Sasol plans integrated gas-to-liquids, cracker complex

South African-based energy and chemicals company Sasol announced it will proceed with front-end engineering and design for an integrated, 96,000 barrel (bbl.) per day gas-to-liquids (GTL) facility and worldscale ethane cracker with downstream derivatives at Lake Charles, Louisiana.

The GTL facility, the first of its kind in the U.S, will produce 4 million tons per year (mtpy), or 96,000 bbl. per day of high-quality transportation fuel, including GTL diesel and other chemical products. Current project ccosts for the GTL facility are estimated between $11 billion and $14 billion.

The GTL project will be delivered in two phases, with each phase comprising 48,000 bbl. per day. The first phase is planned to be in-service 2018 and the second phase will follow in 2019.

The ethane cracker will allow Sasol to expand its differentiated ethylene derivatives business in the U.S. The cracker will also benefit from the current low U.S. natural gas prices and the abundance of ethane.

Current cracker project costs are estimated between $5 billion and $7 billion. Sasol expects start-up in 2017, producing an estimated 1.5 mtpy of ethylene with downstream derivative plants.

Sasol also announced it will adopt a phased approach to the next stage of its planned GTL facility in Alberta. The feasibility study was successfully completed in 2012. Required regulatory application and land procurement processes are under way.

Consolidated regulatory oversight may speed projects

Greater regulatory oversight may actually expedite approval of new natural gas transmission pipelines—in contrast to more lightly regulated crude oil systems, said Mark Lewis, managing partner for the Washington, D.C., office of Bracewell & Giuliani and a member of the firm’s energy practice.

“You have to look at oil and gas pipelines differently,” he told Midstream Business. “With a gas pipeline, you have to go to the Federal Energy Regulatory Commission (FERC) and ask permission. That’s cumbersome and takes time. But look at the (gasprone) Marcellus, look at the Barnett. The infrastructure is getting built on a timely basis. With FERC and the federal government involved, the permitting does get done.”

But with crude projects “it’s a different economic model,” he said. The stalled Keystone XL Pipeline project provides a prime example.

“One of the struggles people see is the lighter regulatory structure on oil pipelines actually makes it harder to get them built. With oil pipelines, you’re dealing with a disparate number of regulators and differing issues. You may not have eminent domain, you may have less certainty on rates—so it’s harder to get financing. It’s counterintuitive,” he added.

Lewis suggested a comparison between those large, gas-prone gas plays and the oily Bakken shale where new crude pipeline capacity stands at a premium. The railroads have become major transportation players instead. He estimated upwards of 40% of Bakken production now moves to market by rail. The Eagle Ford shale, where crude production has been emphasized due to comparatively low gas prices, provides an exception to the trend since pipelines connecting Eagle Ford producers and Gulf Coast refineries and petrochemical plants are wholly Texas intrastate projects.

While there may not be major shifts in the regulatory process soon, “the market’s adjusting, clearly there’s a need for new crude oil pipeline capacity,” Lewis said. The move to firm crude transportation rates and producers taking equity in pipeline projects help speed the process.

ONEOK drops Bakken pipeline proposal

ONEOK Partners LP announced that it did not receive sufficient long-term transportation commitments during its recently concluded open season for the proposed Bakken Crude Express Pipeline and chose not to proceed with plans to construct the pipeline.

Despite this decision, ONEOK Partners said it still expects to increase its EBITDA by an average of 17% to 21% annually between 2012 and 2015, compared with 2012 earnings guidance. The partnership also expects to increase its estimated average annual distributions to unitholders by 10% to 15% between 2012 and 2015.

ONEOK Partners decreased its 2013 capital expenditures estimate to $2.2 billion from $2.6 billion.

The Bakken Crude Express Pipeline would have been a 1,300-mile, crude-oil pipeline with the capacity to transport 200,000 bbl. per day of light-sweet crude oil from multiple points in the Williston basin’s Bakken shale in North Dakota and Montana to the crude market hub in Cushing, Oklahoma.

Williams to invest up to $2.4 billion in Access

The Williams Cos. has agreed to acquire a 50% interest in privately held Access GP and approximately 25% of the limited partner units of Access Midstream Partners LP (ACMP) for approximately $2.4 billion from Global Infrastructure Partners (GIP). Subsequently, ACMP announced plans to acquire most of Chesapeake Energy Corp.’s remaining natural gas and crude oil gathering assets for $2.16 billion.

After closing, Williams and GIP each will own a 50% interest in Access GP, which holds a 2% general partner interest and incentive distribution rights. Williams and GIP have committed to invest up to $1.16 billion in newly issued ACMP limited partnership units and will own approximately 25% and 43%, respectively, of the outstanding ACMP LP units at the time of the transaction closing.

Separately, Chesapeake has affirmed its intention to support Williams’ development of a proposed natural gas liquids (NGL) pipeline that would connect liquids-rich Marcellus and Utica producing areas in the Northeast to large, diverse markets on the Gulf Coast. Williams is developing this project as a large-scale industry solution to support the long-term success of producers in shale-producing areas of the Northeast U.S.

Haddington Energy closes midstream fund

Haddington Ventures LLC has closed its latest private equity fund, Haddington Energy Partners IV LP (HEP IV), with total committed capital of nearly $350 million targeted for investments in midstream energy infrastructure.

Haddington has raised nearly $700 million of equity capital since its formation in 1998. Currently, one-third of Haddington’s management teams are repeat portfolio company management teams from prior Haddington funds.

TEAK Midstream starts Eagle Ford gas plant, gathering system

TEAK Midstream (LLCE) has begun operation of more than 250 miles of gas gathering and residue delivery pipelines and the adjoining Silver Oak 200 million cubic feet (MMcf) per day cryogenic gas processing plant in South Texas, serving the Eagle Ford shale play and surrounding area.

TEAK also announced it recently executed long-term gathering and processing agreements with Comstock Resources Inc. and another major Eagle Ford shale producer that support the facilities. TEAK signed contracts to anchor shippers Talisman Energy USA Inc. and Statoil Natural Gas LLC earlier this year. TEAK plans to expand the processing capacity on its system by 200 MMcf per day by first-quarter 2014, based on volume commitments to date and increasing demand to process liquids- rich gas from the Eagle Ford, as well as from the Buda, Pearsall, Olmos and Escondido formations.

TEAK’s new facilities include two highpressure gas gathering systems. One system consists of 178 miles of 24-inch and 16-inch diameter pipeline with a capacity of approximately 600 MMcf per day. This system originates in Dimmit County on the western edge of the Eagle Ford play and moves rich gas production east through Webb, La Salle, McMullen and Live Oak counties to TEAK’s Silver Oak plant in Bee County. TEAK jointly owns this gathering system with TexStar Midstream Services LP. The second system consists of 22 miles of 20- inch diameter pipeline with a capacity of approximately 400 MMcf per day. This TEAK-owned gathering system moves rich gas production from the Karnes County area to Silver Oak.

TEAK’s new pipeline system also includes approximately 57 miles of 20-inch diameter residue gas pipeline that will deliver dry gas from the Silver Oak plant to six major downstream intrastate and interstate pipelines— Tennessee Gas Pipeline, Channel, Kinder-Tejas, Transco, Texas Eastern and NGPL. Additionally, TEAK constructed approximately three miles of 12-inch diameter NGL pipeline and transports liquids recovered at the Silver Oak plant to the DCP Midstream’s Sand Hills NGL pipeline.

Tortoise Capital Resources changes name

Tortoise Capital Resources Corp., a company that acquires midstream and downstream real property assets from energy companies, announced that it has changed its name to CorEnergy Infrastructure Trust Inc. The company also changed its ticker symbol on the New York Stock Exchange to CORR.

The name change is part of the company’s ongoing transition from a business development company managed by Tortoise Capital Advisors LLC, to a real estate investment trust (REIT) managed by Corridor InfraTrust Management LLC. As part of its rebranding, the company’s website is now www.corridortrust. com. Tortoise will remain an advisor to the company and an affiliate of Corridor.

Lake Charles Clean Energy announces three contracts

Lake Charles Clean Energy (LCCE) announced that it has secured major longterm commercial offtake contracts with BP Products North America Inc., Air Products and Chemicals Inc. and Denbury Onshore LLC, a subsidiary of Denbury Resources Inc., for the Lake Charles Clean Energy project located at the Port of Lake Charles, Louisiana. LCCE is a subsidiary of Leucadia Energy LLC.

This project, employing commercially proven gasification technologies to cleanly manufacture industrial products from petroleum coke, would be the first of its kind in the U.S. LCCE is expected to be one of the world’s lowest-cost producers of methanol and hydrogen and a low-cost producer of other products used in the chemical and refining industries. In addition, the plant is designed to capture, compress and sell 90% of its carbon dioxide (CO2) production for use in enhanced oil recovery along the Gulf Coast.

BP will purchase the majority of the methanol production and Air Products will purchase all of LCCE’s hydrogen and argon and provide air separation units to supply the required oxygen for the project. Denbury Onshore LLC will purchase all of the captured CO2.

Columbia Gas moving forward with East Side Expansion project

NiSource Gas Transmission & Storage (NGT&S), a unit of NiSource Inc., announced plans to move forward with its East Side Expansion project. The project involves the construction of additional capacity on NGT&S’ Columbia Gas Transmission system to help meet increasing demand and transport Marcellus shale gas produced in northern Pennsylvania to markets along the East Coast and the mid- Atlantic region.

The East Side Expansion project, which is supported by binding precedent agreements, will provide up to 310,000 dekatherms per day of additional system capacity. The project calls for constructing additional pipeline capacity along an existing pipeline system, adding compression to an existing compressor station and enhancing interconnects with Millennium Pipeline at Columbia’s Wagoner metering station and with Tennessee Gas Pipeline at Milford compressor station.

Construction on the expansion is expected to begin in early 2015 to meet a targeted in-service date of late 2015.

Methanex receives permits for Louisiana project

Methanex Corp. has been granted the required air permits by Louisiana and the U.S. Environmental Protection Agency to construct and operate its 1 million-ton-peryear methanol project in Geismar, Louisiana.

Methanex officials said the project will create significant value for shareholders, since it can be executed in “significantly less time and with less capital than a similar greenfield methanol plant.”

T.D. Williamson signs pipeline contract with BP

Officials at T.D. Williamson, a pipeline services and equipment company, announced that they signed a global pipeline intervention and isolation services contract with BP plc.

Activities covered by the agreement include hot tapping and Stopple plugging, as well as SmartPlug pressure isolation. The three-year contract earned by TDW is one of only four such contracts awarded worldwide by BP.

Safe isolations are important across BP’s operations for work such as valve replacement and for plant or platform shutdowns. All of the suppliers have committed to a program of continuous improvement and developing best practices leading to industry guidelines.

Williams receives FERC approval for more Northeast gas

Williams Partners LP announced that the Federal Energy Regulatory Commission has approved a proposal to expand its Transco natural gas pipeline to provide an additional 250,000 dekatherms of incremental firm natural gas transportation capacity to serve growing markets in the Northeast by November 2013.

The Northeast Supply Link project is designed to expand the Transco Leidy Line and Transco mainline in Pennsylvania and New Jersey to transport domestic supplies of natural gas to growing northeastern markets.

The expansion project will primarily consist of approximately 12 miles of new pipe at various locations in Pennsylvania and New Jersey, in addition to a new 25,000- horsepower compressor station in Essex County, New Jersey, along with other facility modifications. The capital cost of the project is estimated to be $341 million.

The Northeast Supply Link expansion will provide incremental firm transportation capacity from receipt points on the Leidy Line to New York City and Transco’s Station 210 in New Jersey.

Enterprise completes sixth Mont Belvieu fractionator

Enterprise Products Partners LP announced that the partnership’s sixth NGL fractionator at its Mont Belvieu, Texas, complex is now operational. Expected capacity of the unit is 85,000 bbl. per day, increasing total fractionation capacity at Enterprise’s Mont Belvieu facility to 485,000 bbl. per day.

The new fractionator will facilitate increasing NGL production from domestic shale plays, including the Eagle Ford and other basins in the Rocky Mountain and Midcontinent regions.

Enterprise begins service at ECHO crude oil terminal

Enterprise Products Partners LP announced that the initial phase of its Enterprise Crude Houston (ECHO) storage terminal in Harris County, Texas, is complete, and the facility is now receiving deliveries of crude oil. The first three tanks total 750,000 bbl. of storage capacity. The next phase of the ECHO terminal expansion includes the addition of up to 900,000 bbl. of storage capacity, which could be in service as early as first-quarter 2014.

TECHNOLOGY

Tank car-relief valve announced

Midland Manufacturing, a division of the OPW Fluid Transfer Group, announced the release of its new Hi-Flow pressure relief valve. The valve has received full Association of American Railroads certification.

Midland designed its latest valve to exceed the new higher flow requirements for Packing Groups I & II commodities transported in rail tank cars of 30,000 gallons or more. This requirement includes the two largest commodities, crude oil and ethanol. The valve is available in all standard mounting configurations for new car builds or retrofit applications.Midland is an AAR Class F facility and ISO 9001:2008 certified. Since 2005, Midland has manufactured more than 100,000 tank car pressure relief valves.

INTERNATIONAL

Linde awarded contract for Malaysian LNG Plant

The Linde Group received an order for a mid-scale liquefied natural gas (LNG) plant from Malaysia LNG Sdn. Bhd., a production subsidiary of Malaysia’s national oil and gas company Petronas. The new boiloff gas re-liquefaction facility has a maximum design capacity of 1,840 tons of LNG per day and will be located in the Bintulu LNG complex in Sarawak, East Malaysia.

Linde’s Engineering Division will perform detail engineering, procurement, construction and commissioning of the plant. Linde’s proprietary LNG process and core cryogenic heat exchanger has been customized to re-liquefy boil-off gases from LNG storage and ship-loading and to accommodate large variations in nitrogen content, flow rate and temperature. Linde’s customized process will also enable Malaysia LNG to minimize flaring. The new plant is expected to go on-stream end of 2014.

PEOPLE

Oiltanking Partners names new chief executive

Oiltanking Partners LP announced that Anne- Marie Ainsworth has been selected to succeed Carlin Conner as president and chief executive.

Ainsworth will also serve on the board of directors of Oiltanking. As previously announced, Conner has assumed the role of managing director of Oiltanking GmbH and joined the executive board of Marquard & Bahls AG. Conner will remain chairman of the board of the partnership. A refining industry veteran with 34 years of experience, Ainsworth was most recently senior vice president of Sunoco Refining. Prior to joining Sunoco, Ainsworth was the general manager of the Motiva refinery in Norco, Louisiana.

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