Computer Model May Be Able to Predict Pipeline Fractures

- Computer Model May Be Able to Predict Pipeline Fractures

Wednesday, September 07, 2011
Rigzone Staff
by Karen Boman

A computer model designed by the Massachusetts Institute of Technology's (MIT) Impact and Crashworthiness Lab to test automobile components could also be utilized to predict how pipelines may fracture in offshore drilling accidents.

As a case study, a team at the lab simulated the forces involved in the 2010 Deepwater Horizon explosion in the Gulf of Mexico, finding that their model accurately predicted the located and propagation of cracks in the oil rig's drill riser – the portion of pipe connecting the surface drilling platform to the seafloor. In a side-by-side comparison, the researchers found that their model's reconstruction closely resembled an image of the actual fractured pipe taken by a remotely operated vehicle shortly after the accident occurred.

The group presented their results at the International Offshore and Polar Engineering Conference in June. The lab received a small grant from Shell and invested some of its own resources to prepare the paper for the conference. Three major oil companies have expressed interest in using the computer model, said Tomasz Wierbzbicki, professor of applied mechanics at MIT.

Wierbzbicki said such a simulation could help oil and gas companies identify stronger or more flexible pipe materials that could help minimize the impact of a future large-scale accident. "We are looking at what would happen during a severe accident, and we're trying to determine what should be the material that would not fail under those conditions," Wierzbicki said. "For that, you need technology to predict the limits of a material's behavior."

A decade of intense research took place before the original MIT fracture technology found industrial applications, said Wierzbicki. The steel and automotive industry were first to recognize the value of the technology. "We have developed a substantial research program with the applications to these industries. This program is supported in my lab by 14 major domestic and overseas companies." MIT also is working with an aerospace company to utilize the methods and procedures of this technology.

Wierzbicki over the years has fine-tuned a testing method that combines physical experiments with computer simulations to predict the strength and behavior of materials under severe impacts. To safety-test materials used in automobile bodies, Wierzbicki first cuts small samples from a candidate such as steel, using a high-pressure water jet.

He then sprays the sample with a fine pattern of speckles, covering the surface with tiny dots. After the spray dries, Wierzbicki clamps the cutout into a machine, which subjects specimens to different types of loading. A motion-capture camera, set up in front of the sample, takes images as it crumples, sending the images to a computer, which plots the image's dots along a grid to show exactly when and where deformations occur.

By testing different shapes and sizes of materials under various pressures, Wierzbicki can determine a material's overall mechanical properties, such as its strength and ductility. Knowing this, he says, it's possible to create a simulation to predict a material's behavior in any configuration, under any conditions. Determining the exact limits for materials is especially important for offshore drilling, he says, where pipes are continually subjected to tremendous pressures at great depths.

Since the researchers were unable to obtain a sample from the actual collapsed riser, they consulted an offshore-drilling handbook, finding that the riser was likely made from X70, a grade of steel commonly used in such risers. The material's mechanical properties closely matched those of TRIP 690, a grade of steel the team had previously tested in the lab.

The researchers drew up a computer model of the drill riser — a large-diameter pipe attached at one end to a large rectangle, representing the surface drilling platform. The team then ran a simulation that partially reconstructed the Deepwater Horizon accident: After methane gas erupted and shot to the surface, setting the entire platform on fire, the oil rig began to list and sink. The researchers simulated the sinking by slowly angling the rectangular platform downward.

As a result, the attached drill riser began to bend. A color-coded simulation showed points along the pipe where it was likely to crack: Green and blue meant the material was intact; yellow and red indicated it was at its breaking point. The group found four red areas where cracks — and oil leaks — were especially likely to occur.

The group had one point of comparison: an image, taken by an underwater robot shortly after the accident, of the ruined pipe. When the researchers compared their model with the real-life image, they found an almost perfect match. Wierzbicki sees the results as an encouraging first step in applying the model to materials for offshore drilling.

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TransCanada Pipeline Will Have Limited Environmental Impact

- TransCanada Pipeline Will Have Limited Environmental Impact



Aug 26, 2011

The U.S. State Department concluded that TransCanada (NYSE:TRP) proposed $7 billion KeyStone XL pipeline will have limited impact on the environment, potentially bringing the department closer to a final decision on the controversial project.

TransCanada (NYSE:TRP) has a potential upside of 8.2% based on a current price of $42.48 and an average consensus analyst price target of $45.97.

TransCanada is currently above its 50-day moving average (MA) of $41.96 and above its 200-day of $40.16.

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Fluor Lands Caspian Pipeline Expansion Contract

- Fluor Lands Caspian Pipeline Expansion Contract

Wednesday, August 17, 2011
Fluor Corp.

Fluor has been awarded a contract by Chevron Neftegaz—one of three project managers engaged by the Caspian Pipeline Consortium—for its recently announced expansion project. Fluor will provide project services for the marine terminal and supervisory control and data system (SCADA) portions of the Caspian Pipeline Expansion project. The pipeline begins in western Kazakhstan and runs 1,510 kilometers west to the terminal in Novorossiysk, Russia, on the Black Sea. Fluor booked $100 million into backlog in the second quarter.

"This pipeline expansion is a vital first step to pave the way for numerous additional crude oil production expansion projects in the region," said Peter Oosterveer, president of Fluor's Energy & Chemicals Group. "As the original program management contractor for the first phase of the Caspian Pipeline project—which involved refurbishing more than 700 kilometers of pipeline and building an additional 740 kilometers—we're pleased in the confidence the client consortium has again placed in us. This expansion of the Caspian pipeline and terminal to increase oil transportation capacity is crucial to Russia, Kazakhstan and European economic stability and to meet energy demand."

As the project services contractor, Fluor is providing oversight assistance for the deepwater marine terminal expansion in Novorossiysk as well as the SCADA system for the entire pipeline. The project is scheduled to be completed at the end of 2014.

Fluor completed the first phase of this pipeline project with the first crude oil loaded onto a tanker at the marine terminal in October 2001.

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Magnum Hunter Closes Credit Facility for Eureka Hunter Pipeline

- Magnum Hunter Closes Credit Facility for Eureka Hunter Pipeline

Wednesday, August 17, 2011
Magnum Hunter Resources Corp.

Magnum Hunter's wholly-owned subsidiary, Eureka Hunter Pipeline, has closed a new credit facility totaling $150 million. The Eureka Hunter Finance Facility is comprised of two tranches: (i) a revolving credit facility in the aggregate principal amount of up to $100 million secured by a first lien on the assets of Eureka Hunter Pipeline ("Revolver") with an initial committed amount of $25 million; and (ii) a $50 million term loan secured by a second lien on such assets ("Term Loan"). All of the Term Loan must be drawn before any of the Revolver is drawn and $31 million of the Term Loan was drawn at closing yesterday. Both the Revolver and the Term Loan are "non-recourse" to the parent company, Magnum Hunter.

The proceeds from the Revolver and the Term Loan will be used to finance capital expenditures for the construction of the Eureka Hunter Pipeline system located in northern West Virginia and Ohio. Advances under the Term Loan will be limited to 60% of the project's "Total Capital" including equity and debt invested. As of August 15, 2011, Magnum Hunter has invested approximately $52 million of equity capital in the Eureka Hunter Pipeline project.

In addition, Magnum Hunter has received $21 million of net proceeds from the Term Loan Closing to repay existing indebtedness. As of August 16, 2011, Magnum Hunter had total liquidity including cash and availability under its credit facilities, including the Term Loan, of approximately $75 million, of which $55 million is available to fund its upstream capital program focused on the Company's high growth resource plays.

The applicable interest rate margin of the Revolver ranges from LIBOR plus 2.25% to LIBOR plus 3.50%. The Term Loan accrues interest at a rate of 12.50% per annum; of which 2.75% is payable in cash or Magnum Hunter restricted common stock at the sole option of Magnum Hunter. The Revolver and the Term Loan contain other terms and conditions customary for financings of this type. The Revolver has a maturity of five years from date of closing and the Term Loan has a maturity of seven years from date of closing. SunTrust Robinson Humphrey, Inc. has served as the "Lead Arranger" and SunTrust Bank will serve as "Administrative Agent" for the Revolver. PennantPark Investment Corporation is the "Lender" for the Term Loan.

Management Comments

Mr. Ronald D. Ormand, Executive Vice President and Chief Financial Officer of Magnum Hunter, commented, "The closing of the Eureka Hunter Finance Facility for the Eureka Hunter midstream assets completes one of our primary financial goals for fiscal year 2011. Eureka Hunter Pipeline now has its own primary source of financing, provided on a non-recourse basis to Magnum Hunter, and the capital necessary to complete construction and expand operations of the pipeline through fiscal year 2012. In addition, with the return of $21 million in capital from the Eureka Hunter Finance Facility, Magnum Hunter has further increased its overall financial liquidity to in excess of $75 million. The additional liquidity provides Magnum Hunter with the necessary capital to fund the Company's capital expenditure plan through the end of fiscal year 2011 and into fiscal year 2012."

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Shell: 660 Tons of Oil Remain in Leaking Pipeline in North Sea

- Shell: 660 Tons of Oil Remain in Leaking Pipeline in North Sea

Wednesday, August 17, 2011
Dow Jones Newswires
LONDON
by Alexis Flynn

Some 660 tons of oil is still inside a leaking Shell pipeline in the U.K. North Sea, the Anglo-Dutch major said Wednesday, explaining that efforts to stop the relatively light flow of crude oil are taking a long time so as to minimize the risk of the remaining oil spilling out.

Shell has been attempting to stop a leaking flowline from its Gannet Alpha platform for the last seven days amid mounting public criticism of its perceived lack of transparency about the spill.

"I cannot stress enough the need to undertake detailed risk assessments and ensure any work considered is undertaken safely," Glen Cayley, technical director of Shell's exploration and production activities in Europe, told journalists at a joint press conference with a U.K. government representative.

Scottish Environment Secretary Richard Lochhead said Shell had been made aware of the need for better communication about what happened and what it was doing to address the leak.

"I have spoken with both Shell's senior management and the U.K. government's offshore-incident representative and I stressed, once again, the importance of clear communication on the current operation and the expectation people have for complete openness and transparency on the situation. I was assured by both that this point had been taken on board, and I'm pleased to see that steps have now been taken to put more information in the public domain. This must continue," said Lochhead.

Shell has estimated that around 216 tons--or 1,300 barrels--of oil have spilled from the Gannet Alpha platform since last week. By Wednesday afternoon, oil was continuing to leak at a rate of less than a barrel a day.

Shell declined to say how long it would take to finally close the leak.

If oil continued to leak from the pipeline, Cayley said, it was "inevitable" that it would cross the median line into the Norwegian North Sea. He said Shell had informed the Norwegian government of the possibility.

The Norwegian Petroleum Safety Authority wasn't immediately available for comment.

The Department of Energy and Climate Change official assigned to liaise with Shell and monitor the company's response to the spill said that, in his view, "the leak is under control and has now been greatly reduced." Hugh Shaw said the DECC and the Health and Safety Executive will thoroughly investigate the causes of the incident, after which a full report will be sent to Scottish Procurator Fiscal, or public prosecutor.

The Gannet platform will be shut down from Thursday, said Cayley, although he stressed that this was a long-planned maintenance halt. However, inspections would be carried out on the rest of Gannet's pipeline in light of this incident, he added.

Crude oil from the Gannet system is taken to Teesside, U.K., through the Fulmar pipeline as part of Ekofisk blend.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Gas Driller Opposes Pipeline Rules, Asks Landowners to Raise Concerns

- Gas Driller Opposes Pipeline Rules, Asks Landowners to Raise Concerns

Tuesday, August 09, 2011
Knight Ridder/Tribune Business News
by Laura Legere, The Times-Tribune, Scranton, Pa.

New permitting requirements affecting natural gas pipelines in Pennsylvania have raised the ire of Chesapeake Energy, which is encouraging natural gas leaseholders to join it in protesting the rules.

In a recent letter sent to landowners in the Northern Tier, Chesapeake's vice president for government relations, David J. Spigelmyer, called the updated requirements enacted by the U.S. Army Corps of Engineers on July 1 "unnecessary, time consuming and redundant."

Delays caused by the new permit reviews have stranded 128 of the company's drilled and completed Marcellus Shale wells without pipelines and are "costing Pennsylvanians royalty income," he wrote.

The new rules replace federal regulations that expired in June controlling pipeline construction and other surface-water impacts in Pennsylvania. A change in the regulations requires companies to detail all of the streams and wetlands to be crossed by a pipeline project -- some of which stretch for hundreds of miles -- rather than outlining only the impacts of each stream crossing individually.

The new permits allow regulators to consider the cumulative surface-water impacts of the projects, which are increasingly spiderwebbing the commonwealth to tie new Marcellus Shale wells to interstate pipelines that bring the gas to market.

Army Corps of Engineers spokeswoman Stacy A. Ouellette said the permit "streamlines the process for activities throughout the state of Pennsylvania" and within multiple Army Corps of Engineers boundaries. The permit also allows Pennsylvania "to issue permits for activities having minimal impact to waterways and wetlands, reducing redundancy between the corps and state," she said.

In a description of the regulations published in the Pennsylvania Bulletin in May, Pennsylvania Department of Environmental Protection Secretary Michael Krancer said that the revised permit incorporates federal and state standards in one process and "continues a streamlined process for permit applicants without compromising comprehensive environmental protection."

PennFuture president Jan Jarrett said the cumulative review offered with the new permit is "a good thing." The need for additional regulatory oversight of pipeline construction was highlighted in recent weeks when two failures at a pipeline project in Susquehanna County dumped drilling mud into a high-quality waterway, she said.

"It's unfortunate to see a company coming out opposing updated regulations that address natural gas pipelines," she said. "We would rather see them doubling down and working with the regulations that are clearly aimed at protecting Pennsylvania's water resources rather than stirring up and scaring the landowners who they work with."

Chesapeake said the potential review of all stream and wetland crossings increases the average review time for a project from 45 days to nearly 300 days and unfairly singles out Pennsylvania projects for extra layers of review.

Along with the letter written by Mr. Spigelmyer, Chesapeake provided landowners with a form letter to send to their senators and congressmen that says, "At a time of great economic uncertainty in this country, it seems unproductive that the federal government would take such a drastic step to limit the ability of landowners like me to benefit economically from natural gas production."

In a statement Monday, Mr. Spigelmyer said the Baltimore District of the Army Corps of Engineers began applying aspects of the permit change over the last year and "the delays are already evident."

"This is obviously of great concern to landowners who've had wells drilled on their land and who are wondering why their wells are not yet producing and marketing gas," he said. "It is of equal concern to Chesapeake as each of our wells represents the investment of millions of dollars in capital that can't begin to produce a recovery of investment, let alone a return on investment, if we cannot predictably plan for the development of pipelines necessary to get gas to market."

Copyright (c) 2011, The Times-Tribune, Scranton, Pa.

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El Paso Pipeline Partners Missed Q2 Estimates, Top Line Up 9%

- El Paso Pipeline Partners Missed Q2 Estimates, Top Line Up 9%



Aug 4, 2011

El Paso Pipeline Partners (NYSE:EPB) reported Q2 EPS of $0.50, missing consensus estimates of $0.54 per share. Revenues for the quarter rose 9.1% year-over-year to $358.0 million, missing consensus estimates of $360.8 million.

Jim Yardley, president and chief executive officer of El Paso Pipeline Partners said, "We continue to deliver superior results for our unitholders with another quarter of higher earnings and cash flow. Our portfolio of high-quality assets continues to grow through acquisitions and expansions. During the quarter, we completed the acquisition of additional interests in CIG and SNG, and now own 100 percent of SNG. We also placed into service additional expansion projects which brings our total to fourteen in less than three years. Our successful acquisitions and expansions have enabled us to deliver consistent distribution growth, as we have increased quarterly distributions every quarter since our IPO in 2007."

El Paso Pipeline Partners has a potential upside of 19.4% based on a current price of $35.29 and an average consensus analyst price target of $42.15.

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Petrominerales Finalizes Stake in Ocensa Pipeline

- Petrominerales Finalizes Stake in Ocensa Pipeline

Wednesday, July 20, 2011
Petrominerales Ltd.

Petrominerales has closed its previously announced acquisition of a five percent interest in the Oleoducto Central S.A. ("Ocensa") crude oil pipeline from Total E&P Holdings, for a purchase price of US $281 million.

The 830 kilometer Ocensa pipeline starts onshore at the Cusiana and Cupiagua fields and terminates at the port in Covenas on the Caribbean coast of Colombia. The Ocensa pipeline is presently running at capacity, transporting approximately 560,000 barrels of oil per day ("bopd") from the Llanos Basin, representing sixty percent of the current total oil production in Colombia.

Petrominerales expects to transport crude oil through the Ocensa pipeline commencing September 1, 2011, providing us with strategic access to transportation infrastructure. This acquisition is expected to lower our transportation costs compared to trucking for a significant portion of our Llanos basin production, especially in the near term given the limited existing transportation infrastructure in Colombia. In addition, increasing the volume of our oil transported by pipeline reduces risks associated with trucking oil and our exposure to escalating trucking costs.

The expansion of our infrastructure base through this acquisition enhances our marketing flexibility by improving our access to international crude oil markets and pricing, having the potential to further strengthen our netbacks. Along with our 9.65% interest in the Bicentenario pipeline (OBC), this acquisition supports our long-term corporate objectives by securing strategic transportation capacity for our growing base of production, including our heavy oil opportunities. The acquisition of an interest in Ocensa aligns with Petrominerales' corporate objective of continuing to be the highest netback producer in Colombia.

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Chevron Begins Work to Double Capacity at Caspian Pipeline

- Chevron Begins Work to Double Capacity at Caspian Pipeline

Friday, July 01, 2011
Dow Jones Newswires
MOSCOW
by Jacob Gronholt-Pedersen

The Chevron-led Caspian Pipeline Consortium Friday said it has started a $5.4 billion expansion to double capacity to 1.4 million barrels a day by 2015.

"The capacity of the 900-mile [1500 kilometer] pipeline, which carries crude oil from Western Kazakhstan to a dedicated terminal in the Black Sea, will increase to 1.4 million barrels a day from its current capacity of 730,000 barrels a day," Chevron said in a statement.

The project will be implemented in three phases with capacity increasing progressively from 2012 to 2015, Chevron said.

The pipeline, which has been operating for ten years, ships crude from the Tengiz and Karachaganak fields in Kazakhstan to Russia's Black Sea port of Novorossiysk.

CPC shareholders include Lukoil Holdings, Transneft, Shell, ExxonMobil), Kazakhstan's KazMunaiGas and Italy's Eni.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Alamo Adds Appalachian Acreage

- Alamo Adds Appalachian Acreage

Tuesday, June 28, 2011
Alamo Energy Corp.

Alamo announced the acquisition of approximately 2,500 acres in Knox County, Kentucky.

The acquisition falls inline with Alamo's strategy of becoming a significant player in the Appalachian basin. The new acreage is located contiguous to existing acreage and infrastructure allowing for new wells to be tied into Alamo's 23-mile pipeline that has a capacity of up to 9,000,000 cubic feet per day.

Utilizing Alamo's in-house drilling company, we believe that the new acreage will allow for an additional 125 wells targeting the Devonian Shale and Big Lime formations based on 20-acre spacing.

Allan Millmaker, Chief Executive Officer, commented, "While our strategy is to expand aggressively in the Appalachian basin, we are always looking to maximize returns. The new acreage will allow us to take advantage of potential cost savings not only at the drilling and completion stage but also when on production because of the proximity to existing Alamo infrastructure."

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Eni Sells Stake in TAG Pipeline

- Eni Sells Stake in TAG Pipeline

Friday, June 10, 2011
Eni S.p.A.

Eni signed a purchase agreement with Cassa depositi e prestiti Spa (CDP) for the sale of 89% of the existing shares, corresponding to 94% of the economic rights held in Trans Gasleitung Austria GmbH.

Trans Gasleitung Austria GmbH is the company owning the transport rights for the Austrian section of the pipeline that connects Russia to Italy and that, in 2010, reported total revenues of 270 million euro.

This operation is part of the commitments taken by Eni in response to the European Antitrust Commission ruling on September 29, 2010, and it is subject to its approval.

The sale provides for the payment of €483 million, plus reimbursement of a shareholder loan granted by Eni to the company equal to 192 million euro (a total of $986MM), and these amounts will be subject to review at the closing date as per market practice.

The parties have also agreed to recognize an additional charge based on some earn-out mechanisms linked to the occurrence of certain events.

Following the conclusion of the operation, the ship-or-pay contract signed by Eni with TAG will remain into force.

By virtue of the nature of the counterparty and the economic importance of the contract for Eni, the transaction takes the form of an operation with a related party of minor importance for which a non-binding opinion has been required from the Committee for Internal control.

Mediobanca – Banca di Credito Finanziario S.p.A. and Rothschild S.p.A. for Eni and Credit Suisse for Cassa Depositi e Prestiti issued fairness opinion on the operation based on the assessment methodologies currently used for this type of operations.

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McDermott Scores Pipeline Installation Proj. in GOM

- McDermott Scores Pipeline Installation Proj. in GOM

Tuesday, May 31, 2011
McDermott International Inc.

McDermott's subsidiaries was awarded a contract by PEMEX Exploración y Producción for procurement, construction and installation of three oil and gas pipelines ranging from 8 to 20 inches in diameter, in Mexico's Bay of Campeche. The contract is valued at more than US $50 million and will be included in McDermott's second quarter backlog for 2011.

"We are pleased to be working again for PEMEX in the Gulf of Mexico. Our installation solution for this project will be supported by our subsea engineering design group in Houston and fabrication work from our construction yard in Altamira, Mexico," said Stephen M. Johnson, McDermott's Chairman, President and Chief Executive Officer.

Pipeline installation engineering is expected to begin in the second quarter of 2011, with subsequent fabrication of the risers, clamps and guards, subsea tie-in assembly and additional platform piping and structural items from Altamira. McDermott's DB16 will perform the installation work, with completion expected by the end of the year.

DB16 is outfitted with a customized Automatic Welding System that offers high weld production rates and production flexibility. The vessel and its crew are recognized for producing repeatable high-quality welds with exceptional mechanical properties. Also impressive is the vessel's underwater block, capable of lifting large amounts of tonnage into deepwater.

The field development in the Gulf of Mexico sits in approximately 170 feet of water. The pipelines will run from the Kambesah Wells Recoverer Structure to the Kutz TA platform and the Ixtoc-A platform.

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PUC Gives Nod to Eminent Domain Power for Pipeline Company

- PUC Gives Nod to Eminent Domain Power for Pipeline Company

Monday, May 23, 2011
Knight Ridder/Tribune Business News
by David Falchek, The Times-Tribune, Scranton, Pa.

The state Public Utility Commission intends to declare natural gas pipeline company Laser Northeast Gathering a public utility, giving it the power to condemn private property by eminent domain.

By a 3-2 vote, the commission tossed back to Administrative Law Judge Susan D. Colwell her recommendation to deny Laser's application for a "certificate of public convenience," which would grant it utility status and the right to wield eminent domain.

The narrow majority of the commission disagreed with Judge Colwell's arguments that the commission lacked the authority to regulate the activity and that Laser didn't meet the definition of a public utility.

Rejecting Judge Colwell's legal reasoning, the commission majority sent the recommendation back with a narrow charge: Determine if granting a certificate of public convenience is in the public interest.

In a fiery dissent, Commissioner James Cawley warned of "grave implications for individual Pennsylvanians and their communities." He said his colleagues' decision would upset the balance in easement negotiations, giving more power to pipeline companies.

"The upset of this balance is not in the public interest and is sufficient reason to deny Laser's application," Mr. Cawley wrote, joined in his opposition by Tyrone Christie.

Joining Mr. Gardner in remanding the Laser requests were Robert Powelson and John Coleman Jr.

Collection and gathering pipelines will directly impact more property owners than the gas wells expected to multiply over the next several decades tapping Marcellus Shale gas. Every well has an estimated lifespan of 30 to 40 years and has to be connected to an interstate pipeline.

Judge Colwell argued a pipeline collection and gathering system did not serve the "public," but rather natural gas well owners. But the commission said the legal definition of public "is not confined to the entire public," but rather the individuals or companies requiring the service.

Also at the meeting, Mr. Gardner said in his motion the PUC has the authority to enforce voluntary environmental safeguards to which Laser consented. Environmental group Earthjustice, which intervened in the case, said it is pleased the PUC recognized its ability to enforce those environmental protections reached in a side agreement with Laser.

"Gas development has proceeded at a frenzied pace in Pennsylvania and along with it has come countless spills, accidents, explosions," said Earthjustice attorney Megan Klein. "Finally, state officials have a chance to do something right from the outset, rather than rushing to clean up the aftermath."

But those protections in the Laser agreement may not be enforced across the board.

State Consumer Advocate Irwin "Sonny" Popowsky is concerned pipeline companies in Pennsylvania will continue to be free to opt in or opt out of regulation.

"At some point, the commission has to decide generically whether this activity of natural gas collection and gathering is going to be regulated as a utility activity or not," he said. "You can't just have companies deciding whether or not they get to be public utilities."

Based in South Abington Twp., Laser Northeast Gathering is run by former Southern Union executive Tom Karam. The company began building its 31-mile pipeline in February and plans complete it by the fall.

Copyright (c) 2011, The Times-Tribune, Scranton, Pa.

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Ivanhoe Upgrades Pungarayacu Crude to Pipeline Quality

Ivanhoe Upgrades Pungarayacu Crude to Pipeline Quality

Thursday, May 05, 2011
Ivanhoe Energy Inc.

David Dyck, President and Chief Operating Officer of Ivanhoe Energy Inc. and Michael Silverman, Executive Vice President and Chief Technology Officer on Thursday announced that heavy crude oil extracted from Ivanhoe's IP-5B well in the Pungarayacu field in Block 20 in Ecuador has been successfully upgraded to local pipeline specifications using Ivanhoe Energy's proprietary HTL upgrading process.

The successful tests demonstrate the flexibility and robustness of the HTL upgrading process to convert diverse heavy crude feedstocks into more valuable and marketable, pipeline-ready synthetic crude oil. In addition, these tests help position Ivanhoe Energy for full-scale heavy oil operations in Ecuador and in other countries having similar heavy oil characteristics.

Ivanhoe Energy drilled its first two appraisal wells in the Pungarayacu field in 2010. This followed a 26-well appraisal drilling program in the 1980's carried out by Petroecuador, which provided valuable preliminary data on the field but did not include thermal recovery and hence did not produce any oil for characterization and testing.

Ivanhoe Energy's goals for the initial wells in Pungarayacu were to add to its preliminary understanding of the reservoir, to carry out thermal recovery tests, and to extract heavy oil for characterization and upgrading tests using its proprietary HTL upgrading process. Ivanhoe Energy drilled its second well, IP-5B, at the southern end of the Pungarayacu oil field in Block 20. Following thermal operations, heavy crude was extracted and test volumes were sent to Ivanhoe Energy's HTL Feedstock Test Facility (FTF) in San Antonio, Texas. These heavy crude volumes were successfully processed and converted to a product that would meet pipeline specifications in Ecuador and would have a higher value and greater marketability than the raw heavy crude.

"This successful processing test confirms the capabilities and flexibility of our HTL upgrading technology", said David Dyck. "We believe our HTL process provides Ivanhoe Energy with a unique capability to help the Government of Ecuador, and other governments and heavy oil owners around the world, develop this important resource in a cost-effective and environmentally-responsible manner."

Ivanhoe Energy's technical team is pleased with this result given the specific characteristics of the crude samples that were obtained from IP-5B. The crude gravity is similar to Athabasca bitumen, at approximately 8° API, however other characteristics are quite different and present specific upgrading challenges. This included higher residual oil (heaviest fraction of the crude), metals, viscosity, solids, and water. In order to deal with these challenges, the FTF was calibrated and customized to suit the feed, and the processing was successful.

The input heavy crude, with a gravity of approximately 8° API, was upgraded to approximately 17° API, while the viscosity of the feed was virtually eliminated and the metals significantly reduced. All of this was accomplished with an overall liquid yield of 88%. These results were from Ivanhoe's first well of recovered volumes and as such represents an early test result. Ivanhoe anticipates that improvements in technical attributes, including API, will continue to advance as progress is made on the overall Ecuador project. This would be consistent with improvements achieved in the Tamarack Project also operated by Ivanhoe.

"In recent years, we have dramatically improved the overall performance and capabilities of the HTL process from its early stage design," said Silverman. "Over the last twelve months we have focused deliberately on making the process as flexible as possible so we can handle different and more challenging crudes. This preparation served us well when processing the heavy crude from well IP-5B."

An independent review by Gaffney, Cline & Associates estimated that within the 250 square-mile delineated portion of Block 20, and within the Hollin formation, there are between 4 and 12 billion barrels of oil originally-in-place. Canadian reporting standards and, in particular, the Canadian Oil and Gas Evaluation Handbook, stipulate that, until it can be established that oil will flow to the surface, original-oil-in-place must be reported as "undiscovered resources."

Ivanhoe has also commenced a 190 kilometer 2-D seismic program on the southern part of the Pungarayacu Block. Ivanhoe anticipates that this initial phase of shooting and processing of 2-D seismic will be completed in early July. The seismic data will be used to better identify sub-surface structures, assist in the selection of future drilling locations and possibly determine deeper geologic trapping systems which may contain lighter quality crude products.

HTL represents a unique competitive advantage as Ivanhoe executes its heavy oil business plan around the world. HTL has demonstrated the ability to upgrade a wide range of heavy oil feedstocks with significant variability in characteristics into a more valuable and marketable synthetic crude oil meeting pipeline specifications. HTL eliminates the need for diluent and blend agents for transport, and eliminates, or virtually eliminates, the need for natural gas for steam generation for thermal recovery. These HTL advantages all come to bear in Pungarayacu in Block 20, as well as in many other heavy oil fields in Ecuador, where access to natural gas and blend agents is restricted, and heavy oil is abundant.

Ivanhoe Energy Inc. is an independent, international oil and gas company with a focus on heavy oil development and production using advanced technologies, including its proprietary, patented heavy to light upgrading process (HTL). Core operations are in Canada, Ecuador, China and Mongolia, with business development opportunities worldwide.

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Enterprise to Extend Eagle Ford Pipeline System

Enterprise to Extend Eagle Ford Pipeline System

Tuesday, May 03, 2011
Enterprise Products Partners L.P.

Enterprise Products Partners L.P. on Tuesday announced plans to build an 80-mile extension of its 350,000 barrel per day (BPD) Eagle Ford Shale crude oil pipeline, that would allow the partnership to serve growing production areas in the southwestern portion of the play.

The Phase II project would originate in Wilson County, Texas at the terminus of the partnership's previously announced 140-mile Phase I segment, and extend to a site near Gardendale, Texas in La Salle County, where a new central delivery point (CDP) is planned for construction that will feature 500,000 barrels of storage. Phase I is on schedule to begin service by the second quarter of 2012, with Phase II set to commence operations in the first quarter of 2013. When completed, the approximately 220-mile crude oil pipeline system will provide Eagle Ford Shale producers with access to the Texas Gulf Coast refining complex through Enterprise's integrated midstream network.

The Phase II extension, which is being designed with a capacity of 200,000 BPD, is anchored by a 10-year agreement with Chesapeake Energy Marketing, Inc. ("Chesapeake"), a subsidiary of Chesapeake Energy Corp., that Enterprise also announced today. As part of the long-term contract, Chesapeake has committed to 100,000 BPD of firm crude oil transportation capacity.

"We are very pleased to expand our relationship with Chesapeake in the Eagle Ford Shale by adding crude oil transportation to the various natural gas services Enterprise is already providing under long-term contracts," said A.J. "Jim" Teague, executive vice president and chief operating officer of Enterprise's general partner. "Including the Chesapeake agreement, we now have producer commitments for nearly all of the available capacity on Enterprise's Eagle Ford crude oil pipeline, with 320,000 BPD under 10-year contracts."

With more than 2.5 million acres under lease and potentially 15,000 wells to be drilled over the production life of the Phase II service area—based on the partnership's own research and information from producers—development activity in this region of the Eagle Ford Shale is expected to remain brisk for the foreseeable future. Estimates provided by producers also suggest that up to 3 billion barrels of crude oil are recoverable in the southwestern region of the play.

The Phase II project would address the lack of pipeline infrastructure in the southwestern crude oil production region of the Eagle Ford Shale and provide shippers with access to Enterprise's Sealy, Texas delivery point. The Sealy facility interconnects with the partnership's Rancho Pipeline and feeds into Enterprise's new ECHO crude oil storage terminal being constructed at a location along the Houston Ship Channel in southeast Harris County, Texas. The pipeline options available to shippers via the terminal would provide access to more than two million BPD of refining capacity in the Houston area.

Teague further stated, "Typical of the strategy that has positioned Enterprise as a key provider of midstream services in the Eagle Ford Shale, this latest agreement leverages our existing integrated network of assets to create a cost-effective and timely solution that will allow Chesapeake to maximize the value of their production by providing access to the largest refining market in the world."

Approximately 165 rigs are presently working in the Eagle Ford Shale, which have drilled more than 1,200 wells. Current production from the play is approximately 100,000 BPD of crude oil and condensate.

Enterprise Products Partners L.P. is the largest publicly traded partnership and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. EPD's assets include approximately: 50,200 miles of onshore and offshore pipelines; 192 million barrels of storage capacity for NGLs, refined products and crude oil; and 27 billion cubic feet of natural gas storage capacity. Services include: natural gas transportation, gathering, processing and storage; NGL fractionation, transportation, storage, and import and export terminaling; crude oil and refined products storage, transportation and terminaling; offshore production platform; petrochemical transportation and storage; and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems and in the Gulf of Mexico.

Beach Briefs Interruption at Tantanna Pipeline

Beach Briefs Interruption at Tantanna Pipeline

Tuesday, April 19, 2011
Beach Energy Ltd.

Beach has been informed by Santos that the pipeline between the Tantanna facility and the Gidgealpa facility has been interrupted due to integrity concerns and is currently being assessed.

The pipeline operated by Beach that feeds the Tantanna facility and transports all the crude oil from the PEL 92 Western Flank oil fields (Beach 75% and Operator, Cooper Energy 25%), remains fully operational. The current capacity of the Beach operated pipeline is approximately 6,000 barrels of oil per day (4,500 barrels of oil per day net to Beach).

Beach is considering all its options at this stage and has started to mobilize trucks to transport the oil from Tantanna to Moomba in the interim. Success to date at Parsons-3, Parsons-4 and Butlers-2 in PEL 92, underpins the Western Flank drilling campaign that is targeting a net increase in reserves to Beach of 6 million barrels of oil.

Circle Oil Hits Gas Pay in Morocco

Circle Oil Hits Gas Pay in Morocco

Friday, April 15, 2011
Circle Oil plc

Circle Oil announced that the KSR-11 exploration well has been drilled, logged and successfully tested in the Sebou Permit, Rharb Basin, Morocco.

The Company confirms a gas discovery in the Main Intra Hoot target and secondary targets available for future testing in the Mid and Base Guebbas sands. The well tested gas at a sustained rate of 4.0 mmscf/d on a 16/64" choke from the Intra Hoot. The perforated Intra Hoot zone of 17.9 meters at 1,761.2-1,779.1 meters MD has a calculated net gas pay of 11.6 meters.

The Base Guebbas zone of 37.7 meters at 1,636.0-1,673.7 meters MD has a calculated net gas pay of 5.5 meters. The Mid Guebbas zone of 22.8 meters at 1,464.1-1,486.9 meters MD has a calculated net gas pay of 4.1 meters. The Guebbas Zones will be tested at a later date following production and depletion of the Intra Hoot producing zone.

The well is being completed as a potential producer.

A full technical evaluation of all the results of the well is underway. This will allow for future planning as a precursor to further assessment of the resource, including conducting an extended well test to give a more complete estimation of the reserves.

The drilling rig is now being demobilized to end the 2010-2011 drilling campaign. Work is underway for consolidation of the results of this campaign together with planning for the next drilling campaign. The preparations for Circle's third Moroccan drilling campaign include the acquisition of a new 3D seismic survey over areas of Circle's permits not previously covered by 3D seismic.

In parallel, recent engineering testing of underground crossings of public transport infrastructure have been successfully completed as part of the construction preparation for the new 8-inch pipeline. Work on the pipeline is progressing in line with management's expectations.

The Sebou permit lies to the north-east of Rabat in the Rharb Basin in Morocco. The Rharb Basin is a foredeep basin located in the external zone of the Rif Folded belt. The concession agreement, in which Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share, includes the right of conversion to a production license of 25 years, plus extensions in the event of commercial discoveries.

Prof. Chris Green, CEO, said, "I am very pleased to be able to report that we have yet again continued our drilling success in Morocco's Rharb Basin. The KSR-11 well has been completed and, when required, will be available for future production. We tested this well at a small restricted choke size and it still achieved a good flow rate with very quick pressure build up. The second drilling campaign has been very successful and we have increased our ability to both supply gas and incrementally increase our resources in line with the business plan for the area. Everyone has worked hard to achieve this result and it is definitely appropriate to thank staff and our service companies for their efforts and also to thank ONHYM for their continuing support to our endeavors."

OGX Hits Oil Pay in Campos Basin

OGX Hits Oil Pay in Campos Basin

Thursday, April 14, 2011
OGX S.A.

OGX has identified the presence of hydrocarbons in the Albian section of well 1-OGX-33-RJS, which is located in the BM-C-41 block, in the shallow waters of the Campos Basin. OGX holds a 100% working interest in this block.

An oil column of approximately 95 meters with approximately 42 meters of net pay has been identified in the carbonate reservoirs of the Albian section. The drilling of well OGX-33, also known as the Chimborazo prospect, was concluded at a final depth of 3,755 meters.

The OGX-33 well is situated 84 kilometers off the coast of Rio de Janeiro at a water depth of about 127 meters. The rig, Pride Venezuela, left the well on April 9, 2011. Drilling of the third extension well (OGX-42) of the Pipeline accumulation has been initiated.

Statoil Mulls Reducing Stake in Gassled Pipeline

Statoil Mulls Reducing Stake in Gassled Pipeline

Tuesday, April 12, 2011
Dow Jones Newswires
by Katarina Gustafsson

Norwegian oil and gas major Statoil is evaluating a sale of some of its shares in the Gassled joint venture pipeline, according to a company spokesman.

"We consider reducing our ownership share in Gassled and believe that could potentially make capital available that we could manage elsewhere where we could use our experience and competence to create more value," Bard Glad Pedersen told Dow Jones Newswires. "We aren't considering to sell out, just to reduce our ownership."

The spokesman declined to comment on whether the firm, which owns 28.5% of Gassled, had been approached by potential buyers and said a transaction would require the approval of Norway's Ministry of Petroleum and Energy.

Norwegian daily Aftenposten reported Tuesday that Statoil, Shell and Total want to sell stakes in Gassled to "foreign funds" based outside Norway, citing unnamed sources.

Gassled is used for transporting Norwegian gas to mainland Europe and the U.K. Its largest shareholder is state-run oil company Petero, which has a 45.8% stake.

U.S. oil major ExxonMobil last year sold its 8% stake in Gassled for around 6 billion kroner ($1.12 billion), so the pipeline's market value may be around NOK75 billion. Bard Glad Pedersen declined to comment on the figure.

Norwegian authorities would like the current ownership structure to remain in place but have few means to prevent a sale, Aftenposten cites Oil and Energy Ministry spokesman Erik Johnsen as saying.

Shell and Total decline to comment on the issue, Aftenposten said.

Koch to Facilitate Eagle Ford Production

Koch to Facilitate Eagle Ford Production

Monday, April 11, 2011
Koch Pipeline Co., L.P.

Koch Pipeline Company, L.P. plans to build a crude oil pipeline from Pettus, Texas to Corpus Christi, Texas to move more Eagle Ford production. Current plans include a 20-inch line, which is currently in the permitting and right-of-way acquisition phase and should be complete in mid-2012.

"With this large-diameter line in operation, Koch Pipeline will have increased its system capability from Karnes County to the Corpus Christi-area to about 250,000 barrels per day," said Kim Penner, president of Koch Pipeline.

The completion of the line is timed with affiliate Flint Hills Resources' updates to an Ingleside terminal that will have the capacity to ship up to 200,000 barrels per day of production via barge to other Gulf Coast markets.

Koch Pipeline is constructing a station near Helena in Karnes County along with connections to tank batteries in Karnes and DeWitt counties as well as a 16-inch pipeline from Helena to Pettus. The 16-inch pipeline will connect to the new line announced today at Pettus.

"With several new lines, our legacy system and arrangements with Arrowhead Pipeline and NuStar Logistics, we are addressing producers' needs to move crude oil and condensate to market," Penner said. "We continue to evaluate major South Texas pipeline projects, including a project to connect producers in Western counties."