Underground Construction - January 2018 - 20

Pipeline Infrastructure Outlook
istration (EIA). It was led by the
Permian, where production was
up 21percent from July 2016 to
August 2017. In the last quarter of
the year, EIA noted that the general increase in gas production nationally had constrained takeaway
capacity again, and it predicted
that with ramp-ups such as Rover
Pipeline, the opening of the Cove
Point (MD) LNG facility for exports, and the Nexus gas transmission project converging at the end
of 2017 and early in 2018, there
should be a combined 5.5 Bcf/d of
added takeaway capacity.
As a result, B&V's Denny Yeung,
a principal consultant in its Houston office, sees a lot of sizable,
mostly intrastate projects being
completed in Texas, given that
it has one of the nation's most
favorable regulatory climates
for new infrastructure projects.
Yeung thinks most of the Permian
projects have a high likelihood of
being built in the time frames now
outlined. Three of those projects
include:
* Kinder Morgan's Gulf Coast
Express project
* Boardwalk Inc.'s Permian to
Katy project
* Enterprise Partners' Permian to
Gulf Coast project
Yeung thinks two of the three
could be built in 2018.
At the Permian Basin Petroleum Association (PBPA), there
was much discussion among industry players at the end of 2017
about various interconnections
leading to a more complex network linking the Permian's various sub-basins to the Texas Gulf
Coast and elsewhere.
Midland-based Oryx Midstream
Services CEO Brett Wiggs talked
with local news media about plans
for a 400,000-bpd pipeline from
the Permian's Delaware sub-basin
being part of larger efforts that
eventually will build a "natural
header system" for developing
new Permian export projects that
"create significant marketing and
economic benefits through an inte-

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grated solution from wellhead to
the Gulf Coast."
Oryx in late 2017 was starting
construction on a 220-mile oil
pipeline from southeastern New
Mexico into Texas, up to Midland,
with segments varying from 16to 24-inch diameters. "It will be
constructed in phases during 2018
and completed by year end," a
PBPA official said.
Another liquids pipeline now
being built, starting in southeast
New Mexico, is the Epic Y Grade
Pipeline LP natural gas liquids
(NGL) line. Destinations for the
650-mile, 375,000-bpd pipeline
include Orla, Benedum and Corpus Christi, where an Epic affiliate
plans to build a fractionation complex that will accommodate the
line's volumes. Epic officials promoted the project as an "NGL superhighway" providing a link from
the Permian to Corpus Christi.
Also in the Delaware sub-ba-

sin, Magellan Midstream Partners
LP is building a 60-mile, 24-inch
pipeline to move 250,000 bpd of
crude oil and condensate from
Wink to Crane, TX. The new line
will have the ability to expand up
to 600,000 bpd if future demand
supports those volumes. It will
include a new terminal at Wink, offering what Magellan calls "broad
inbound and outbound pipeline
access" to parties connecting to the
new facility when it is operational.
"All of these projects are either
under construction or are highly
likely to be constructed," PBPA
Executive Vice President Stephen
Robertson said.

Temporarily stalled projects
Amid this momentum, projects
remain stalled or shelved by legal
and social activist efforts. Another
hurdle comes in the form of marketing and financing challenges,

according to Matt Hong, director
of Research, Power and Gas at
Morningstar Commodities Research in Chicago. Engineering of
these projects is often the easiest
part, given the social, legal and
financial requirements that ultimately need to be addressed.
"As we moved into the current
environment where gas prices are
on the low side, the big energy sector challenge in the last two years
has been getting access to financing," Hong said. "Especially looking
out to 2018-19, there doesn't appear to be a huge carryover in the
market right now. The other piece
is the marketing of the capacity
to ensure you have the cash flow
from these assets at a level where
banks are comfortable lending the
money."
In 2018-19, Hong said the
industry is looking at an added 19 Bcf/d of pipeline capacity;
longer term, up to 65.9 Bcf/d of
new capacity is in the works; 12.7
Bcf/d is under construction. It is
concentrated in the Northeast,
upper Midwest and Permian (New
Mexico/Texas) with just a handful
of smaller projects in the West.
Built into these plans is the realization among companies that court
challenges will be part of the design, permitting and construction
phases. It is part of the infrastructure build-out business today.
Hong's view near the end of
2017 was that FERC will continue
to approve the new pipelines, but
some states, such as New York in
particular, could slow the completion of permitting. This has
happened in three cases he cited:
Millennium Pipeline Company
LLC's Valley Lateral (New York),
Constitution Pipeline (Pennsylvania and New York), and National
Fuel Gas Supply Corp.'s Northern
Access Pipeline (New York).
In all three projects, state agencies have undermined FERC's approvals. For Northern Access, the
New York environmental department refused to issue a water certificate, preventing construction
from starting after a Pennsylvania
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Underground Construction - January 2018

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