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Pipeline capital spending accelerates with more than $10 billion in North American projects
The U.S. downstream industry is rapidly responding to the energy renaissance with pipelines and infrastructure to transport refined products to the Gulf Coast, northeast or nearby consumers.
Globally, more than $535 billion worth of projects are forecasted in the oil and gas pipelines industry, according to Industrial Information Resources (Industrial Info). Of these, $1.7 billion worth are associated with maintenance projects.
In North America, Industrial Info has deemed $10.92 billion worth to have a medium or high probability to begin construction from May 2018 to May 2019.
Total NGL volumes in the U.S. are anticipated to almost double within the next five years pushing the need for pipelines to support industry growth, according to the U.S. Energy Information Administration (EIA).
Industrial Info also is forecasting $96.72 billion worth of oil and gas industry projects in Africa, Asia, Europe, Middle America and South America that are rated at medium or high probability of beginning construction as planned.
Image: Industrial Info
Of note in the U.S., Enterprise Products and Permico Energia both have $750 million in high-probability natural gas liquids (NGL) pipeline projects in West Texas that will begin construction in the second half of 2018. Each pipeline is more than 500 miles long.
Enterprise’s 24-inch Shin Oak pipeline will extend 571 miles from Orla to Mont Belvieu, Texas. This pipeline is anticipated to begin service in the second quarter of 2019.
Shin Oak's initial capacity is 250 M barrels/day and is expandable to 600 M barrels/day to service growing production coming from the Permian Basin.
This pipeline connects incremental NGLs from the basin to the petrochemical and refining markets along the Gulf Coast, as well as international markets through its export terminals.
The first of three processing trains at the Orla, Texas natural gas processing complex began service in May.
The Orla 1 plant has a nameplate capacity of 300 million cubic feet per day (MMcf/d) of natural gas processing and can extract more than 40,000 barrels/day of NGLs.
The start-up of the initial processing train at the Orla complex will be followed by the start-up of the Orla 2 processing train in the fourth quarter of 2018 and the Orla 3 processing train in 2019.
When complete, the three trains will be able to process up to 1 billion cubic feet per day (Bcf/d) of natural gas and have the capacity to produce 150,000 barrels/day of NGLs.
In conjunction with the Orla 1 start-up, Enterprise also placed into service approximately 70 miles of high-pressure residue natural gas pipeline connecting the plant to its existing intrastate natural gas pipeline system and a 30-mile extension of its NGL system to provide producers with takeaway capacity and direct access to Enterprise’s integrated network of NGL assets.
“The start of operations at our Orla natural gas processing complex will facilitate continued growth of natural gas and NGL production in the Permian Basin, which is expected to double over the next four years,” said A.J. “Jim” Teague, chief executive officer of Enterpise’s general partner in a statement.
“The completion of the three trains at Orla, along with Enterprise’s existing assets, will increase our processing capacity in the Permian Basin to 1.5 Bcf/d. When combined with Enterprise’s extensive integrated midstream network that includes our NGL fractionation and storage complex in Mont Belvieu, Texas, Orla will support Delaware Basin producers with flow assurance and access to expanding domestic and international markets.”
Enterprise is also planning two additional pipeline expansions that will transport NGLs from Colorado to a storage facility in Texas.
One pipeline will bring NGLs from northeastern Colorado, the heart of the Denver-Julesburg Basin, to Skellytown in North Texas.
Enterprise hopes to nearly double the Front Range pipeline by adding a capacity of 100,000 barrels/day and bring the pipeline network to a total capacity of 250,000 barrels.
The planned Colorado expansion will stretch for 435 miles and is expected to begin service in mid- 2019.
Enterprise's second announced expansion will connect Skellytown to Mont Belvieu with another NGL pipeline. That extension will add 90,000 barrels a day of capacity to a pipeline that will stretch 583 miles and is also expected to be in service in 2019.
Permico’s Texas NGL Project will pipe NGLs produced from the Permian, Delaware and Eagle Ford basins to the Corpus Christi area where they will be fractionated into purity products and moved into Texas and international markets via product pipelines and water borne transport.
The fractionator will have yet another pipeline, called Markham, that will have a length of 116 miles, have a capacity of 175,000 barrels/day and have ethane, propane and y-grade service. This pipeline will terminate at the Markham storage facility.
Construction began in the second quarter of 2018, and operations should start in the fourth quarter of 2020, the company said.
To continue industry growth, infrastructure hurdles must improve, construction managers told Petrochemical Update.
Project managers lament that the U.S. Federal Energy Regulatory Commission (FERC) approval process to get pipelines started is long and challenged by multiple groups and must be considered as a key hurdle in project planning.
As a recent example, the Atlantic Coast Pipeline is slated to deliver an additional 1.5 Bcf/day of shale gas into the Mid-Atlantic region. Its roughly 600-mile path would run from West Virginia through Virginia and on to eastern North Carolina.
But the pipeline is now challenged over the extent to which construction can move forward on the 600-mile natural gas pipeline project, following an appeals court decision in May vacating a U.S. Fish and Wildlife Service authorization.
The Southern Environmental Law Center, which represented the environmental litigants, told the FERC in a filing that the agency must halt all on-the ground construction and stop all notices to proceed.
Developer Dominion Energy issued a statement saying it remained confident in project approvals.
“The project will continue to move forward with construction as scheduled,” Dominion said in its statement adding that limited areas are affected by the order.
By Heather Doyle