Midstream Project Update: A Lean Harvest

The midstream project harvest is lean this autumn.

News from the Gulf Coast was positive but in late September, the PennEast Pipeline joined Northeast Supply Enhancement and Constitution among Northeast gas projects killed by permitting problems. It was another blow, both to the industry and the pipe-constrained region. On the other hand, Nord Stream 2 is good to go….

Gulf Coast

The final segment of EPIC Y-Grade LP’s NGL super system was completed in early October when the 165-mile pipeline from Robstown, Texas, to Sweeny, Texas finished construction. The system can serve producers from the Permian Basin and the Eagle Ford Shale.

EPIC is now connected to both the Corpus Christi and Sweeny markets, with the ability to transport and fractionate NGL in both locations. The company’s 175-mile propane pipeline to Sweeny also went into service.

Venture Global LNG’s Calcasieu Pass and Plaquemines export terminals in Louisiana are yet to start deliveries, but they’ve already committed to supplying Poland for 20 years.

In early September, Venture signed a long-term agreement with Polish oil and gas company PGNiG that revised a previous agreement and added 2 million tonnes per annum (mtpa). PGNiG has now committed to purchasing a total of 5.5 mtpa from Venture over the 20-year time frame of the deal.

Calcasieu Pass will export 10 million metric tons per year (MMmt/y) of LNG once deliveries begin next year. Exports from the 20 MMmt/y Plaquemines terminal are expected to begin in 2023.

“Since 2018, our two companies have significantly increased our cooperation, nearly tripling the volume LNG Venture Global will export to PGNiG,” Venture CEO Mike Sabel said. “Poland will lower its carbon footprint and diversify its energy mix by incorporating more American natural gas into its portfolio. Pivoting towards cleaner natural gas from the United States will not only increase Poland’s energy security but also decrease its carbon emissions, and Venture Global looks forward to supporting our partner PGNiG in these efforts for years to come.”

In late August, the Port of Corpus Christi Authority and Howard Midstream Energy Partners (HEP) executed a memorandum of understanding (MOU) stating their intention to convert Howard’s Javelina refinery services facility into the region’s first carbon-neutral hydrogen production facility.

Javelina is connected by pipeline to all six local refineries. The facility controls about 60 million cubic feet per day (MMcf/d) of hydrogen production through a combination of hydrogen entrained in the refineries’ waste gas that the facility processes, and hydrogen produced through a steam methane reformer process.

Currently, the hydrogen is sold back to refineries and other industries to remove impurities like sulfur during the refining process. The port and Howard ultimately hope to scale hydrogen production for exports.

Kinder Morgan Inc. also has its eye on utilizing existing infrastructure to add value in the energy transition. In mid-September, the pipeline giant announced plans to convert a portion of a crude-oriented facility in Louisiana into a renewable feedstock storage hub.

“While likely not a major equity needle-mover in isolation, we see the announcement as an attractive opportunity for KMI to broaden its energy transition product offering alongside the prior acquisition of RNG/LNG producer Kinetrex earlier this year without deviating from the company’s terminal and pipeline wheelhouse,” analysts with Tudor, Pickering, Holt & Co. (TPH) wrote in a research note.

The company will modify tanks and piping located at its Harvey, La., facility to enable segregated storage for a variety of raw material. The work also includes installation of a new boiler for heating tanks and railcars and infrastructure improvements for rail, truck and marine movements.

Permian Basin

An open season was announced in late August for the Texas Expansion Project, a three-mile pipeline that will connect to the Trophy Pipeline LLC’s existing crude oil pipeline in Lea County, N.M. The project will originate in Winkler County, Texas.

Appalachia

Winning a ruling from the U.S. Supreme Court wasn’t enough to convince PennEast Pipeline’s partners that the project would be allowed to be built. The natural gas pipeline was canceled in late September, ending the partnership’s struggle to obtain permits, including water certification from the state of New Jersey.

“The PennEast partners, following extensive evaluation and discussion, recently determined further development of the project no longer is supported,” the company said in an email. PennEast, it said, “has ceased all further development of the project.”

The $1.2 billion project from Pennsylvania to New Jersey would have boasted a capacity of 1.1 Bcf/d. In June, it won an eminent domain rules dispute in the U.S. Supreme Court.

International

Midstream infrastructure firm Prostar Capital closed on a $280 million refinancing of a project at the Fujairah Oil Terminal in the United Arab Emirates. The project will connect the terminal’s crude oil tanks to the Port of Fujairah’s VLCC loading facility via the Matrix Manifold 2 and the ADCOP pipeline, which transports Abu Dhabi’s Murban crude to Fujairah.

The terminal is a 7.4 million-barrel bulk liquid storage facility, and the top-ranked independent operation in the port. It accounted for 29% of throughput in 2020 and represented about 12% of the Fujairah storage market.