April 2024, Vol. 251, No. 4

Global News

Global News April 2024

CenterPoint to Sell 12,000-Mile Network for $1.2 Billion 

CenterPoint Energy plans to sell its natural gas assets in Louisiana and Mississippi for $1.2 billion to Bernhard Capital Partners, as part of the electric and gas utility’s decision to concentrate on its regulated business.

CenterPoint said the assets being sold include 12,000 miles (19,312 km) of main pipelines, which serve about 380,000 customers in Louisiana and Mississippi. 

“From an operational and strategic perspective, we remain confident in and committed to our regulated natural gas utilities in Texas, Indiana, Minnesota, and Ohio where we have significant footprints and rate bases,” said CEO Jason Wells in a statement. 

Last year, Duke Energy and American Electric Power announced sales of unregulated assets and several others have sold off unregulated assets to avoid relying on market dynamics for returns. 

In regulated states, a utility could be responsible for electricity generation, transmission and distribution, while in non-regulated states consumers can choose to buy their power from different providers. 

CenterPoint plans to use the $1 billion in expected proceeds toward investments in places with fewer regulatory constraints and the utility already has a large presence. 

Guyana’s Promised Gas-to-Power Project Pushed to 2025 

Guyana will postpone its effort to capitalize on its plans for a $1.9 billion gas-to-power project until 2025. The project had been scheduled to start taking shape this year. 

The rising oil producing nation relies on imported fuels in and an often faltering  electric grid, but promised to use its abundant oil reserve to build a 140-mile (225-km)pipeline, along with a gas processing facility and a 300-megawatt (MW) power plant. 

Winston Brassington, a government consultant involved in the project, told Reuters that issues with the combined-cycle power plant are the reason for the delay. The project suffered work delays, late equipment deliveries and issues on the foundation at the location chosen for the project, he said. 

The project was an election-year pledge to about 800,000 residents and was expected to slash their energy costs by 50% this year. 

Guyana has been seeking a $646 million loan from the Export-Import Bank of the United States to finance the onshore facilities. 

ExxonMobil is currently building the $1 billion pipeline, with Guyana  paying for the project with proceeds from its offshore oil operations. The pipeline is expected to be operational by the end of the year. 

Occidental Considers $18 Billion Sale of Western Midstream  

Occidental Petroleum is considering selling its holdings in Western Midstream Partners, a U.S. natural gas pipeline operator,  valued of more than $18 billion, including debt, according to sources. 

The divestment would help Berkshire Hathaway-backed Occidental eliminate some of the $18.5 billion debt that the company took on through recent acquisitions. 

Occidental bought oil and gas producer CrownRock for $12 billion in December and acquired Anadarko Petroleum four years earlier for $54 billion. 

Occidental owns 49% of Western Midstream and controls the company’s operations by also owning its general partner.  

Houston-based Western Midstream has about 16,000 miles of pipelines in its network, as well as processing, treatment and other facilities. It operates primarily in the Delaware area of the Permian basin in Texas and New Mexico. It also has holdings in the Denver-Julesburg basin in Colorado.

Congestion Foreseen by Enbridge Despite Trans Mountain  

Increased oil production in Canada could mean shipper volumes continue to be rationed on the Enbridge Mainline pipeline system even when the Trans Mountain Expansion (TMX) is in operation, an Enbridge’s vice president of Liquids said. 

Calgary-based Enbridge transported a record 3.2 MMbpd of crude on the Mainline during the final quarter of 2023. 

Last year, Enbridge said the TMX going in service would likely cause Mainline volumes to fall, but that notion has become a “bit of a stale concept,” Colin Gruending, told investors during an earnings call. 

“(TMX) has been delayed materially and in that multi-year period of delay, supply has structurally and permanently grown,” he said, adding that during those delays there was a “slight tailwind” for the Mainline, which ships the bulk of Canada’s crude exports to the United States. 

Gruending estimated Canadian producers would add around 750,000 bpd of supply in a four-year period up to the end of 2025. 

Tokyo Gas Sees Bulk of Overseas Profit Coming From U.S. Gas   

Japan’s largest city gas supplier, Tokyo Gas Co. Ltd., expects that by 2030 its U.S. shale gas and related businesses, including trading and marketing, will contribute 50% to its targeted overseas profit, its president said. 

The company paid $2.7 billion to acquire Texas-based natural gas producer Rockcliff Energy, in December, and agreed to purchase 49% stake in an energy marketing and trading firm in North America, ARM Energy Trading. 

“Our aim is to create a U.S. gas value chain by linking our projects to increase the value of our investments, rather than seeking profits from individual projects,” President Shinichi Sasayama told Reuters in an interview this week. 

Tokyo Gas has been expanding its U.S. reach from upstream businesses to midstream and downstream assets, while selling off some minority stakes in gas projects in Australia. 

“We want our U.S. shale and surrounding operations to generate about a half of our overseas profit in 2030,” Sasayama told Reuters.  

Final Train for LNG 2 on Hold, TotalEnergies Announces 

The third and the last train of the Arctic LNG 2 project in Russia has been put on delayed, however, the second train is likely to be installed, the head of stakeholder TotalEnergies said. 

The project in the Russian Arctic has been significantly slowed by U.S. sanctions imposed on the project over the war in Ukraine, and subsequent force majeures by shareholders. 

At the end of 2023, Arctic LNG 2 limited production at its first train, but the project has still not delivered an initial cargo. Russia had planned to put the third train into operations in 2026. 

“The third train for me is on hold, which I understand,” TotalEnergies’ CEO Patrick Pouyanne told those at an energy event in London.  

Novatek is Russia’s biggest LNG producer and owns a 60% stake in the project with China’s state oil majors CNOOC Ltd. and China National Petroleum Corp. (CNPC) each holding a 10% stake. TotalEnergies also has a 10% stake. 

With all three trains in service, Arctic LNG 2 is designed to produce 19.8 mtpa and 1.6 mtpa of stable gas condensate. 

TotalEnergies initiated a force majeure process on the project in January following the U.S. sanctions. 

Pouyanne said his company was not taking part in the project’s management due to Western sanctions. 

Iran’s Main Gas Pipeline Hit by Sabotage, Officials Say 

Two explosions along Iran’s south-north gas pipeline network were caused by sabotage, the Iranian oil minister told state television, while not identifying any suspects. 

Authorities denied reports that the attack caused gas cuts for industries and offices in some provinces, state media reported. 

This terrorist act of sabotage occurred at 1 a.m., Feb. 14, in the network of national gas transmission pipelines in two regions of the country, officials said. Only villages near the damaged pipeline were experiencing gas outages, which were later fixed, the state reported.  

While such attacks are rare in Iran, Arab separatist militants in Iran claimed in 2017 that they had blown up two oil pipelines in coordinated attacks in the country’s western Khuzestan province. 

In December, Iran executed five people whom it accused of being saboteurs with links to Israel’s Mossad intelligence service in a decades-long shadow war that has seen Tehran accuse Israel of attacks on its nuclear and missile efforts, charges the latter has never confirmed or denied. 

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