Forecast: calmer waters (Part 1)

By some measures, the Gulf of Mexico is in decline. Over the last decade, the percentage of offshore oil production in the region has waned from 27% of US output to 16%. The percentage share of offshore gas production has also dropped, from 26% in 1997 to 5% in 2014.

But onshore the region is experiencing a renaissance, with unconventional shale oil and gas pushing up production to unprecedented heights, invigorating both the refining and petrochemical sectors with billions of dollars of new investment.

And that means new pipelines and expansion of existing networks. “Our analysis of the fundamentals of the US Gulf Coast has led to a strategic shift in thinking about that region, which leads us to believe it can be an area of new growth for us,” said Guy Jarvis, President of Liquids Pipelines for Enbridge. “The region has always been a massive energy corridor, but its prominence in North America and globally is growing.”

New offshore pipes

New developments require heaps of offshore pipe. Williams recently began operations on the extended Discovery natural gas pipeline system. The 20 in., 209 mile Keathley Canyon connector lies in 7200 ft of water approximately 300 miles southwest of New Orleans. The system is capable of gathering more than 400 million ft3/d from the Lucius, Heidelberg and Hadrian fields and delivering it ashore to the Larose processing plant.

Recently, Shell awarded Technip the pipeline tie-in contract for the Stones field, which sits in the Walker Ridge area under 9600 ft of water. The Paris-based company will connect two production wells to the FPSO vessel anchored above the field.

Shell will also build the Mattox pipeline to service the Appomattox project. A 24 in. dia. corridor pipeline will transport crude oil from the Appomattox host to an existing offshore structure in the South Pass area and then connect onshore through an existing pipeline.

Onshore

Several North American unconventional exploration developments are having a profound impact on the Gulf Coast refining and petrochemical industry, and the subsequent pipeline networks associated with them. For decades, the Gulf Coast region has been a landing point for imports of crude from the Middle East, Latin America and Africa. Many of the imports were upgraded in Texas and Louisiana, but much was also shipped into the Midwest interior. As production from the oilsands in Canada and the Bakken formation in North Dakota has increased, they have gradually displaced those imports to the Midwest, and now significant attention is being focused further south, to the Gulf Coast.

Although the Keystone XL pipeline was rejected, other indirect routes are now reaching completion. Enbridge and EPP’s Seaway Twin pipeline entered service in late 2014. The 450 mile pipeline carries up to 450 000 bpd of crude from Cushing, Oklahoma, to Freeport Texas. The twinning more than doubles the capacity of the Seaway system to 850 000 bpd.

In the Gulf Coast region itself, the development of the Eagle Ford shale and the Permian Basin shales has led to a huge increase of gas, crude, NGLs and condensate that have required significant increases in dedicated pipeline capacity.

Several new pipelines will transport gas south to Mexico. The Federal Electricity Commission is installing a total of five lines to service gas turbines throughout the country. Two lines will originate in Waha, Texas, and run to Chihuahua State. A third will run from Ojinaga, Chihuahua, to El Encino, Chihuahua, and a fourth from El Encino to Durango. A fifth line will extend from Arizona to San Luis Rio Colorado in Sonora State. In all, the five pipelines will have a capacity of 5.8 billion ft3/d.

Part 2 coming soon!

Written by Gordon Cope and edited from published article by Stephanie Roker

To read the full version of this article, please download a copy of the January 2016 issue of World Pipelines.

Read the article online at: https://www.worldpipelines.com/special-reports/25032016/forecast-calmer-waters-part-1/