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USA pipeline update – Part 2

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World Pipelines,

Colonial pipeline

On 9 September, an oil spill was discovered in Alabama. An Alabama Surface Mining Commission employee was conducting a monthly check on a coal mine, when they noticed a strong odour and could see a clear sheen on the surface of one of the retention ponds.

The smell and visible leak had come from Colonial Pipeline's Line 1, a 36 in. dia. pipeline, which ordinarily transports 1.3 million bpd of gasoline from refineries in Houston to distribution centres across southeast USA.

Within 20 minutes of the leak being reported, Colonial Pipeline shutdown Line 1, however, on 17 September, officials estimated that 336 000 gal. of gasoline was lost. This figure amounts to approximately 37 truckloads at an industry-average of 9000 gal. per tank.

Domestic supplies were affected, with gas stations in Alabama and Tennessee reporting outages of some or all grades of gasoline, and prices rising at the pumps.

Line 1 returned to service on 21 September.

Later, on 31October, five workers were injured and one killed as a result of an explosion that occurred along the same Colonial pipeline (Line 1) in rural Alabama. The explosion sent flames soaring over the surrounding forest, which is located approximately one mile west of where the pipeline burst and leaked thousands of gallons of gasoline in September and led to gasoline shortages across south USA.

Colonial's Line 1 carries 1.4 million bpd of gasoline from the US Gulf Coast to a major junction and product storage hub in Greensboro (North Carolina). The 5500 mile (8850 km) Colonial pipeline is the largest in the US. According to PHMSA data, the pipeline has experienced five spills in Alabama in 2016.

According to Colonial, a track hoe – a machine used to remove dirt – struck the pipeline, causing gasoline to be ignited and a blaze to begin. The company decided to shut the pipeline down, which led gasoline prices in New York to jump. Bloomberg reported that the fuel's premium to Brent crude soared to as high as US$18/bbl.

On 6 November, Colonial’s Line 1 was back in service but it was stressed that it may take several days for the fuel delivery supply chain to return to normal after the service restoration.

After the explosion, gas prices began to rise because of the risk of shortages. However, restarting the line eased concerns about supply. The explosion also shutdown a sister pipeline (that transports diesel and jet fuel) for several hours.

Constitution pipeline

In 2014, the FERC published its final environmental review of the proposed 124 mile 30 in. dia. natural gas pipeline of Constitution Pipeline Company, LLC.

While the project was expected to be complete by late 2015 – 2016, the owner of the Constitution natural gas pipeline pushed back the start of the line's expected operation by at least six months, from the end of 2016 to 2H17.

The company blamed the delay on a "rapidly closing environmental window" to cut trees along the line's planned route in New York. Limits imposed by the FERC and US Fish and Wildlife Service allowed the company to cut trees only between 1 November 2015 and 31 March 2016 in order to protect migratory songbirds and the northern long-eared bat.

In Juy, the FERC approved granted the developers a two year extension, to December 2018.

In August, it was reported that Williams Partners and its co-developers (including Cabot Oil & Gas, Piedmont Natural Gas and WGL Holdings) of the US$925 million Constitution natural gas pipeline were expected to prevail in at least one of two legal challenges to opposition.

In a case before the US District Court for the Northern District of New York, Constitution challenged the New York State Department of Environmental Conservation’s decision to require permits relating to impacts on wetlands. The developers contested New York’s denial of a water quality permit in a separate proceeding.

The proposed pipeline would run 124 miles, delivering low-cost gas from Pennsylvania’s shale gas fields to New York and New England.

Atlantic Coast pipeline

In September 2015, it was announced that Atlantic Coast Pipeline, LLC, had applied for permission to build a 564 mile interstate natural gas transmission pipeline to the FERC. The pipeline is designed to meet the need for cleaner electricity generation, satisfy the growing demand for natural gas to heat homes and businesses, and promote consumer savings and economic growth in Virginia and North Carolina .

According to economic impact studies conducted in 2015, the project's construction is expected to generate more than 17 000 jobs, US$2.7 billion in total economic activity and US$4.2 million in average annual tax revenue for cities and counties in the project area.

At a pipeline summit on 23 April, residents of Virginia and North Carolina discussed how to stop the construction of the pipeline in their area. Some residents believe that the pipeline could damage Virginia’s economy.

At the summit Lorne Stockman, the Research Director at Oil Change International, stated: “We are calling for a climate test. Oil Change International and 15 other organisations in Canada and the US launched a website a few months ago. You’ve got to have a climate test. Otherwise you don’t know if it is helping or hindering your goal.”

Further concerns were raised in May, when Dominion Transmission was sent letters by the Department of Environmental Quality regarding its Atlantic Coast pipeline project. The letters stated that the company was required to conform to specific erosion and sedimentation standards.

While concerns were been raised, Dominion Energy (the company leading the natural gas pipeline project) has responded by reassuring residents that the company will ensure industry best practices to ensure a safe operation.

Dominion Transmission Spokesman, Aaron Ruby, stated: “We’re a safety first company. That’s not a PR slogan. An emphasis on safety permeates the organisational culture and informs everything the company does.”

In September, the FERC received a correspondence from the US Forest Service’s Forest Supervisor, Clyde Thompson, expressing the agency’s concerns about locations that had been marked for the construction of an access road to the Atlantic Coast pipeline. The Forest Service also questioned the reports that Dominion submitted to FERC with regards to salamanders, macroinvertebrates, fish and mussels and soils in the National Forests.

Ruby responded, stating that the pipeline remains on track to receive federal approval to begin construction in late summer 2017, regardless of the US Forest Service letter.

At the end of September, Atlantic Coast Pipeline, LLC announced that it had signed a construction contract with Spring Ridge Constructors, LLC, even though FERC approvals were still pending.

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