Report Volume XXIX, Number 10 January 15, 2018

January 11, 2018

INDUSTRY NEWS (Missouri City, TX) – We are excited about our new service at Pipeline Intelligence Co. It is the Pipeline Intelligence Spreadsheet. The Spreadsheet is updated twice a month (same as the hard copy), and is available for download at pipelineintelligence.com. The added feature costs an additional $195 per year. You must be a subscriber in order to add the Spreadsheet service. Please call us at the office (281) 499-3131 or email us at pipelineintelligence@gmail.com to add this service today.

 

INDUSTRY NEWS (Houston, TX) – Tellurian Inc. announced that the Federal Energy Regulatory Commission (FERC) has issued the notice of schedule for environmental review of Driftwood LNG, a proposed 27.6 million tonnes per annum (mtpa) liquefied natural gas (LNG) export facility, and Driftwood Pipeline, a proposed 96-mile, 4 billion cubic feet a day (Bcf/d) pipeline. According to the notice, FERC will issue its final Environmental Impact Statement (EIS) on October 12, 2018, and has established a 90-day Federal Authorization Decision Deadline on January 10, 2019. Assuming a favorable decision, Tellurian expects that this schedule will allow it to begin construction of Driftwood LNG in early 2019, pending a final investment decision by Tellurian.

 

INDUSTRY NEWS (Tulsa, OK) – ONEOK, Inc. recently announced plans to invest approximately $1.4 billion to construct a new pipeline, and related infrastructure, to transport natural gas liquids (NGLs) from the Rocky Mountain region to the company’s existing Mid-Continent NGL facilities.

The Elk Creek Pipeline – an approximately 900-mile, 20-inch diameter pipeline that is expected to be completed by the end of 2019 – will have the capacity to transport up to 240,000 barrels per day (bpd) of unfractionated NGLs from near the company’s Riverview terminal in eastern Montana to Bushton, Kansas. The pipeline will have the capability to be expanded to 400,000 bpd with additional pump facilities.

“The existing Bakken NGL and Overland Pass Pipelines are operating at full capacity. Additional NGL takeaway capacity is critical to meeting the needs of producers who are increasing production and are required to meet natural gas capture targets in the Williston Basin,” said Terry K. Spencer, ONEOK president and chief executive officer. “The Elk Creek Pipeline will strengthen ONEOK’s position in the high-production areas of the Bakken, Powder River and Denver-Julesburg regions and also provide additional reliability and redundancy on our NGL system.”

The Elk Creek Pipeline is anchored by long-term contracts with terms ranging between 10 to 15 years totaling approximately 100,000 bpd, which is supported primarily by minimum volume commitments. In the aggregate, and based on these contracts for 100,000 bpd, this project is expected to generate adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) multiples of four to six times.

 

INDUSTRY NEWS (Houston, TX) – Minnesota public utility regulators recently rejected a judge’s recommendation that would have pushed out their final decision on a controversial crude oil pipeline until September.

Instead, the Minnesota Public Utilities Commission (PUC) moved its decision date on Enbridge’s proposed Line 3 from April or May to sometime in June. The new Line 3, first proposed in 2014, would carry Canadian oil across northern Minnesota to Enbridge’s terminal in Superior, Wis.

A kerfuffle over scheduling arose after the PUC in December rejected the Minnesota Department of Commerce’s Environmental Impact Statement (EIS) on Line 3. The Commerce Department basically has 60 days to respond to a few narrow concerns brought up by the PUC.

To take into account EIS revisions, environmental groups and Indian tribes opposing the pipeline asked for more time to make their final arguments. Administrative Law Judge Ann O’Reilly essentially agreed, concluding that final arguments could be “flawed, incomplete or inconsistent” if made before the EIS is deemed adequate, according to a PUC filing.

Administrative law judges are appointed in contested cases before the PUC, and the 340-mile long new Line 3 is about as contested as they come. Enbridge says the pipeline is necessary to replace the corroding 1960s-vintage current Line 3. Opponents say Enbridge’s path for the new Line 3 would open a new region of lakes and rivers to degradation from oil spills.

After several rounds of legal briefings and hearings, O’Reilly will write a report on Line 3 that will be weighed heavily by the PUC.

Her report was originally due Feb. 28, which would have meant a PUC final decision by April 30. In late November, the due date for O’Reilly’s report was extended to March 30, likely pushing out the PUC’s verdict to May.

But under O’Reilly’s new schedule, the due date would be extended to mid-July, meaning the PUC couldn’t make a final decision until Sept. 6 at the earliest, a PUC filing says. Commissioners said that such a timeline would fly in the face of previous PUC decisions on Line 3.

 

 

INDUSTRY NEWS (Houston, TX) – EVX Midstream Partners got off to a quick start in 2018. In McMullen County, Texas, the company has announced plans to construct, own and operate a new crude gathering line targeting Eagle Ford shale producers. The company said it has partnered with a large independent oil and gas producers for the project.

Set for completion by Q2 this year, the pipeline will connect to a storage terminal and then connect to the Eagle Ford JV Pipeline.

Brian Stewart, vice president of business development for EVX, said the project sets the company up for long-term growth opportunities.

Herb Chambers, CEO, said the larger diameter pipeline planned for construction will allow the company to serve more customers over a larger area.

Chambers said the company will look for other opportunities in 2018 in the Eagle Ford as well as the Permian. The company already has operations for water gathering in the Eagle Ford.

Five Point Capital Partners is the private equity firm invested in EVX. In addition to EVX, Five Point is also invested in four other midstream entities targeting shale plays, mainly in Texas or New Mexico.

Industry News, Reports

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