Cheniere to start construction

Project to convert Sabine Pass facility to export LNG

By the time Golden Pass Partners decided this month to apply for permits to convert its facility along the intracoastal canal to include the ability to liquefy and export natural gas, its rival across the river Cheniere Energy Partners was almost ready to start construction on converting its facility.

Both Cheniere and Golden Pass planned and built their multi-billion LNG export facilities at a time when experts were warning a serious shortage of natural gas in the United States was imminent. As construction neared completion, new recovery techniques and the discovery of additional deposits of natural gas radically altered the equation.

Cheniere was first out of the gate, moving ahead with the construction of facilities to liquefy and export natural gas in Louisiana, moving the U.S. one step closer to becoming a major exporter of the commodity.

The company said it had given engineering contractor Bechtel Oil, Gas and Chemicals Inc. the green light to start building two liquefaction trains at its Sabine Pass, La., import terminal. Bechtel designated Recon and Bomac as the prime subcontractors, with those three firms and Cheniere officials on hand for the session.

The U.S. exports relatively small quantities of LNG to Japan out of Alaska, but the Sabine Pass facility would be the first terminal to do so out of the lower 48 states. The company has struck long-term agreements with four global buyers to supply over two billion cubic feet a day of natural gas for 20 years.

Golden Pass to export LNG

Conversion would mean $10 billion investment, 9,000 jobs

Golden Pass Products LLC (Golden Pass) has submitted an application to the U.S. Department of Energy (DOE) to export liquefied natural gas (LNG) from the Golden Pass LNG receiving terminal at Sabine Pass.

The proposed project involves construction of natural gas liquefaction and export capabilities at the existing Golden Pass LNG facility. A final investment decision will be made following government and regulatory approvals.

If developed, the project would represent about $10 billion of investment on the U.S. Gulf Coast, generating billions of dollars of economic growth at local, state and national levels and millions of dollars in taxes to local, state and federal governments. The project would generate approximately 9,000 construction jobs over five years with peak construction employment reaching about 3,000 jobs.

The proposed project would have the capacity to send out about 15.6 million tons of LNG per year. New infrastructure required to export will be located on the existing property, which currently contains two berths for LNG tankers, five storage tanks and access to the Golden Pass pipeline. The expanded facility would then have the capability and flexibility to both import and export natural gas.

The proposed expansion of Golden Pass is an opportunity to capitalize on America’s abundant natural gas resources. The Energy Information Administration’s Annual Energy Outlook 2012 shows that the United States has substantial gas supplies that can support gas exports, including LNG exports, over the longer term.

The application filed with the DOE is to export natural gas to nations that have existing free trade agreements (FTA) with the United States. A similar application is planned for non-FTA countries.

The expansion, Golden Pass Products, is a partnership of Qatar Petroleum International and ExxonMobil affiliates. The experience of its two partners provides Golden Pass Products market-leading project development skills and technical expertise that would allow the company to construct a world-class liquefaction and export facility in the United States.

This proposed expansion is taking place in a changing energy market. The abundance of natural gas in the U.S. is revolutionizing the scale and future of domestic energy development. Because of its abundant supply and world-class industry capability and infrastructure, the U.S. has the opportunity to capture significant economic benefits by expanding domestic and international markets for natural gas. LNG exports will help maintain a robust domestic U.S. gas production industry.

Company officials noted this project would create an opportunity to adapt an existing business to the changing demands of the global market, capture benefits in the U.S. through jobs and investment and deliver an abundant energy resource to our trade partners. LNG exports are consistent with U.S. efforts to expand international trade and reduce barriers to trade. The U.S. is already an exporter of many commodities and energy products, including wheat and coal. The company believes the freedom to import and export goods and services benefits Americans in the form of more choices, more value, more wealth and more jobs.

In announcing its application for this new project, the company cited demonstrated safety and environmental performance in the construction and operation of its existing Sabine Pass facility. The Golden Pass expansion project would be built and operated with the same unwavering commitment to safety as the existing facilities. Through construction of the existing facility, Golden Pass demonstrated an excellent safety record with more than 5 million work hours without a lost-time injury. Since operation, there have been zero lost-time injuries at the Golden Pass employee base. Golden Pass is an excellent environmental steward, with zero water discharge or air violations. The expansion project would be built on the existing industrial footprint, minimizing environmental and community effects.

The U.S. government, through the Department of Energy and the Federal Energy Regulatory Commission, utilizes a rigorous application and permitting process for LNG export projects. DOE evaluates several criteria, such as energy security and price implications, in order to determine if an LNG export project would be in the public interest. FERC ensures the safe operation and reliability of proposed and operating LNG terminals.


Business Journal editor James Shannon offers a weekly column of business news for readers of The Examiner. For more details, see the editions of the Business journal published monthly in Beaumont, Port Arthur and Greater Orange. Check out the blog at setxbiz.blogspot.com or e-mail james@beaumontbusinessjournal.com.

Keystone pipeline coming

Construction of Gulf Coast Project underway in Jefferson County

 

Those big tractor-trailer rigs transporting large quantities of pipe across Jefferson County represent the advance guard of a huge construction project that will bring crude oil to the thirsty refineries along the Texas Gulf coast – and jobs to Southeast Texas.

TransCanada Corporation announced July 27 that it has received the final of three key permits needed from the U.S. Army Corps of Engineers in order to advance the 485-mile Gulf Coast Project. With the permit from the Fort Worth Army Corps district added to previously received permits from the Galveston and the Tulsa, Okla., districts, TransCanada is now in a position to start construction of the oil pipeline in the coming weeks.

“Receiving this final, key Army Corps permit for the Gulf Coast Project is very positive news. TransCanada is now poised to put approximately 4,000 Americans to work constructing the $2.3 billion pipeline that will be built in three distinct ‘spreads’ or sections,” said Russ Girling, TransCanada’s president and chief executive officer. “The Gulf Coast Project will contribute millions in property taxes to counties in Oklahoma and Texas, money that can be used to build roads, schools and hospitals.”

The pipeline will transport growing supplies of U.S. crude oil to meet refinery demand in Texas. Gulf Coast refineries will be able to access lower-cost domestic production and avoid paying a premium to foreign oil producers, reducing cost and the United States’ dependence on foreign crude oil.

Although the release does not spell it out, TransCanada officials confirmed to the Business Journal that the Gulf Coast Project is the southern link to the Keystone XL pipeline that has been approved for construction even as the application to reroute the Nebraska portion of Keystone is under review.
Girling points out building a safe and reliable pipeline remains TransCanada’s top priority.

“TransCanada has an industry-leading safety record, and that is something we take great pride in,” he added. “People expect their energy to be delivered safely and reliably – on this point there can be no compromise. As an industry, we need to have the best and most modern policies, procedures and equipment in place to prevent and respond to incidents.”

TransCanada says it has state-of-the-art leak detection systems, elevated safety features and specialized staff training in place to ensure its crude oil pipeline system is safe. These features include:

• Around-the-clock monitoring of pipeline operations by highly trained staff who are empowered to shut down the pipeline at the first sign of a problem.

• A greater number of data sensors and emergency shut-off valves than in older pipeline systems.

• Information updates every five seconds on pipeline operating conditions from more than 36,000 electronic sensors that transmit data via satellite (16,000 sensors in the current operational Keystone pipeline, 6,800 for the Gulf Coast Project, 13,500 for Keystone XL).

• The ability to shut down the pipeline and isolate affected sections within minutes using hundreds of remote-controlled shut-off valves.

• Requiring all possible problems to be investigated immediately by pipeline controllers and field staff. The pipeline cannot be re-started until it is confirmed safe to do so.

Fred Jackson, staff attorney to Jefferson County Judge Jeff Branick, said TransCanada has also agreed to additional monitoring of roads and bridges used by heavy trucks and other equipment traversing county roads during the construction process.

“TransCanada has retained a third-party contractor to conduct surveillance along the ‘haul route’ that will be used,” said Jackson. “The road chiefs from each county precinct will receive reports from the monitoring.”

As shown in the map (Page 14A), the pipeline will enter Jefferson County from the west and traverse many lightly populated areas but will occasionally come near established neighborhoods. In March of this year, the Beaumont City Council got in on the act, unanimously voting to grant TransCanada a permanent easement for the pipeline to cross the Tyrell Park marsh in exchange for a one-time payment of $240,640.

The terminus for the pipeline is at the Sun Oil Tank farm in Port Neches with an additional tank farm likely to be constructed when the entire Keystone XL pipeline is completed. A dense network of existing pipelines will then transport the crude oil to area refineries.

The company has voluntarily agreed to 57 additional safety procedures that will be incorporated into the construction of crude oil pipelines, including a higher number of remotely controlled shutoff valves, increased pipeline inspections and burying the pipe deeper in the ground. TransCanada also uses a technique called horizontal directional drilling to drill under major rivers a minimum of 25 feet. This will allow the company to bury the pipe deeper on both sides of the riverbank, offering protection from floods or high river levels. The pipe will be made of thicker steel as it crosses rivers, will operate at a lower pressure and be further protected by advanced non-abrasive coatings.

TransCanada notes they have safely and reliably operated pipelines and other energy infrastructure across North America for more than 60 years. The company’s existing 2,154-mile Keystone pipeline from Alberta to Cushing, Okla., and Wood River/Patoka, Ill., has safely delivered more than 280 million barrels of Canadian crude oil to U.S. markets since July 1, 2010.

The U.S. Department of State is currently reviewing TransCanada’s application for a Presidential Permit to proceed with the 1,179-mile Keystone XL pipeline from Hardisty, Alberta, to Steele City, Neb., and is expected to make a decision in the first quarter of 2013. TransCanada also continues to work with the Nebraska Department of Environmental Quality to finalize a route that avoids the environmentally sensitive Sandhills area of Nebraska.

“The Gulf Coast Project and the entire Keystone system will further help the U.S. achieve true energy security,” concluded Girling. “The U.S. Energy Information Administration has forecast the United States will continue to import more than 7 million barrels of oil each day into 2035. I continue to believe Americans would prefer to consume their crude oil from domestic producers and from Canada rather than higher-priced oil from countries that do not share American values.”

With more than 60 years’ experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure, including natural gas and oil pipelines, power generation and gas storage facilities. TransCanada operates a network of natural gas pipelines that extends more than 68,500 kilometers, tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent’s largest providers of gas storage and related services with about 380 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns or has interests in more than 10,900 megawatts of power generation in Canada and the United States.