Page 9 - NorthAmOil Week 05

NorthAmOil PIPELINES & TRANSPORT NorthAmOil
Standoff over Mainline plan continues
NORTH AMERICA
PIPELINE operator Enbridge last week said that opponents of its plan to make its Main- line system contract-based may be stalling for time as they wait to see what happens with other pipelines before making long-term commitments.
is comes a er the proposal rst drew the ire of some shippers on the Mainline in the sec- ond half of 2019, with opponents claiming the new process for allocating space on the pipeline would be unfair. e reaction prompted regu- lators to halt a bidding process for space on the system, with Enbridge required to submit its full plan for review. Now producers that remain opposed to the plan are asking for it to be rejected outright.
Last week, Canadian Natural Resources Ltd (CNRL) argued in a ling with the Canada Energy Regulator (CER) that Enbridge’s bid to change the Mainline from monthly service to long-term contracts was an abuse of market power. CNRL, the country’s largest oil producer, added that the move would not be in the public interest.
e company asked the CER to split its review of the proposal into two parts, one of which it proposed should look at whether the conversion
should be allowed at all. e Explorers & Pro- ducers Association of Canada, which represents mostly small and medium-sized producers, also backs such a two-part review.
If the CER agrees, this would likely delay the regulatory review process longer, if not endan- ger the Mainline proposal. e dispute comes as pipeline operators battle to complete a number of major projects that would provide Western Can- ada with much-needed new takeaway capacity. ese projects include Enbridge’s Line 3 replace- ment, which cleared a key regulatory hurdle in Minnesota this week. (See: Oil sands investment forecast to rise for rst time since 2014, page 4) Separately, a legal victory for the Trans Mountain expansion also takes that project a step forward. Further obstacles remain, but Canadian produc- ers are increasingly con dent that new pipeline capacity could start coming online from the end of this year. is would make it unsurprising that some shippers are hesitant to commit to space on the Mainline as they wait to see how competitive contract terms are.
Enbridge, however, has pointed out that the majority of its customers on the 2.85mn barrel per day (bpd) Mainline support the proposed changes.™
Edge LNG to liquefy, ship gas from second Marcellus project
PENNSYLVANIA
SOME producers in the proli c Marcellus shale are turning to small-scale LNG in order to cir- cumvent challenges posed by a lack of pipeline and gas-gathering capacity in the more remote areas of the play. Reports emerged last week that Edge LNG had been awarded a contract by a major Marcellus producer to capture and liq- uefy gas from its stranded wells in Pennsylvania’s Tioga County.
e name of the producer has not been dis- closed. However, the contract would initially involve the installation of two Cryobox liq- uefaction units. e Cryobox technology was created by Galileo Global Technologies and is deployed exclusively by Edge in North Amer- ica. e units can be delivered by truck to any site accessible by road. is can make them an attractive option for producers that have been stung by low natural gas prices and are con- cerned about investing in new gas-gathering infrastructure at this time, but have wells in
remote locations that can be brought online. Each Cryobox unit can produce roughly 10,000 US gallons (15 tonnes) per day of LNG, directly from the well or flare. This process requires around 1mn cubic feet (28,320 cubic metres) per day of feed gas, of which around 75%
is lique ed, while the remainder is used as fuel. Edge will purchase the LNG from the gas pro- ducer and will deliver it by truck to its existing customers in the region. Over the coming year the company expects to add 3-4 more locations,
each with 2-4 Cryobox units.
e deal is Edge’s second in the Marcellus,
where it is targeting stranded gas. e company also has operations in the Bakken play and the Permian Basin, where stranded gas is routinely ared, in a bid to help reduce the rates of aring in those regions.
Galileo, the developer of Cryobox technol- ogy, is also a shareholder in Edge, as is the private equity rm Blue Water Energy.™
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