TransCanada seeks Keystone veto damages

TransCanada Corp. formally requested arbitration under the North American Free Trade Agreement (NAFTA) provisions over President Barack Obama’s rejection of the Keystone XL pipeline. The company is seeking to recover $15 billion in costs and damages, according to legal papers filed at the end of June.

In January, TransCanada submit-ted a notice for an arbitration claim and attempted to negotiate a settlement with the U.S. government. President Obama rejected the pipeline project last November, seven years after its initial proposal, on grounds that it would not have a meaningful contri-bution to the U.S. economy long term.

Crude exports set new record

U.S. crude oil exports rose to a record 662,000 barrels per day (bbl/d) in May, up from 591,000 bbl/d in April, according to foreign trade data released by the U.S. Cen-sus Bureau as the third quarter began.

Canada accounted for most of the U.S. crude exports at 308,000 bbl/d, followed by the Netherlands, 110,000 bbl/d, and Curaçao, 67,000 bbl/d. Other prominent destinations were Britain at 36,000 bbl/d, Japan at 29,000 bbl/d and Italy at 23,000 bbl/d.

The total export figure was the highest on record since at least 1920, according to government data. U.S. oil exports have risen since the decades-long ban was lifted at the end of 2015. A number of merchants, traders, producers and refiners have moved crude to Latin America, Europe, Asia and other locations.

Tesoro buys Dakota refinery

Tesoro Refining & Marketing Co. LLC acquired Dakota Prairie Refining LLC (DPR), which has a 20,000 bbl/d refinery near Dickinson, N.D., with access to Bak-ken crude oil. It is about 100 miles west of North Dakota’s only other refinery— Tesoro’s 74,000 bbl/d plant at Mandan, outside Bismarck.

The DPR plant produces ultra-low sul-fur diesel, naphtha and residual oils. Tesoro said it plans to continue to market the diesel to local customers and utilize the naphtha and resid at its other refineries. Tesoro will continue to service DPR’s $66 million term-loan debt and contribute approximately $10 million toward working capital.

Separately, Tesoro Alaska closed on the acquisition of Flint Hills Resources’ (FHR) wholesale marketing and logistics assets in Anchorage and Fairbanks, Alaska. The deal includes a Fairbanks airport terminal with 22,500 bbl/d of in-service jet fuel storage and a truck rack; an Anchorage terminal with 580,000 bbl of storage capacity, rail loading capability and a truck rack; all of FHR’s Alaska wholesale fuel marketing contracts; and a multiyear terminalling agreement at FHR’s terminal at North Pole, Alaska, which will provide railroad offload capabilities and will provide Tesoro access to Alaska’s interior. Flint Hills operated a refinery at North Pole that has closed.

North Dakota gas flaring declines

Natural gas flaring in North Dakota has plummeted since 2014 in absolute and percentage terms, according to the U.S. Energy Information Administration (EIA). Starting in 2012, North Dakota had the highest volume of flared gas. Although production has skyrocketed in the area, particularly in the Bakken, “flaring rates and volumes have significantly decreased,” the EIA said, with a total of just 10% of gas flared in March, compared to January 2014’s 36%. The state’s natural gas pro-duction hit a record 1.71 billion cubic feet per day (Bcf/d) in March.

Newly built pipeline infrastructure has alleviated the need for gas flaring, resulting in “more of the Bakken region’s natural gas production … brought to the market,” the EIA said. New wells comprise a signif-icant portion of North Dakota’s flared gas volume. From April 2015 to March 2016, 29% of gas produced by confiden-tial wells—a status that can be attributed to wells in their first six months of production—was flared, while only 15% of gas from non-confidential gas was flared.

Kinder Morgan sells half its stake in Utica project

Kinder Morgan Inc. announced that River-stone Investment Group LLC will become a 50% partner in the Utopia NGL pipeline project. To acquire the interest, Riverstone agreed to an upfront cash payment pro-vided at closing, consisting of reimburse-ment to Kinder for its 50% share of prior capital expenditures related to the project and a payment in excess of capital expen-ditures to recognize the value created in developing the project to this stage.

In addition to the acquisition of the exist-ing assets, Riverstone has agreed to fund its share of future capital expenditures nec-essary to complete construction and com-missioning of the pipeline project. The total project cost is estimated to be approximately $500 million, excluding capitalized interest.

Utopia is a common carrier project that will include approximately 215 miles of new, 12-inch pipeline constructed entirely within the state of Ohio from Harrison County to Fulton County. The pipeline will connect with an existing Kinder Morgan pipeline and associated facilities to transport ethane and ethane-propane mixtures to the petrochem-ical complex at Sarnia, Ontario. The pipe-line is scheduled to become operational in 2018 with a capacity of 50,000 bbl/d. Credit Suisse acted as the exclusive financial advisor to Kinder Morgan for the transaction.

Canadian court overturns Northern Gateway approval

Canada’s Federal Court of Appeals over-turned the approval of Enbridge Inc.’s Northern Gateway oil pipeline, a project frequently combatted by aboriginal groups and environmentalists. The 2-1 ruling said the government had failed to adequately consult with aboriginal groups.

The court sent the issue to Prime Minis-ter Justin Trudeau’s cabinet. According to a statement, Enbridge intends to construct the CA$7.9 billion pipeline, determining the next steps through work with partners, including aboriginal groups. In 2014, Northern Gate-way, designed to carry oil from the Alberta oil sands to northern British Columbia ports, was approved by the Conservative gov-ernment. The con-struction, which was subject to over 200 conditions, spurred a number of lawsuits from British Colum-bia aboriginal com-munities. Trudeau has voiced opposi-tion to the project.

Sabine Pass to offer notes

Sabine Pass Liq-uefaction LLC will offer $1 billion in senior secured notes due 2026, according to parent company Cheniere Energy Partners LP. Sabine Pass will use net proceeds from the offering to prepay part of the amounts cur-rently outstanding under its credit facilities and to pay associated fees and expenses.

Enterprise probes plant fire cause

Enterprise Products Partners LP said it is investigating the cause of a fire that occurred in late June at its gas processing facility in Pascagoula, Miss. There were neither injuries nor impact to the surrounding community, and the fire was restricted to inside the plant, Enterprise said. The plant was shut in, impacting production from several offshore platforms in the Gulf of Mexico.

The three-train plant has a capacity of 1.5 Bcf/d and was averaging 400 million cubic feet per day (MMcf/d) at the time of the fire, it added.

Enterprise assumed 100% ownership of the Pascagoula plant after it purchased an outstanding interest from BP Plc during the first quarter.

EnLink to build Permian system

EnLink Midstream announced plans to construct a crude oil gathering system called Greater Chickadee in the Permian Basin’s Upton and Midland counties, Texas. The partnership said its investment for Greater Chickadee, which will comprise 150 miles of high- and low-pressure pipelines trans-porting crude to the Midland, Texas, area, is roughly $70 million to $80 million.
The project will also involve construc-tion of multiple central tank batteries, plus truck injection and storage stations to maximize shipping and delivery options for producers. The initial phase of Greater Chickadee will be operational in the sec-ond half of this year with full service expected early next year. Approximately 35,000 dedicated acres in Upton County, Texas, are included in the project, and the acreage’s current production is above 10,000 bbl/d.

Fairway plans to launch an IPO

Fairway Energy plans to go public this year and has filed an initial registration form with the U.S. Securities and Exchange Commission. The company said it will go public any time after Aug. 1.

Fairway is building some 11 million bar-rels (MMbbl) of underground crude storage in Houston. The facility will connect local refineries and terminals on the Houston Ship Channel. The company said it expects to begin service by next Jan. 1.

The firm added it is considering imple-menting an auction for space at its caverns, which would operate in a similar manner to the monthly auction for space at the Louisi-ana Offshore Oil Port.

Fairway is also talking with CME Group about launching a physically deliverable exchange-traded contract. The company is pushing for futures contracts on Western Canadian Select, Eagle Ford and domes-tic sweet crude. Customers will have the option to lease an entire cavern at Fairway’s facility, totaling 1.5 MMbbl.

NGL completes private placement

NGL Energy Partners LP completed its pri-vate placement of 10.75% Class A convert-ible preferred units with funds managed by Oaktree Capital Management LP, including a vehicle funded by Partners Group private markets investment manager.

In April, NGL agreed to issue $200 mil-lion of 10.75% Class A units to Oaktree, later increased to an aggregate $240 million. Net proceeds will repay outstanding revolving credit facility borrowings, which could be reborrowed to fund capex.

NGL and Oaktree will jointly pursue future opportunities within NGL’s busi-ness segments. RBC Capital Markets, UBS Investment Bank and Deutsche Bank Secu-rities Inc. were NGL’s placement agents and financial advisors. Andrews Kurth LLP was its legal counsel while Barclays was Oaktree’s financial advisor and Vinson & Elkins was legal counsel.

Separately, NGL announced that, due to additional shipper interest, it would hold a second binding open season for its wholly owned Grand Mesa Pipeline LLC crude pipeline. The season was expected to close at the end of July.

Grand Mesa will provide takeaway capac-ity for oil producers in the Denver-Julesburg Basin. The pipeline is expected to be in oper-ation in November and originates in Weld County, Colo., extending 550 miles south-east to NGL’s terminal at Cushing, Okla. The pipeline will be capable of receiving and batch transporting 150,000 bbl/d day.

Venezuela’s oil minister sees $10 oil price hike

Oil prices will likely rise by $10/bbl this summer, Venezuela’s oil minister said, adding that the South American nation and OPEC member’s output could increase by as much as 200,000 bbl/d in the next six months.

Eulogio Del Pino said in an interview that increased demand and lower supply would help boost oil prices in the coming months. Prices began falling dramatically two years ago as a result of a global supply glut.

“Two million barrels more in demand and a million barrels less supply will trans-late to a recovery of prices that we estimate to be some $10,” he said.

Del Pino said state oil company PDVSA has launched a broad effort that includes cooperation with joint ventures and new contracting arrangements with service companies that will help it boost output, which has been weakened by low prices.

OPEC data said Venezuela’s output dropped to 2.37 MMbbl/d in May. How-ever, Del Pino said in June that output was at 2.7 MMbbl/d for the month and would rise to 2.8 MMbbl/d by the end of the year.

Meanwhile, “The downside risks for Venezuela’s oil production seem to be increasing,” Barclays said in a research report. The country’s output could decline to end the year at about 2.1 MMbbl/d, the bank added. Amid a cash crunch, Venezue-la’s oil industry is suffering from spare parts shortages, the retreat of oil services compa-nies due to unpaid bills, maintenance issues and crime.

EnLink begins NGL exports

EnLink Midstream announced it has begun exporting butane from its 195,000 bbl/d Riverside fractionator on the Mississippi River to customers in the Caribbean. The company is also exporting other products, such as propane, from the Louisiana plant to other markets in Latin America.

The facility, which completed an expan-sion to transload 14,500 bbl/d of crude oil from railcars to barges and pipelines several years ago, was upgraded recently to export NGL products, the company said.

T.D Williamson sells GAZOMAT

ECOTEC International Holdings acquired GAZOMAT SARL, a Strasbourg, France-based subsidiary of T.D. Williamson. GAZOMAT manufactures portable gas leak detection instruments and first-responder environmental safety equipment. It also provides leak detection services. ECOTEC designs and develops specialty equipment for markets such as gas collection and transmission, utilizing comparable core technologies and serving corresponding markets.

Consumer group fights lease sale cancellation

The Consumer Energy Alliance submitted a petition with more than 650 signatures of New Mexico citizens to U.S. Bureau of Land Management Director Neil Kornze, asking the agency to reconsider its deci-sion to cancel an October oil and gas lease sale near Chaco Culture National Historic Park in New Mexico. The park is southeast of Farmington, N.M., in the San Juan Basin.

“By canceling this lease sale, the BLM is adding economic strain to a state that is already under duress,” CEA President David Holt wrote in the letter. “The real-ity of this decision is that New Mexico will not create new jobs, will not realize millions in private investment, and new, greatly needed tax revenue will not be collected to support New Mexico’s schools, public safety personnel and municipal services, such as road repairs.”

Holt added the cancellation of a lease sale in a major gas-producing region also ignores the growing importance of gas production to the U.S. and New Mexican economies.

Williams, Stone sign gathering agreement

Stone Energy Corp. and The Williams Cos. Inc. signed an interim midstream contract, allowing Stone to resume pro-duction in the Marcellus Shale. Stone said the gathering and processing agree-ment will provide service to Mary Field in West Virginia.

Field volumes were 45 million cubic feet equivalent per day (MMcfe/d) at the end of June but were expected to climb to more than 60 MMcfe/d in July to more than 100 MMcfe/d by August. The volumes are in addition to the about 20 MMcfe/d pro-duced from the Heather and Buddy fields in the region.

TransCanada closes Columbia purchase

TransCanada Corp. and Columbia Pipe-line Group Inc. said all closing con-ditions for TransCanada’s acquisition of Columbia were satisfied and closed the agreement July 1. The aggregate purchase price was about $13 billion, including assumption of approximately $2.8 billion of debt. Columbia became an indirect, wholly owned subsidiary of TransCanada.

With the merger, Columbia’s common shares were canceled and converted into the right to receive $25.50 per share in cash, without interest, subject to the terms and conditions of the merger agreement, which the companies announced in March.

KKR invests in ecology firm

Ecological solutions company Resource Envi-ronmental Solutions LLC (RES) received an investment from Kohlberg, Kravis, Rob-erts & Co. LP (KKR). Financial terms were not disclosed.

RES provides commercial solutions that help clients manage risk from oper-ations in environmentally sensitive areas. RES’ environmental conservation and restoration activities include permitting restored wetlands, streams and species habitats to preserve land, enhance water quality and protect wildlife. New York-based KKR is making the investment from its eleventh Americas Private Equity investment fund.

BP sets first LNG tanker canal transit

BP Plc made the first LNG tanker transit of the enlarged Panama Canal at the end of July. The 138,517-cubic-meter British Merchant left Trinidad and Tobago for the Pacific market. According to the Pan-ama Canal Authority, at the end of the second quarter there were no other LNG tankers scheduled to traverse the canal this year. Part of this lack of LNG ship-ments is because U.S. shippers are focus-ing more on Europe and South America as the price spread to Asian markets is tightening due to lower prices and an oversupplied market.

Separately, the very first vessel to make a routine transit of the canal following ded-ication ceremonies in late June was NYK Line’s LPG tanker Lycaste Peace, transport-ing propane from a Houston Ship Channel terminal to a Japanese customer.

The Panama Canal’s $5.25 billion expansion project was completed in June—several years late. It is expected to provide LNG, LPG and petroleum prod-uct shippers from the U.S. Gulf Coast with faster and cheaper transit routes to Asia and other Pacific markets.

Three promoted at EnCap Flatrock

Gregory C. King and Dave Kurtz were pro-moted to managing partners and Dennis J. McCanless was promoted to partner of EnCap Flatrock Midstream.

King joined EnCap Flatrock as senior adviser in 2015, bringing more than 30 years’ energy industry experience with a focus on liquids. He is based in San Antonio. Based in Oklahoma City, Kurtz is on the board of Tall Oak Midstream II LLC and is also a director at Cardi-nal Midstream II LLC and Lucid Energy Group II LLC.

McCanless is president and a director of Toledo Bend Midstream LLC. He is also a member of the board of EagleClaw Mid-stream LLC, Stakeholder Midstream LLC and Tradition Midstream LLC. He is based in San Antonio.

Columbia promotes Chapman to president

Stanley G. Chapman III was named pres-ident of the general partner of Columbia Pipeline Partners LP following the firm’s acquisition by TransCanada Corp. He will continue to serve as a director and also was appointed senior vice president and gen-eral manager, U.S. natural gas pipelines, for TransCanada. Previously, he was the general partner’s executive vice president and COO.

Snider named Laney’s COO

Alan Snider has been named president and COO of Laney Directional Drilling, the company announced. Snider joined Laney in 2011 and has more than 26 years’ experience designing and managing complex horizontal directional drilling (HDD) and direct pipe (DP) projects for pipeline crossings. Snider handles leadership of HDD, DP, engineer-ing, sales and marketing, and estimating teams. Snider had been vice president of engineering and project management since joining the company.

Shell green lights Pennsylvania cracker

Shell Chemical Appalachia LLC made the final investment decision in June to build a major petrochemicals complex near Pittsburgh.

The complex, which will be an ethylene cracker with a polyethylene derivatives unit, will produce 1.6 million tonnes of poly-ethylene per year from low-cost ethane provided by shale gas producers in the Mar-cellus and Utica basins.

Main construction on the complex in Beaver County, Pa., will start in about 18 months. Commercial production is sched-uled to begin early in the next decade. The complex and its customers will be close to gas feedstock and supply chains that are shorter and more dependable than those from the Gulf Coast.

Vaquero commissions Caymus I gas plant

Vaquero Midstream LLC commissioned its Caymus I gas processing facility on a 330-acre site in Pecos County, Texas, in July. The plant will process gas from the Avalon, Wolfcamp and Bone Spring shale forma-tions in the Delaware Basin.

ethane cracker near Axiall’s existing Lake Charles plants. The new cracker is expected to produce 1 million tons per year. Axiall will use its share of the ethylene to make vinyl chloride monomer, a plastics precur-sor, as well as caustic soda, chlorine and ethylene dichloride.

Lotte Chemical will build a $1.1-billion plant adjacent to the ethane cracker that will produce 700,000 tons per year of MEG using a portion of ethylene produced by the plant. The MEG plant is expected to be the largest in the U.S., the companies said.

Its tailored UOP Russell cryogenic pro-cessing system can handle 200 MMcf/d of gas. The plant could expand with four additional 200 MMcf/d processing trains, Vaquero said, as production increases.

The plant has oversized inlet liquids handling with condensate stabilization and storage, inlet compression to minimize field pressure, amine treating, propane refrigeration prior to cryogenic processing and dual-drive residue compression.

Caymus I is supplied by an 80-mile high-pressure gathering system connecting Pecos, Reeves, Ward and Culberson coun-ties, Texas, to the facility. This gathering system is designed for volumes of more than 800 MMcf/d. Multiple outlets at the Waha gas hub are connected by a 16-inch residue header.

Firms break ground for new ethane cracker

LACC LLC, a joint venture (JV) of Lotte Chemical and Axiall Corp., broke ground on a $3-billion petrochemical facility in Lake Charles, La., that will include an ethane cracker and monoethylene glycol (MEG) production plant.

The JV plans to build a $1.9-billion Both plants are expected to begin oper-ating in 2019. Lotte will be the sole owner of the MEG plant, with construction on that site and the ethane cracker underway now. The ethane cracker will be shared equally by the two companies.

Meanwhile, Westlake Chemical Corp. will acquire Axiall for $2.3 billion after sev-eral bid attempts. The combined company will be the third-largest chlor-alkali pro-ducer and the second-largest PVC producer in North America.

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