Midstream Business Construction Projects: Permian Pipeliners Push Forward

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[Editor's note: A version of this story appears in the April 2021 issue of Midstream Business magazine. Subscribe to the magazine here.]

Permian Basin

♦ Kinder Morgan Inc.’s Permian Highway Pipeline (PHP) went into full service on Jan. 1, moving natural gas from the Waha hub to Katy, Texas, with connections to the U.S. Gulf Coast and Mexico. The pipe is fully subscribed and boasts a capacity of 2.1 Bcf/d.

Kinder Morgan Texas Pipeline (KMTP), a subsidiary of KMI, operates the pipeline. KMTP has a 26.7% ownership interest in PHP, as does EagleClaw Midstream and Altus Midstream. An affiliate of an anchor shipper has a 20% interest.

♦ Just one day after its former president and CEO left, LNG developer Tellurian Inc. informed the U.S. Federal Energy Regulatory Commission (FERC) on Dec. 1 that it would withdraw its application to build the Permian Global Access gas pipeline in Texas and Louisiana.

The company blamed “current market conditions” on its decision to scrap the $4.2 billion project, which was designed to move as much as 2.3 Bcf/d, 625 miles from the Permian Basin to southwest Louisiana, near the site of its proposed Driftwood LNG export terminal. Tellurian still has plans to spend about $5.1 billion on three other pipeline projects: Driftwood (4 Bcf/d), Haynesville Global Access (2 Bcf/d) and Delhi Connector (2 Bcf/d).

♦ The JV partners of the Agua Blanca pipeline system said that their project went into full service on Jan. 27.

The 1.8 Bcf/d expansion of WhiteWater Midstream and MPLX LP’s gas pipeline brings its capacity to more than 3 Bcf/d. Agua Blanca is connected to about 20 gas processing sites in the Delaware Basin and moves gas produced in Culberson, Loving, Reeves, Pecos, Winkler and Ward counties in Texas, and Eddy and Lea counties in New Mexico, to the Waha hub.

♦ Pinnacle Midstream II LLC unveiled plans in mid-December to build the Pinnacle Dos Picos natural gas gathering and compression system in the Midland Basin, where more than 50 miles of primarily 16-in., low- and high-pressure gas gathering mainlines and compression facilities will service Midland, Martin and Glasscock counties in Texas.

The project is anchored by a 15-year gas gathering, processing and purchase agreement with DoublePoint Energy LLC. The gathering system, designed with expansion in mind, is expected to begin service in second-quarter 2021.

♦ Frontier Midstream Solutions IV LLC announced an open season in late October for its Beta Crude Connector, a crude pipeline in Andrews, Ector, Martin and Midland counties, Texas.

Expected to be in service in firstquarter 2021, the 100-mile pipeline will have a capacity of more than 150,000 bbl/d, with about 200,000 barrels of operational storage. Beta will provide delivery to multiple downstream pipelines, as well as access to local refineries, the Cushing, Okla., hub and the U.S. Gulf Coast.

♦ In early January, owners of the Double E Pipeline asked regulators for the go-ahead to dig. Double E, owned by units of Summit Midstream Partners LP (70%) and Exxon Mobil Corp. (30%), is planned to be a 135- mile pipe with capacity to transport about 1.35 Bcf/d of Permian natural gas to the Waha hub.

Gulf Coast

♦ South Texas Gateway’s second dock began crude export operations just as 2020 was coming to a close. Buckeye Partners LP’s new terminal at the mouth of the Corpus Christi Ship Channel in Ingleside, Texas, also loaded a VLCC for the first time.

The two docks allow South Texas Gateway to load two vessels simultaneously and provide throughput capacity of up to 800,000 bbl/d. The facility’s petroleum products storage capacity will be 8.6 MMbbl when construction is completed, likely in firstquarter 2021. Storage capacity has the potential to expand to 10 MMbbl. The joint venture is 50% owned and operated by Buckeye Partners. Subsidiaries of Phillips 66 Partners LP and Marathon Petroleum Corp. each have a 25% ownership interest.

♦ The new 30,000-tonne refrigerated ethylene storage tank at the Morgan’s Point ethylene export terminal on the Houston Ship Channel began service in late December. The facility, a 50:50 joint venture of affiliates of Enterprise Products Partners LP and Navigator Holdings Ltd., features two docks and the capacity to load 2.2 billion pounds of ethylene per year, with an ultimate nameplate capacity of 1 million tonnes per year (mtpa).

A 600 million-pound ethylene storage cavern at Enterprise’s Mont Belvieu, Texas, complex supplies the tank. In a company statement, Enterprise said it can expand its underground caverns to accommodate additional ethylene storage.

♦ The first two liquefaction trains for Venture Global LNG Inc.’s Calcasieu Pass LNG export facility arrived from Italy in fourth-quarter 2020, months ahead of schedule, the company said in November. Less than a day after they were welcomed to America, the 0.6 mtpa trains were positioned on its foundations at the Cameron Parish, La., site.

The trains were built in Baker Hughes’ factories in Avenza, Italy, and were delivered just 15 months after final investment decision (FID). The Calcasieu Pass plant will ultimately house 18 trains.

♦ NextDecade Corp. pulled the plug on its Galveston Bay LNG project in late January after determining that the need for congressional approval to work on part of the site would lead to prolonged uncertainty

A portion of the site is under Federal Navigation Servitude and serves as an active Dredged Material Placement Area (DMPA) for the Texas City Ship Channel Federal Project. Galveston Bay LNG project would not be able to be built without the U.S. Army Corps of Engineers requesting that Congress authorize the release of its right of Navigation Servitude over this DMPA.

NextDecade stressed that the cancellation does not affect its Rio Grande LNG project, which is on track for an FID in 2021.

Appalachia

♦ Equitrans Midstream Corp. confirmed in early November that its Mountain Valley Pipeline will be both more costly and take longer to build. The price tag is now up to an estimated $6 billion, and the expected in-service date has been pushed back to year-end 2021. The 303- mile, 42-in. pipe natural gas pipe will have a capacity of 2 Bcf/d.

The company will now seek individual permits for each stream the project crosses. Analysts predict that the in-service date will be delayed until the first half of 2022.

Equitrans said “unanticipated delays during the prime 2020 construction season” led to the delay. In October, the U.S. Fourth Circuit Court of Appeals issued a temporary administrative stay of the Mountain Valley’s Nationwide Permit 12, which prevents waterbody crossings under the U.S. Army Corps of Engineers’ permit program. Also slowing progress was a stop-work order from FERC regarding construction in areas inhabited by endangered and threatened species.

Williston Basin

♦ Outrigger Energy II LLC completed construction of its Williston Basin midstream facilities project in Williams County, N.D., the company said in mid-January. The assets include the Bill Sanderson Gas Processing Plant, a 250-MMcf/d cryogenic gas processing plant and an 80-mile, 20- and 24-in. diameter, rich gas gathering system originating in eastern Williams County and terminating at the Bill Sanderson Plant.

The new plant features ethane recovery and rejection capabilities with direct market access to the Northern Border Pipeline system for residue gas and the ONEOK NGL pipeline system for NGL. The assets are anchored by a long-term gas gathering and processing agreement with XTO Energy Inc. The gathering system can transport over 450 MMcf/d of raw gas volumes. Outrigger plans to expand the plant’s capacity to meet producer needs.

West Coast

♦ Just one day before the end of the Trump administration, FERC upheld denial of a clean water permit for the Jordan Cove LNG project by the state of Oregon. The former administration had put the project’s environmental reviews on a fast track in March 2020 but the state had refused to issue water permits.

Pembina Pipeline Corp., which plans to build the $10 billion export terminal and natural gas pipeline, had appealed to FERC to override the state’s decision based on the argument that Oregon had waived its authority under the federal Clean Water Act. The federal regulator disagreed.

♦ Alaska said in February that it was seeking federal stimulus and infrastructure funds to support construction of a 500-mile natural gas pipeline from the North Slope to Fairbanks, Alaska. The Alaska Gasline Development Corp. said an unidentified “major pipeline developer” would build the $5.9 billion project, and it hoped that federal funding would cover 75% of costs associated with that phase of the state’s LNG export plant project.

Canada

♦ President Joe Biden’s executive order to revoke the Keystone XL’s (KXL) presidential permit could be a boon for the Trans Mountain pipeline expansion project. Owned by the Canadian government, Trans Mountain Corp. is spending C$12.6 billion (US$9.9 billion) to nearly triple the crude oil pipeline’s capacity to 890,000 bbl/d. Prime Minister Justin Trudeau’s government purchased the pipeline from Kinder Morgan Inc. in 2018.

In the absence of KXL, Trans Mountain’s strategic value has grown. Along with its ability to transport Canadian crude to the U.S., its Pacific Ocean connection provides access to Asian markets. However, some analysts have warned that, even without KXL, Canada will be saddled with surplus export pipeline capacity when Trans Mountain enters service.

♦ In January, the state of Michigan approved some of the permits needed to build a tunnel under the Straits of Mackinac to house Enbridge’s Line 5 oil pipeline. At issue was a 4.5-mile section that runs underwater along the lakebed.

Line 5 has been a target of Michigan Gov. Gretchen Whitmer, who wants to shut it down because of concerns over a possible spill into the Great Lakes. Enbridge still requires permits from the Michigan Public Service Commission and U.S. Army Corps of Engineers to move ahead with building the tunnel.

On a different project, Enbridge received the final permit from a Minnesota state agency in late November, allowing it to move forward on its Line 3 replacement project. Construction is complete in Canada, North Dakota and Wisconsin, but the $2.9 billion U.S. component of the project was awaiting the go-ahead in Minnesota. When complete in thirdquarter 2021, the pipeline will move crude from Alberta to Superior, Wis.

♦ Operating costs for TC Energy’s Coastal Gaslink pipeline are expected to rise by $42 million a year, the company said. TC Energy cited increased scope, permit delays and COVID-19 impacts for the increase on the $6.6 billion gas pipeline. When complete, the project will connect the Montney shale to LNG Canada’s liquefaction facility under construction near Kitimat, British Columbia.