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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The prolonged swoon in crude oil and natural gas prices is one of several factors taking its toll on North American Pipeline projects. Over the last 12 months, over $20 billion of Oil & Gas Pipeline projects have been cancelled or placed on hold due to market conditions or inability to secure necessary permits.
Last month, these pipeline projects joined the list of cancelled or delayed projects:
ANR Pipeline Company (Houston, Texas) last year placed its $800 million Defiance East Natural Gas Pipeline Project on hold. That 200-mile pipeline was scheduled to stretch from MarkWest's existing gas processing facility in Cadiz, Ohio, to ANR's compressor station in Defiance, Ohio. Prior to being placed on hold, ANR expected to begin construction in the current quarter, and the project had a yearend 2017 in-service date.
Another large project that was placed on hold last year was the Fort McMurray-to-Hardisty Grassroot Synergy Crude Oil Pipeline, a 250-mile, $650 million project that is expected to carry up to 650,000 barrels per day (BBL/d) of diluted bitumen across Alberta. Project owner Spectra Energy Midstream Corporation (Calgary, Alberta) is a subsidiary of Spectra Energy Corporation (NYSE:SE) (Houston, Texas).
Several legs of the controversial Keystone XL Crude Oil Pipeline, valued at about $2 billion, also were placed on hold late last year following the Obama administration's refusal to issue a presidential import permit for the project. The Keystone XL pipeline is a 1,179-mile, multi-billion-dollar proposed pipeline that could transport up to 830,000 BBL/d of oil sands crude oil from Alberta to Steele City, Nebraska. For more on that decision, see November 10, 2015, article--KXL Pipeline Permit Denial Caps a Week to Forget for TransCanada.
In late 2015, a $450 million project, Sharon Springs Grassroot Grand Mesa Crude Oil Pipeline, was cancelled by its owner, Rimrock Midstream (Plano, Texas). That project was scheduled to run about 550 miles from Weld County, Colorado, to Cushing, Oklahoma. Part of the Grand Mesa Pipeline project, the Sharon Springs project would have transported up to 130,000 BBL/d of crude oil from the Denver-Julesburg (D-J) Basin to the crude-oil hub in Oklahoma. It was scheduled to kick off construction earlier this year.
Several projects that are part of the Dakota Pipeline Project also were placed on hold in recent months. The Dakota Pipeline is a $650 million project that would bring up to 500 million square feet of gas per day (MMCF/d) from North Dakota to Moorhead, Minnesota. Project owner WBI Energy Transmission (Bismarck, North Dakota), a unit of MDU Resources Group Incorporated (NYSE:MDU) (Bismarck, North Dakota), had planned to begin construction of the projects in late 2015 and early 2016, with completion expected by yearend 2018.
"The law of gravity--what goes up must come down--certainly applies to Oil & Gas producers, pipeline developers and oilfield service companies," said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "Some of these projects need higher commodity prices to be viable while others, notably Keystone XL, need a Republican president in the White House. We expect project activity in the Pipeline sector to rise and fall with commodity prices, and project cancellations and delays over the last year have shown that."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Last month, these pipeline projects joined the list of cancelled or delayed projects:
- The Northeast Energy Direct (NED) gas pipeline was cancelled due to lack of firm customer commitment. This proposed pipeline, which would have cost over $1 billion to construct, was being developed by Tennessee Gas Pipeline Company LLC (Houston, Texas), a unit of Kinder Morgan Incorporated (NYSE:KMI) (Houston). It would have transported up to 1.2 billion cubic feet of gas per day (Bcf/d) from the Marcellus Shale to New York and New England. For more on this project, see April 21, 2016, article--Kinder Morgan Ditches Two Key Pipeline Projects, Cuts Growth Backlog $4 Billion and April 8, 2015, article--Developers Delay, Cancel Gas Projects in U.S. Northeast.
- The 124-mile Constitution pipeline was denied a water-quality permit by the New York State Department of Environmental Conservation (NYSDEC) (Albany, New York). The project's developer, Constitution Pipeline Company LLC, said it remains committed to the project. For more on the NYSDEC permit denial, see April 26, 2016, article--Tough Times for Pipelines: Two Major Northeast Projects Hit Roadblocks. Constitution Pipeline Company is owned by subsidiaries of Williams Partners LP (NYSE:WPZ) (Tulsa, Oklahoma), Cabot Oil & Gas Corporation (NYSE:COG) (Houston, Texas), Piedmont Natural Gas Company (NYSE:PNY) (Charlotte, North Carolina) and WGL Holdings Incorporated (NYSE:WGL) (Washington, D.C.).
ANR Pipeline Company (Houston, Texas) last year placed its $800 million Defiance East Natural Gas Pipeline Project on hold. That 200-mile pipeline was scheduled to stretch from MarkWest's existing gas processing facility in Cadiz, Ohio, to ANR's compressor station in Defiance, Ohio. Prior to being placed on hold, ANR expected to begin construction in the current quarter, and the project had a yearend 2017 in-service date.
Another large project that was placed on hold last year was the Fort McMurray-to-Hardisty Grassroot Synergy Crude Oil Pipeline, a 250-mile, $650 million project that is expected to carry up to 650,000 barrels per day (BBL/d) of diluted bitumen across Alberta. Project owner Spectra Energy Midstream Corporation (Calgary, Alberta) is a subsidiary of Spectra Energy Corporation (NYSE:SE) (Houston, Texas).
Several legs of the controversial Keystone XL Crude Oil Pipeline, valued at about $2 billion, also were placed on hold late last year following the Obama administration's refusal to issue a presidential import permit for the project. The Keystone XL pipeline is a 1,179-mile, multi-billion-dollar proposed pipeline that could transport up to 830,000 BBL/d of oil sands crude oil from Alberta to Steele City, Nebraska. For more on that decision, see November 10, 2015, article--KXL Pipeline Permit Denial Caps a Week to Forget for TransCanada.
In late 2015, a $450 million project, Sharon Springs Grassroot Grand Mesa Crude Oil Pipeline, was cancelled by its owner, Rimrock Midstream (Plano, Texas). That project was scheduled to run about 550 miles from Weld County, Colorado, to Cushing, Oklahoma. Part of the Grand Mesa Pipeline project, the Sharon Springs project would have transported up to 130,000 BBL/d of crude oil from the Denver-Julesburg (D-J) Basin to the crude-oil hub in Oklahoma. It was scheduled to kick off construction earlier this year.
Several projects that are part of the Dakota Pipeline Project also were placed on hold in recent months. The Dakota Pipeline is a $650 million project that would bring up to 500 million square feet of gas per day (MMCF/d) from North Dakota to Moorhead, Minnesota. Project owner WBI Energy Transmission (Bismarck, North Dakota), a unit of MDU Resources Group Incorporated (NYSE:MDU) (Bismarck, North Dakota), had planned to begin construction of the projects in late 2015 and early 2016, with completion expected by yearend 2018.
"The law of gravity--what goes up must come down--certainly applies to Oil & Gas producers, pipeline developers and oilfield service companies," said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "Some of these projects need higher commodity prices to be viable while others, notably Keystone XL, need a Republican president in the White House. We expect project activity in the Pipeline sector to rise and fall with commodity prices, and project cancellations and delays over the last year have shown that."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
