Operators schedule 16,400 miles for 2006 construction

Worldwide construction in 2005 reached 15,000 miles

of mainline gas, crude oil and products pipeline systems.

Buddy Ives, Publisher
Bruce Beaubouef, Senior Editor

Worldwide pipeline construction in 2006 is projected to be up slightly from 2005 levels, as the industry continues to look at building additional systems to meeting growing demand for natural gas in the U.S and the key international regions.

Worldwide, pipeline companies built more than 15,039 mi of mainline gas, crude oil and refined petroleum products system last year. Some 16,465 mi are projected in 2006.

Contractors in the U.S. laid 4,302 mi in 2005, and projects scheduled for 2006 are expected to add some 4,768 mi to the country’s energy transportation network. Activity includes 3,337 mi of cross-country and offshore natural gas facilities, and 1,431 mi of liquids lines.

Outside the U.S., some 10,737 mi were built in 2005. For this year, pipeline companies are projected to lay some 11, 697 mi, including 6,902 mi of cross-country and offshore natural gas lines.

Natural gas again will lead U.S. activity, with liquids lines showing a slight increase in activity from recent years. Gas operators, in many cases, continue to watch on market conditions as they make construction commitments.

U.S. onshore

Pipeline activity in the Rocky Mountain region will pick up this year, with construction expected to take place on at least two projects. Work will continue on the Entrega gas pipeline, which calls for the construction of a 327-mi, 36 and 42-in. pipeline to deliver western Rocky Mountain gas to regional and interstate markets. U.S. Pipeline, Inc., has been awarded spreads one and two of segment one, which entails building a 136-mi, 36-in. line from the Meeker hub in Colorado to Wamsutter, Wyoming. Work on this segment is expected to be completed late in 2005. Entrega says it plans to construct segment two of the pipeline, involving 191 mi of 42-in. pipe from Wamsutter to the Cheyenne hub, in the fall of 2006.  

El Paso has received FERC approval for Wyoming Interstate Company’s (WIC) Piceance lateral expansion. This project calls for construction of a 142-mi, 24-in. pipeline from the Colorado Interstate Gas Company (CIG) Greasewood compressor station in Rio Blanco County, Colorado, to the CIG Wamsutter compressor station in Sweetwater County, Wyoming. Sheehan Pipe Line Construction Co. and Gregory & Cook Construction Co. have been selected to build the line. A March 2006 completion is planned.

In the Northwest, Williams has received FERC approval for its $333-million Capacity Replacement project, designed to expand capacity on its Northwest pipeline system in Washington state. The project calls for construction of approximately 80 mi of 36-in. pipe, in four sections between Sumas and Washougal, and the addition of 10,760 net horsepower of compression at existing stations. Snelson Companies, Inc. is undertaking directional drills of the North Fork of the Nooksack River, and on the South Fork and North Fork of the Stillaguamish River. A contract for the main pipeline work will be awarded in time for the planned May 2006 construction start. A November completion is planned.

In Texas, Kinder Morgan, Inc. says that its Natural Gas Pipeline Company of America (NGPL) subsidiary will move forward with a $16-million expansion of its A/G Line in Lamar and Morris counties, Texas. The 800-mile A/G line connects NGPL’s Amarillo and Gulf Coast pipelines. The expansion involves building a 95-mi, 30-in. line in Lamar County, Texas,  and also the installation of 9,500 horsepower of compression at a site in Morris County, Texas. It is designed to provide producers in the growing Barnett Shale supply basin with greater access to attractive markets via the NGPL system. Subject to expedited regulatory approvals, an October 2006 completion is planned.

The upper Gulf Coast is another area of increasing activity. CenterPoint Energy, Inc., has announced plans to build a $375-million, 168-mi, 42-in. pipeline that will move natural gas from Carthage, Texas, to the Perryville hub in northeast Louisiana. The project is part of an agreement between CenterPoint Energy Gas Transmission Co. (CEGT) and XTO Energy Inc., in which CEGT will transport approximately 600 MMcfd of XTO’s natural gas production for 10 years. CenterPoint says it is developing the engineering, permitting, and other elements required for a FERC application. Early plans call for a late 2006 or early 2007 completion. The company says that it will also evaluate an extension of the project to gain incremental access to pipelines primarily serving southeastern markets.

In addition, Kinder Morgan has proposed building the 38-mile Carthage pipeline, which would move gas from Beckville, Texas, to Stonewall, Louisiana. This line would deliver to gas several existing interstate systems via interconnects, and would terminate at a new $225-million pipeline being planned by Crosstex Energy. The Crosstex project would extend the LIG pipeline system northward with 65 miles of 36-in. pipe, from the Shreveport area to Natchitoches. The Crosstex expansion is expected to be in operation by summer of 2006.

In the Midwest, Vector Pipeline L.P. has filed an FERC application to expand its gas transmission system by building two new compressor stations in Illinois and Michigan. The $70.4-million project would bring 45,000 horsepower in added compression through a new station in Joliet, Will County Illinois, and another in Washington Township, Macomb County, Michigan. At the Joliet station, Vector plans to add a single unit, 15,000-hp natural gas driven turbine compressor. The Washington Township station would house two 15,000-hp natural gas fueled turbine compressor units. Vector has requested that the FERC grant the certificate by November 2006 so that it can meet a November 2007 in-service date.

In the southeast, El Paso Corp. subsidiary Southern Natural Gas (SNG) Co. has filed an application with FERC to build its proposed $240-million Cypress natural gas pipeline project. As proposed, the project would expand the SNG system by building a 176-mi, 24 and 30-in. pipeline from Savannah, Georgia, to Jacksonville, Florida. Three new compressor stations would also be built, totaling approximately 31,050 horsepower, and other appurtenant facilities would be added as well.

The FERC has issued a positive preliminary environmental approval for the Cypress project. With timely approvals, construction could begin in the fall of 2006. SNG says that the project will be constructed in three phases, with phased in-service dates of May 1, 2007, May 1, 2009, and May 1, 2010.

In the Northeast, developers of the Millennium pipeline project have submitted an amended filing with FERC to build the reconfigured project in phases. Phase 1 will entail construction of a 182-mi, 30-in. pipeline to run from Corning to Ramapo, New York. Plans also call for the addition of natural gas compression at Columbia Gas Transmission’s existing Corning compressor station, located in Steuben County. Phase 2 will cross the Hudson River, linking to the New York City metropolitan market. To date, regulatory hurdles have blocked the pipeline from crossing the river. Pending receipt of necessary approvals, construction is expected to begin in mid-2006, and work toward a November 2007 completion.

On a related project, National Fuel Gas Co. has filed an application with FERC to build the $144-million Empire Connector, an expansion of its Empire State pipeline system that would provide upstream supply for Phase 1 of the Millennium project. Plans call for a 78-mi, 24-in line that would run from Rochester to Corning, New York. In addition, a new 20,620 horsepower compressor station will be built at Oakfield, New York. The company has requested that FERC provide a determination on the application in spring 2006. With timely approvals, construction would begin in spring 2007 for a fall completion.

U.S. offshore

Amberjack Pipeline Company LLC has agreed to build a crude oil pipeline for the Tahiti Prospect in the Gulf of Mexico, in 4,000-ft-plus waters. Amberjack says it will construct the 52-mi Tahiti lateral with a minimum 20-in. diameter, from the Tahiti facility in Green Canyon block 641 to a Shell platform in Green Canyon block 19. There, it will connect to existing systems. Plans call for a 2007 completion.

Enbridge Offshore Pipelines LLC says it will spend (U.S.) $100 million on its Neptune lateral project, which will connect the deepwater Neptune oil and gas field to existing offshore pipelines. The project involves building two 23-mi lines, a natural gas gathering lateral and a crude oil lateral. The Neptune field is about 120 miles off the coast of Louisiana. A second-quarter 2007 completion is planned.

Williams reports plans to extend its Canyon Chief and Mountaineer pipelines to support oil and gas development in the Blind Faith field in the deepwater Gulf of Mexico. The $177-million project will involve a 37-mi extension of each pipeline to reach the Blind Faith field, located in approximately 7,000-ft waters in Mississippi Canyon blocks 695 and 696. A mid-2007 completion is planned.

Canada

In Canada, Kinder Morgan Canada (formerly Terasen Pipelines) has also announced plans to expand its existing Corridor pipeline. The expansion includes building a new 288-mi, 42-in. diluted bitumen line, and upgrading existing pump stations along the existing pipeline system, from the Muskeg River Mine north of Fort McMurray to the Scotford Upgrader in the Edmonton region.

In addition to the pipeline expansion, the company says it plans to install new, larger pumps at the Muskeg River, Crow Lake, Scotford North and Scotford South pump stations, adding some 56,850 hp of new pump capacity to the system. Plans also call for a 27-mi, 20-in products pipeline to be constructed from the Scotford refinery in Fort Saskatchewan to the company’s terminal south of Edmonton. Terasen filed an application with the Alberta regulatory authorities in December. Pending regulatory approval and market conditions, construction would begin in late 2006, and work toward a first-half 2009 completion.

Terasen has also announced a phased expansion of its Trans Mountain crude oil pipeline system, to provide additional capacity for growing oil sands production. The first phase, estimated to cost Cdn $210 million (U.S. $177 million), will entail building new and upgrading existing pump stations along the existing system between Edmonton and Burnaby, B.C. The company has filed an application with the NEB to build phase one. Pending regulatory approval, construction would get underway to meet a first-quarter 2007 completion.

Europe 

In the North Sea, pipelay will continue on the 745-mi, 30, 42 and 44-in. Langeled offshore natural gas pipeline project. The Ormen Lange license group has awarded installation contracts to Stolt Offshore, Allseas, and Saipem. Plans call for two 74-mi, 30-in. lines to run from the Ormen Lange field, offshore Norway, to Nyhamna on the Norwegian coast. From there, a 42-in. line will run south to the Sleipner riser platform, followed by a 44-in. line to Easington on the English coast. The Stolt Offshore LB200 is installing the Langeled line south from Statoil’s Sleipner Riser gas transport hub in the Norwegian North Sea, and the Allseas vessel Tog Mor has completed the landfall tie-in at Easington, and is installing the first 15 kilometers from land. Pipelay is halfway completed, and while some gas will start flowing this October, the overall project is set for an October 2007 completion.

Also in the North Sea, Gasunie is moving forward with its (EU)$500-million (U.S.$616-million) BBL natural gas pipeline project. Plans call for a 146-mi, 36-in. line to link Balgzand in The Netherlands with Bacton on the Norfolk coast of the UK. Saipem has been awarded the lump sum contract for the installation of the pipeline and associated land-fall and tie-in works. The vessel Castoro Sei will carry out most of the pipelay between second and third quarter 2006.

Caspian

Construction is nearing completion on the $900-million South Caucasus Pipeline (SCP) project, designed to move natural gas to markets in Georgia and Turkey. Starting from the Sangachal terminal, the line will run 428 miles with 42-in. pipe through Azerbaijan and Georgia to the Turkish border. Consolidated Contractors International Co. is carrying out the work in Azerbaijan, while construction in Georgia is being performed by a Petrofac/Spie Capag joint venture. Over 95% of the SCP has been constructed, with good progress being made in completing hydrotesting of the line throughout the high mountainous section in Georgia. Facilities for the off-take of gas are 98% complete in Turkey and 95% complete in Georgia. A September completion is planned.

Africa

Work will continue on the $590-million West African Gas Pipeline (WAGP) project, designed to deliver natural gas from Nigeria for power generation and industrial development in Ghana, Togo and Benin. It calls for a 34-mi line from Alagbado to Seme beach in Lagos state in Nigeria; and the larger, 430-mi offshore line. The offshore portion was proposed to have landfall spurs at Cotonou (Benin), Lome (Togo), Tema (Ghana), Takoradi (Ghana) and Effasu (Ghana).

Horizon Offshore was  awarded a contract by WAPCo. for the installation of a 20-in. main gas transportation pipeline which will extend some 360 mi from Lagos to Takoradi, running along the coastlines of Togo and Benin with feeder spur lines to each of those countries. Work on this portion of the project began last year, and will continue this year to meet an October completion.

Far East

In the Far East, work also continues on the $2.5-billion Sakhalin II oil and gas project in Russia. The project involves construction of some 994 mi of crude oil and natural gas pipelines on Sakhalin Island, offshore eastern Russia. Plans call for a roughly 500-mi, 20, 24 and 48-in. onshore twin pipeline system. The system will connect the Piltun-Astkhskoye and Lunskoye fields, off northwest Sakhalin Island, to an LNG plant and oil export terminal at Prigorodnoye, in the southern part of the island.

The U.S.$1.2-billion onshore pipeline contract involves the engineering, procurement (excluding line pipe) and construction of the twin pipeline systems. A consortium led by Starstroi and including LUKoil-Neftegazstroi, together with the European companies Saipem SA and AMEC Spie Capag is performing the work. The onshore pipelines are expected be operational in March 2007.   

Saipem has been awarded two offshore contracts, together worth U.S.$343 million. It is installing a twin pipeline system connecting the Lunskoye and Piltun-Astkhskoye platforms to the shore. 

South America

In Brazil, construction is underway on the first phase of the Petrobras (U.S.)$309-million Malhas Sudeste natural gas pipeline project, designed to increase gas transport capacity between the southeastern states of Sao Paulo and Rio de Janeiro.

The first phase involves building a 278-mi, 28-in. line, from Campinas in Sao Paulo to the Japeri terminal in Rio de Janeiro. Petrobras has selected the CCDL Construções de Dutos consortium to build the line. The group is comprised of Japan’s Toyo Engineering Corporation and Brazilian engineering firm Camargo Correa, with Brazilian engineering firms GDK and Azevedo Travassos, and Argentina’s Techint serving as subcontractors. A 2007 completion is planned.

In Argentina, natural gas regulator Enargas is considering the construction of a (U.S.)$600 to $700-million pipeline to bring natural gas from the south of the country to meet demand further north. The so-called San Martín II line would run a similar route to gas transport company TGS’s existing San Martín line, which is presently being expanded. If the project goes forward, the San Martín II line would start operations in 2006.

Mexico

TransCanada Corp. says that it has been awarded a contract by Mexico’s Comisión Federal de Electricidad to construct, own and operate a 78-mi, 36-in. natural gas pipeline in east-central Mexico. The Tamazunchale pipeline will extend from the facilities of Pemex Gas near Naranjos, Veracruz, and transport gas to a power plant near Tamazunchale, San Luis Potosi. TransCanada says it expects to invest approximately (U.S.) $181 million in the project, and that it will immediately commence project and construction activities. A December 2006 completion is planned.