Underground Construction - January 2019 - 21

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After a period of sustained improvement, the upstream sector
ended a politically tumultuous
year on an unexpectedly somber
note as oil prices skidded in the
final months of 2018 amid oversupply concerns and signs of a
cooling global economy.
While these short-term trends
have added a cautionary tone to
some industry projections, a generally hopeful sentiment remains
among analysts. Wood Mackenzie's senior vice president, Tom
Ellacott, for one, believes the
upstream sector will thrive this
year.
"Oil and gas companies can
cope with whatever's thrown at
them in 2019," Ellacott said in
mid-December. "Portfolios are
set to weather low prices."
The midstream sector, meanwhile, roared into 2019 on a wave
of pipeline construction activity
driven by the continuing global
shift toward natural gas, the
rapid growth of shale production,
and the infrastructure demands
created by changing patterns of
interregional trade.
The latter is particularly true
of the United States, where the
lifting of an oil export ban and
the predicted growth in global
LNG demand has led to massive
infrastructure development,
particularly along the Texas and
Louisiana Gulf coasts, including
oil and LNG export terminals,
new and expanding liquefaction
facilities, and the pipeline capacity to supply them.
Companies continue to see an
"attractive outlook for midstream
in 2019," according to Morgan
Stanley Research analyst Tom
Abrams, whose Nov. 30 quarterly
midstream earnings recap noted
that "most companies highlighted several new growth projects
on the horizon, so it appears the
growth phase still has legs."
The latest survey by sister
publication Pipeline & Gas Jour-

nal, based on Energy Web Atlas
data, indicates 145,353 miles of
pipelines were planned or under
construction worldwide at the
start of the new year - and North
America accounted for 36,087
miles of that total. The survey
indicated that 9,542 miles of
pipeline are under construction
in North America and 26,545 are
planned.

United States
While pipeline construction has
increased throughout North
America, the heaviest activity has
been concentrated around major
U.S. shale plays with takeaway
capacity constraints - most notably, the Permian Basin of West
Texas and New Mexico and the
Marcellus/Utica basins of Appalachia.
Pipeline capacity from the gasrich Marcellus increased in 2018
with the completion of Columbia
Pipeline's Leach Xpress, which
added 1.5 Bcf/d of capacity from
West Virginia in January, and
Williams' Atlantic Sunrise project. A $3 billion expansion of the
Transco system, Atlantic Sunrise
added 186 miles of greenfield
pipe in Pennsylvania and 1.7
Bcf/d of takeaway capacity when
it began full operations in early
October.
The $5 billion, 600-mile (970km) Atlantic Coast Pipeline is
a 42-inch natural gas pipeline
developed through a joint venture between Dominion Energy,
Duke Energy, Piedmont Natural
Gas and Southern Company Gas.
The 1.5 Bcf/d pipeline, which has
faced opposition and delays, is
scheduled for completion in late
2019.
Mountain Valley Pipeline officials said the $4.6 billion project
is on target to be fully in-service
in the fourth quarter of 2019.
Mountain Valley, which spans
303 miles from northwestern
West Virginia to southern Vir-

ginia, was reported to be 70%
complete by the end of 2018,
including 58% of all welding, and
planned to finish remaining construction of compressor stations
and interconnects by February.
Additional Marcellus projects
include Mountaineer Xpress,
which will add 2.7 Bcf/d, and
TCO's Columbia Gulf and WB
Xpress expansions, which will
combine for up to 2 Bcf/d of
capacity. Rover Phase 2 adds
3.25 Bcf/d to the Midwest and
Ontario, and NEXUS Pipeline,
which follows a similar route to
Rover, will deliver 1.5 Bcf/d of
new capacity.
In the Permian Basin, more
than 2 MMbpd of pipeline capacity has been proposed, and several
of those projects have moved forward following successful open
seasons that revealed strong customer interest. Production in the
hottest U.S. shale oil play began
pushing against takeaway capacity in 2017, causing tariffs to rise,
and surpassed it during 2018.
A number of major Permian
projects are scheduled for completion during 2019, including the 730-mile Epic crude oil
pipeline to Corpus Christi, Texas,
which is developing into a major
crude and NGL export hub. The

Epic crude line will add 590,000
bpd of takeaway capacity, following the path the Epic NGL
pipeline which also is under construction.
Plains All American expects
first flow on its Cactus II project in the second half of this
year. Cactus II was proposed as
a 585,000 bpd project linking
Permian production to Corpus
Christi/Ingleside via existing and
two new pipelines. Due to customer interest, Plains conducted
a successful second open season
for expanded capacity. Cactus II is
expected to start partial service in
the third quarter of 2019, Plains
is targeting full service on the
670,000 bpd line in April 2020.
Other notable Permian crude
oil projects include the Phillips
66/Enbridge Gray Oak Pipeline
to Corpus Christi, Freeport and
Houston. Gray Oak, which is
scheduled to begin service in the
second half of this year, will have
an initial capacity of 385,000 bpd.
Most recently, Houston-based
Jupiter Energy Group commenced an open season in December for a 650-mile, 36-inch
crude oil pipeline with expected
completion by the fourth quarter
of 2020. The pipeline would have
capacity up to 1 MMbpd with
UConOnline.com | JANUARY 2019

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Underground Construction - January 2019

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