Bottleneck in the Bakken continues

Reuters recently reported Bakken crude oil prices are set to weaken from already low levels in coming months, largely due to the expected frigid weather conditions this winter that will likely disrupt rail loadings and worsen bottlenecks as production continues to increase. The Bakken has reached record levels of production at 1.3 million bpd, “overwhelming pipelines and rail cars.” As Reuters writes:

The region’s pipeline capacity is just 1.25 million bpd, per market intelligence firm Genscape, forcing producers in North Dakota to rely on less efficient rail, which could face difficulties operating in the winter. In addition, nearby Canadian producers also grappling with bottlenecks are pushing more oil into the United States, worsening the constraints.

North Dakota’s crude production typically is not affected enough to lift prices the winter, but rail operations face severe challenges in the frigid weather, said John Zanner, crude analyst at RBN Energy.

“Winter weather makes crude-by-rail operations much more difficult. You have stuff freeze up, especially in North Dakota,” Zanner said.

Reuters highlights that Energy Transfer plans to expand the Dakota Access Pipeline’s capacity to as much as 570,000 bpd from its current 525,000 bpd. Although new projects have been announced to help alleviate the pipeline shortage in the region, it will take some time before these lines are constructed and brought into operation. Just last week, a federal judge halted construction on the Keystone XL crude oil pipeline from Canada.

With record levels of production, the US is at a critical point in which we must prioritize expanding our critical energy infrastructure network in order to efficiently fuel our current and future energy needs.

Energy Infrastructure Key to Moving Latin America Forward

Real Clear World recently published an op-ed authored by GAIN spokesman Craig Stevens highlighting the importance of energy infrastructure and resilience in Latin America. Although Latin America has seen great progress in recent years when it comes to expanding energy access, more than 23 million people still do not have access to reliable energy. Those suffering from energy poverty often have to rely on primitive methods of heating their homes or cooking food.

As the op-ed emphasizes, these families often also have to overcome unhealthy living conditions and additional challenges, including “a lack of potable water, improper sewage treatment, and educational and health care shortfalls.” Proper energy infrastructure and improved access to reliable energy can “help bring communities out of poverty, and it can help support economic and political stability.” The overall quality of life could be greatly improved, as Stevens contends:

The possibilities cannot be overstated, as reliable energy can greatly improve many aspects of life. In the home, for example, it promotes modern, sanitary cooking and heating.  In hospitals and medical facilities, electricity enables modern care and life-saving procedures. In schools, electricity allows the power of the internet, and with it new information, to teach the next generation of leaders. 

Additionally, the op-ed goes into detail on specific countries that have significant populations suffering from energy poverty, including Honduras and Haiti:

Take Honduras, for example, where the migrant caravan started. As of 2016, nearly one million residents did not have access to electricity.  The country ranks 96th out of 137 on the Global Competitiveness Index, with electricity and communications infrastructure ranking 105th of the 137 countries studied. Adding electricity capacity to a more reliable national grid would help bolster the economy and create new jobs. Haiti is another example of an underdeveloped country that could greatly benefit from investments in critical energy infrastructure. The country ranks 136th out of 137 for electricity and communications on the Global Competitiveness Index. The promotion of public-private partnerships is crucial in order to create a more resilient electric grid and expand access to all Haitians. 

Stronger energy infrastructure and increased access to reliable energy are key to improving living conditions in developing nations in Latin America. Advancements in infrastructure would not only benefit residents and communities in the region, but also solidify more resilient relationships between energy-rich countries like the US and countries throughout Latin America and the Caribbean.

Read the full op-ed here.

American Petroleum Institute releases new report featuring cybersecurity in the oil & gas industry

GAIN recognizes that in addition to growing our nation’s infrastructure, it is critical that we also prioritize protecting what is already in the ground. The American Petroleum Institute (API), in conjunction with the Oil and Natural Gas Subsector Coordinating Council and the Natural Gas Council, recently released a new report emphasizing the importance of cybersecurity in the oil & gas industry. The report highlights the industry’s “resilience and preparedness to defend itself and energy consumers against malicious cyber threats,” as well as “providing insight for policymakers into the comprehensive cybersecurity programs of the natural gas and oil industry.” The report goes into great detail, describing cybersecurity efforts from the time natural gas is extracted till it reaches the consumer:

Cybersecurity in the natural gas and oil industry applies throughout the value chain, extending from wellheads to pipelines and through to the supply of natural gas to an electric power generation facility or gas utility, or the supply of oil to a refinery and through to the manufacturing of fuels and sales at a gasoline station.

However, a misconception has recently developed that implies natural gas pipelines are more vulnerable to attacks than other energy infrastructure. Although it is true that cyberattacks targeting US energy infrastructure are on the rise, our pipelines have a number of security mechanisms in place to ensure safe, efficient operation. As the report notes, there are a series of industry guidelines that are closely adhered to, as energy companies are continuously evaluating potential risks and adding increased levels of enhanced security. Expanding on this point, the report contends:

Furthermore, the natural gas system is highly resilient because the production, gathering, processing, transmission, distribution and storage are highly flexible and elastic – characterized by multiple fail-safes, redundancies and backups. Pipeline companies have in place layers that protect against cascading failure, which also include mechanical controls that are not capable of being overridden through any cyber compromise of [industrial control systems].

A layered defense approach provides optimal protection in the rapidly evolving cyber threat landscape, as no one layer of defense or technology will ever be completely effective. This approach creates a landscape that is much more challenging for an attacker to fully penetrate – providing necessary time to implement defensive response measures.

Industry works closely with the government agencies responsible for cybersecurity throughout each of these segments – from Coast Guard regulatory oversight in maritime and maritime-facing facilities to TSA regulatory oversight of pipelines, as well as bi-directional sharing with the U.S. intelligence community via DHS/NCCIC, DOE, FBI and others – ensuring collaboration and communication at every point.

Through strong public-private partnerships and ongoing technological advancements, energy companies will be able to continue to protect and maintain pipelines around the country. GAIN appreciates the extensive efforts of the American Petroleum Institute in compiling this comprehensive report on the continued need to protect our nation’s critical energy infrastructure.

Read the full report here.

The interdependent relationship between the agriculture & energy industries

The High Plains Journal recently published a letter by Kansas resident Cole Morehead on the critical dynamic between the agriculture and energy industries. The letter emphasizes that these two industries heavily rely on one another – farms and ranches need oil and natural gas to operate efficiently, while energy developers rely on cooperation from rural landowners for pipeline routing and construction. The author contends these industries should work together for mutual benefit, writing:

In rural America, prosperity is based on crop and livestock production, which relies on products derived from pipeline-shipped oil and gas. What’s good for the farmer or rancher should be good for the pipeline operator, and vice versa. Instead of standing on opposite sides of the fence screaming at the other side, why don’t we all jump on the fence and have a conversation about aligning our interests?

The letter also assures readers that pipelines are the safest, cleanest means of transportation, citing data that finds a “barrel of oil shipped by pipeline safely reaches its destination 99.999 percent of the time.” The author writes:

Yet, the public’s perception of pipelines is poor, driven by misconceptions, negative press and politics. It isn’t the years of accident-free operations on thousands of miles of pipelines across the country that make headlines, but the one day when something goes wrong on one length of pipe.

From start to finish, the pipeline process is carefully planned and implemented. Pipeline operators “go above and beyond” to ensure systems are safe, including 24/7 monitoring and regular maintenance. In addition, workers are trained in land conservation, prioritize thorough, site restoration, and follow all environmental regulations.

GAIN looks forward to further investment and promotion of energy infrastructure across the country, and continuing to foster the important relationship between the energy and agriculture industries. As Morehead concludes:

Energy, farming and ranching are essential to the lives of every U.S. citizen, and to people around the world who count on our energy and agricultural exports. Let’s come together to strengthen the partnership between pipelines and rural landowners and maintain America’s position as the global leader in agriculture as well as oil and gas.

Dakota Access expanding as need for energy infrastructure in the Bakken continues to grow

Bismarck Tribune recently reported that “Energy Transfer Partners has announced it is seeking commitments from shippers to transport more Bakken crude to the Gulf Coast.” According to a company spokesperson, the proposed expansion would increase the pipeline’s capacity from about 500,000 barrels per day (bpd) to 570,000 bpd. The article writes that the expansion would “require minimal asset modifications within the existing pipeline right-of-way.”

Industry expert Justin Kringstad told the Tribune that pipeline capacity can be increased by a variety of factors, including adding a chemical to the oil that makes it flow easier, or adding additional horsepower or pumping stations. Kringstad contends that North Dakota producers have benefited and saved money on shipping costs as a result of DAPL, stating:

“Every expansion at this point is going to assist in keeping the market strong in North Dakota. But long-term, it will take some substantial new investment to continue to keep North Dakota oil connected to new markets.”

Energy Transfer’s recent announcement on the Dakota Access expansion comes at a critical juncture as North Dakota’s Bakken region is currently experiencing a major comeback, as recently reported by the Wall Street Journal. Many industry experts believed the region to have reached its peak – that is – until recent spikes in crude production. The Journal writes:

Several factors account for the Bakken’s recent rise, Mr. Prudencio said. U.S. oil futures surpassing $70 a barrel have spurred more drilling across the country. Additionally, cheaper acreage and improved crude transportation have made the area more attractive than some other major shale fields.

Namely, the Dakota Access Pipeline has made it cheaper to send crude to other parts of the country. Previously, much of the oil produced was transported by rail.

The United States is facing a major pipeline shortage around the country. The need for stronger infrastructure extends from the vast oil fields of the Bakken and Permian to the small New England towns preparing for frigid winter temperatures. GAIN is hopeful regarding the proposed DAPL expansion, and looks forward to continuing the fight to Grow America’s Infrastructure Now.

Rover Pipeline benefiting local communities along route

This past weekend, The Times-Reporter, of New Philadelphia, Ohio, highlighted a local school district’s plans for tax revenue it is expected to collect from Rover Pipeline this year. The Tuscarawas Valley Local School district recently held a public meeting to share information and field questions regarding the district’s vision to capitalize utility tax revenue of the Rover Pipeline.

The school district is set to receive approximately $950,000 annually as a result of utility tax revenue from Rover. The school district is not proposing a bond issue or tax increase of any kind this year, largely due to the significant revenue from Rover. The district plans to leverage the utility tax revenue generated by the pipeline to establish a permanent improvement fund, which will in part be used to create a “safe, state of the art pre-Kindergarten-12 facilities for all students on the Tusky Valley Road Campus.” In addition to new facilities, the district plans to use the funds to renovate an existing middle school, the stadium, and transform the existing high school to serve as a community center and house central offices.

Communities along the Rover Pipeline, and other pipelines across the country, are benefiting in similar ways. Tax revenue from energy infrastructure projects can be used by local municipalities to improve educational facilities, public infrastructure such as roadways and bridges, and even purchase new equipment or training for first responders. From providing much-needed tax dollars to communities, to safely and reliably transporting energy products to market, it is clear US officials must continue to welcome investment in our critical energy infrastructure.

US needs safe, reliable energy infrastructure to deliver to consumers

Forbes recently published a comprehensive overview by industry expert David Blackmon highlighting ongoing pipeline construction across the country and extreme levels of opposition these important projects continue to face. According to Blackmon, although these protests are not receiving the national media attention that those of Dakota Access experienced, they are still disrupting the safe completion of a number of critical pipelines.

Blackmon goes into detail on pipeline challenges from the East Coast, to the Dakotas, to the bayous of Louisiana. Tactics have escalated against specific projects in some areas, while are seemingly counterintuitive in others. In Minnesota, for example, protesters of Enbridge’s Line 3 blocked a bridge for several hours. However, there is no Line 3-related construction going on anywhere in the state. In Louisiana, landowners filed a suit to halt the construction of Bayou Bridge, questioning the developer’s ability to build on private land under the state’s expropriation law. These are just a couple instances of the mounting hurdles much-needed pipelines are facing. Blackmon emphasizes the need for the continued expansion of modern energy infrastructure, stating:

All of this is so counterproductive and frankly, ill-advised. These pipelines are without question the safest, most efficient and most environmentally-friendly way to move oil and natural gas to the markets they serve, and the demand for the products they transport is strong and growing stronger. While all of these pipelines will ultimately end up being completed, time is money in the midstream business, and these delays and work stoppages only serve to raise the cost of energy for everyone, while doing little if anything to protect the environment.

Simply put, the reality is the US needs an extensive, and reliable, network of pipelines in order to safely and efficiently deliver energy products to consumer markets around the country. Many environmental activists have continued to ignore the facts, including the impressive safety ratings of pipelines and considering the riskier alternative transport options. Having been unsuccessful in their efforts to “keep it in the ground,” activists have directed their efforts toward preventing the means of safely transporting it to market.

GAIN echoes Blackmon’s assertion that the US needs strong energy infrastructure. It is time for US officials to promote investment in our critical infrastructure and ensure safe and timely completion of our pipelines.

Trump administration emphasizes need for energy infrastructure

The Hill recently reported President Trump is expected to make a “renewed push” to permit and build oil and natural gas pipelines next year, according to his top economic adviser Larry Kudlow. The article writes, “the need for pipeline is especially strong in the natural gas industry, where drillers, thanks to the boom in fracking and horizontal drilling, are producing more gas than there is pipeline capacity to carry.”

The lack of pipelines is so great in certain regions that drillers have resorted to “flaring,” or burning, large amounts of excess natural gas. To complicate the bottleneck even more, ongoing pipeline projects, from Louisiana to North Dakota, from Ohio to Texas, have faced a number of hurdles. These hurdles include vigilante activists, legal challenges, and strict state regulations.

The US government must promote investment in our critical energy infrastructure and ensure regulatory certainty. Strong energy infrastructure is key to delivering reliable, affordable energy products to consumers across the country. Pipelines have also played a critical role in the US’ record-amount of oil and natural gas exports. GAIN recognizes the President’s prioritization of strengthening American energy and the continued need for modern energy infrastructure.

New trade deal promotes American energy

The Daily Caller recently published an article on President Trump’s new trade agreement with Canada and Mexico and its provisions that “free up the energy industry to continue expanding U.S. Natural gas exports into Mexico without worrying about tariffs.” The pact, known as the U.S., Mexico, and Canada Agreement (USMCA), largely focuses on the export of automobiles, but the article notes that it “does allow for continued market access for U.S. gas and investments in Canada and Mexico, which is highly dependent on U.S. natural gas exports.”

American energy has the potential to benefit greatly from the USMCA. Considering the oil and gas boom, from the Marcellus to the Permian, and with continued investments in our critical energy infrastructure, the U.S. is in a strong position to provide reliable energy to not only American consumers, but also to our neighbors in Canada and Mexico. The Daily Caller reports that Mexico accounts for the bulk of U.S. gas exports, with 90 percent coming from pipelines and the rest from LNG. In fact, “the country’s energy industry expects to increase its natural gas use for electric power generation by about 50 percent over the next five years.” The Daily Caller expands on the important role of energy infrastructure in regards to transporting product to Canada and Mexico, writing:

Pipelines such as Rover and Nexus Gas Transmission are being built to shuttle gas from the Marcellus and Utica supply regions in Ohio, Pennsylvania, and West Virginia into areas on the Gulf coast and eastern Canada. USMCA is not expected to derail any future exports or pipeline constructions between the countries.

The positive influence of U.S. energy continues to grow as we reach record production levels, as well as modernize and expand our critical energy infrastructure network. GAIN looks forward to American industry continuing to provide reliable, affordable energy to our allies around the world, starting with Canada and Mexico.

Pipeline 101: Remediation

The last installment of our Pipeline 101 series focuses on the important process of remediation. Once construction is complete, environmental experts remediate the land that was affected by the construction process. Once the pipeline begins operating, it is monitored around the clock, every day of the year. The operator has the ability to monitor conditions for any potential issues, pinpointing the problem, and the technology to shut down the pipeline remotely within minutes. To learn more about remediation, pipeline monitoring, and the completion of the process, watch this short video!