for our company, with customer growth in our Delmarva natural gas distribution service territories continuing at levels two to three times above the national average customer growth rate,” Jeff Householder, president and CEO, said. “We’ve met the energy needs of the Delmarva Peninsula for many years, and we’ll continue to do so in a way that makes life better for the people and communities we serve there.” 

In 2017, Sandpiper Energy, a wholly owned subsidiary of the company, completed conversion of the Ocean City gas system from propane to natural gas. Since that conversion, there continues to be increased demand for natural gas. 

Construction is expected to begin in the second quarter and to be completed in the fourth quarter. 

Gazprom Has Not Booked Yamal Pipeline Capacity for 3rd Quarter 

Russia’s Gazprom has not booked gas transit capacity through the Yamal-Europe pipeline for the third quarter, according to Interfax news agency, which cited auction results on the GSA Platform. 

The Yamal pipeline, which crosses through Belarus, Poland and Germany, has mostly worked in a reverse mode since last December, sending gas eastward from Poland to Germany. 

Gazprom has needed capacity on the Yamal-Europe pipeline since Poland decided not to expand its gas transit contract with Russia in 2020. 

The ongoing gas supply conflict between the two countries escalated recently as Gazprom halted gas supplies to Poland and Bulgaria, which refused to meet the Kremlin’s demand for gas payments in rubles. 

Normally, the pipeline accounts for about 15% of Russia’s annual gas exports to Europe and Turkey. 

Nigeria Says Russia Interested in Gas Pipeline to Morocco 

Russia has expressed interest in investing in the Nigeria-Morocco gas pipeline project that has been on the cards since 2016, Nigeria’s minister of state for petroleum resources old Reuters. 

In December 2016, Nigeria and Morocco signed an agreement to construct a 3,517-mile (5,660-km) pipeline linking the two countries.  

“The Russians were with me in the office last week. They are very desirous to invest in this project and there are lots of other people who are also desirous to invest in the project,” Nigerian Oil Minister Timipre Sylva told reporters in Abuja recently. 

The pipeline is tentatively scheduled to be in development by May 2023. 

Japan to Ban Russian Oil Imports ‘In Principle,’ Prime Minister Says 

Japan is moving to ban Russian crude oil imports “in principle,” as part of a Group of Seven (G7) effort to hurt Russia in the wake of the invasion of Ukraine. 

“For a country heavily dependent on energy imports, it’s a very difficult decision,”  said Prime Minister Fumio Kishida, following an online meeting of G7 leaders. “But G7 coordination is most important at a time like now.” 

However, according to Reuters, Tokyo has shown less appetite so far for a full ban on Russian oil and gas, given that resource-poor Japan is dependent on imports to keep the lights on, particularly since it shut down the bulk of its nuclear reactors following the 2011 Fukushima nuclear crisis. 

Russia is Japan’s fifth-biggest supplier of crude oil and liquefied natural gas (LNG). 

“We commit to phase out our dependency on Russian energy, including by phasing out or banning the import of Russian oil. We will ensure that we do so in a timely and orderly fashion,” the G7 leaders said in their joint statement. 

The idea of phasing out Russian oil could give Japan some leeway to scale back imports gradually as it looks for alternative energy sources. 

Sempra Expects Final Decision on New Cameron LNG Train in 2023 

Sempra Energy said the Cameron liquefied natural gas (LNG) plant in Louisiana remains on track to make a final investment decision in 2023 to build a new liquefaction train at the plant. 

In a first-quarter earnings statement, Sempra said Cameron LNG plans to complete development work on the fourth liquefaction train in the summer of 2023 and “to be in a position to make a final investment decision thereafter.” 

Separately, the company said its Sempra Infrastructure Partners’ unit entered into a non-binding agreement with TotalEnergies SE for Sempra’s Vista Pacífico LNG project under development in Mexico. 

The Vista Pacífico agreement anticipates TotalEnergies contracting for one-third of the long-term export production, as well as TotalEnergies’ participation as a minority equity investor in the project.  

Sempra said it expects to close the sale of a non-controlling 10% interest in  

Enterprise Products Sees Volumes Rise 16% on Crude Pipeline 

Enterprise Products Partners’ crude pipeline volumes rose by 16% in the first quarter, the company said, pointing to an increase in demand. 

Volumes increased on the company’s Midland-to-ECHO pipeline to the ECHO terminal in Houston, and on its crude oil gathering systems in West Texas and southeast New Mexico that connect to its terminal in Midland, Texas, Enterprise said. 

Enterprise is among the pipeline operators looking to repurpose some energy pipelines through  carbon dioxide transportation and sequestration solution for the Texas Gulf Coast.  

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