Page 8 - NorthAmOil Week 03
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NorthAmOil PIPELINES & TRANSPORT NorthAmOil
M&NP pipeline’s owners pledge $152mn to cover mishaps
EASTERN CANADA
THE consortium that owns the Maritimes & Northeast Pipeline (M&NP) has pledged CAD200mn ($152mn) to cover any leaks or other mishaps that may occur on the natural gas project. The move comes after Canadian federal regulators ordered the owners of all pipelines in the country to post guarantees that money is available in the event of any incident.
The 1,100-km M&NP was built in the late 1990s to carry natural gas from fields offshore Nova Scotia to markets in Eastern Canada and the New England states. It passes through Nova Scotia and then southern New Brunswick before crossing the US border near St Stephen. How- ever, both of Nova Scotia’s offshore production facilities, the Sable Offshore Energy project and Deep Panuke, were shut down in 2018. Now M&NP only carries gas to Eastern Canadian markets.
Enbridge is the majority owner in M&NP with a 77.53% stake, Emera holds 12.92% and ExxonMobil owns the remaining 9.55%.
The M&NP line has been assessed as the maximum for a natural gas pipeline, based
on the diameter of the pipe and the pressure it operates under, a Canada Energy Regulator (CER) spokesperson, Sarah Kiley, was cited by CBC News as saying. The owners of larger oil pipelines have been assessed at a maximum of CAD1bn ($762mn), because a leak from those would result in higher clean-up and compensa- tion costs, according to Kiley.
M&NP has proposed to cover its obliga- tion with CAD100mn ($76mn) in insurance and the remainder in credit guarantees from the pipeline owners, based on their stake in the project. Under this proposal, Enbridge has pledged CAD78mn ($59mn), Emera’s share is CAD12.79mn ($9.74mn) and ExxonMobil’s is CAD9.5mn ($7.2mn).
Kiley said the CER was assessing the financial plan to ensure that it meets federal requirements.
The question of pipeline safety remains a high-profile one in Canada, with public concern over the risk of leaks and spills from oil and gas pipelines contributing to opposition to new pro- jects under development.
PERFORMANCE
McDermott files for bankruptcy protection
US
McDermott’s recent losses are linked to cost overruns at the Cameron and Freeport LNG projects.
ENGINEERING and construction firm McDer- mott International has filed for Chapter 11 bank- ruptcy protection after reaching an agreement with its creditors.
According to the filing, in the Southern Dis- trict of Texas, the company has estimated liabil- ities of $1-10bn. McDermott’s debt ballooned following its acquisition of Chicago Bridge & Iron (CB&I) in an all-stock deal valued at around $6bn, including nearly $4bn in debt. Following the merger, McDermott’s total liabilities rose to $7.86bn at the end of June 2018, from $1.36bn in the previous quarter. As of November 4, 2019, the company’s debt stood at $9.86bn, Reuters noted.
McDermott announced this week that it had the support of two-thirds of the holders of its funded debt in a restructuring agree- ment that would eliminate more than $4.6bn of debt by swapping it for equity. The com- pany also agreed to sell its Lummus Tech- nology unit for at least $2.725bn to a joint partnership between the Chatterjee Group and Rhône Group.
The company said it planned to finance its bankruptcy with a $2.81bn debtor-in-posses- sion (DIP) loan, adding that it had secured exit financing of over $2.4bn. McDermott expects to emerge from bankruptcy with about $500mn in debt.
McDermott’s business has come under pres- sure in recent years as low oil and gas prices have discouraged the construction of new megapro- jects. The company was one of the joint ven- ture contractors on the Freeport and Cameron LNG projects on the US Gulf Coast, which both entered service last year. But construction on the projects was hit by cost overruns, which con- tributed to the $1.9bn loss on $2.1bn of revenue that McDermott reported for the third quarter of 2019.
McDermott said in its statement that it expected all of its businesses to continue oper- ating as normal for the duration of the restruc- turing process. However, it anticipates being delisted from the New York Stock Exchange (NYSE) in the coming days as a result of its Chapter 11 filing.
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w w w. N E W S B A S E . c o m Week 03 22•January•2020
