Page 8 - NorthAmOil Week 07

NorthAmOil PIPELINES & TRANSPORT NorthAmOil
Enbridge to acquire Rio Bravo pipeline
TEXAS
Rio Grande LNG is
one of three export terminals proposed for the Port of Brownsville.
CALGARY-BASED Enbridge has struck a deal to buy the planned Rio Bravo gas pipeline from US LNG developer NextDecade. e pipeline will supply the Rio Grande LNG project, which NextDecade is proposing to build at the Port of Brownsville in South Texas. e deal illustrates Enbridge’s growing confidence in the area’s LNG export potential, as the pipeline company also has a 10.5% equity stake in a rival project, Annova LNG, that is also being proposed for the Port of Brownsville. However, the details of the Rio Bravo deal suggest Enbridge is still proceed- ing with some caution.
Under the de nitive agreement, announced on February 13, Enbridge will buy the Rio Bravo pipeline for up to $25mn in cash. Of this, $15mn is due to be paid upon the deal’s closing, and the remaining $10mn would be paid in the event of NextDecade reaching a nal investment decision (FID) on the Rio Grande terminal.
Once the transaction closes, Enbridge will own 100% in the pipeline, and will be solely responsible for its construction and operation.
e two companies have also negotiated a
precedent agreement, under which NextDec- ade will retain its rights to the natural gas rm’s transportation capacity on the Rio Bravo pipe- line for a period of at least 20 years to supply the Rio Grande facility. is would be executed upon closing of the pipeline sale, which is anticipated in the rst quarter of 2020.
e 137-mile (220-km) Rio Bravo pipe- line is designed to carry 14.5bn cubic feet (127.4mn cubic metres) of gas from the Agua Dulce hub near Corpus Christi, Texas, to Brownsville. Enbridge already moves gas from Agua Dulce to Brownsville via the Val- ley Crossing pipeline, which then connects to another pipeline o shore to carry the gas on to Mexico. Valley Crossing was brought into service last year.
In January, Enbridge struck a deal to supply Annova LNG with gas from Valley Crossing, which would be expanded with a roughly 9-mile (14-km) lateral connecting to the terminal if that project goes ahead. Rio Grande, Annova and another project in the same area – Texas LNG – all still need to reach FID.™
INVESTMENT
TC talks up gas pipeline expansion plans
NORTH AMERICA
CANADA’S TC Energy has said that it contin- ues to invest in expanding its gas pipeline net- work across North America. Announcing its fourth-quarter results for 2019 on February 13, the Calgary-based company noted that it had brought the CAD1.1bn ($831mn) North Mont- ney Mainline into service in January 2020. On the same day as it announced its results, the com- pany approved the CAD900mn (680mn) 2023 NGTL Intra-Basin System expansion and the US$300mn Alberta XPress project, an expan- sion of the ANR Pipeline system.
e NGTL system expansion will involve the addition of contracted incremental intra-ba- sin rm delivery capacity serving customers in Alberta that include the oil sands, petrochemi- cals, power generation and utilities. e Alberta XPress project will send Canadian gas to markets on the US Gulf Coast, including to LNG export terminals and other buyers.
“Our natural gas pipeline systems require expansion as customers continue to contract for incremental pipeline capacity to meet growing demand,” TC Energy’s president and CEO, Russ Girling, said in a statement. “ ese new invest- ments within our existing system footprints supplement our ongoing CAN$30bn [$22bn]
secured capital programme and demonstrate the long-term need across North America and in global energy markets for clean-burning natural gas, as well as the value of our existing infrastruc- ture as a platform for organic growth.”
On the company’s fourth-quarter earnings call, Girling said that in addition to the Alberta XPress project, TC Energy was advancing CAD1.5bn ($1.1bn) worth of other pro- jects across its US gas pipeline network. is includes the Buckeye XPress, GTN XPress, Eastern Lateral XPress, Louisiana XPress and the Grand Shenir XPress projects. Each of these projects is located along the company’s existing footprint.
However, while TC Energy presses ahead with various pipeline projects, it remains cau- tious over the prospects for its high-pro le Key- stone XL oil pipeline from Alberta’s oil sands to the US. On the company’s earnings call, o cials said there was too much uncertainty to commit to the long-delayed project as yet. While TC Energy has been clearing regulatory hurdles, it still needs to obtain permits to access US water crossings from the US Army Corps of Engi- neers, as well as resolving a potentially signi - cant court challenge.™
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w w w. N E W S B A S E . c o m Week 07 19•February•2020