US stumbles in push to speed pipeline buildout
The Trump administration has quickened the permitting process for energy projects, but legal challenges are slowing progress
A US district court ruling has blocked construction of the 830,000 b/d Keystone XL crude pipeline, highlighting the obstacles that President Donald Trump faces as he seeks to "fast-track" oil and gas pipelines.
Speedy approvals by the administration sometimes result in delays later on, as courts block projects because of incomplete reviews. Montana District Court judge Brian Morris earlier this month rescinded the required permits for Keystone XL, saying the US State Department failed to adequately analyse issues such as the effect of low oil prices and oil spill risks, and did not provide a sufficient explanation for reversing an earlier finding under former president Barack Obama that the pipeline was not in the public interest.
If the ruling remains intact, pipeline developer TransCanada will struggle to meet its target of starting construction early next year on the pipeline, which would ship Canadian crude to the US midcontinent. And the court decision provides ammunition to critics who say Trump's decision to set a 60-day deadline to approve the pipeline ended up backfiring by providing too little time to update analyses that were initially finished in 2014.
"This is definitely a direct result of the Trump administration trying to push things as quickly as possible without regard to following the law," environmental group Sierra Club attorney Doug Hayes says. Hayes was involved in one of the lawsuits challenging the permit.
Keystone XL is just the latest infrastructure project to face legal setbacks over permits that the Trump administration has approved. The 1.9bn ft³/d (19.6bn m³/yr) Mountain Valley and the 1.4bn ft³/d Atlantic Coast gas pipelines were forced to halt construction in some areas after courts overturned key permit awards. These decisions have contributed to delays and cost overruns now estimated at $900mn and $2bn, respectively.
Trump pushed to expedite permitting early in his term, through efforts such as seeking a two-year deadline to approve most infrastructure projects. Last year he said he took "historic steps" to speed pipeline approvals and touted his personal intervention to rapidly approve Keystone XL. "We got it approved. And we got it approved fast," Trump said.
No need for speed
But environmentalists say the focus on speed is generating administrative records that fall short on the details demanded by laws such as the National Environmental Policy Act and the Administrative Procedure Act. "It is yet another case of an attempt to cut corners and skirt legal obligations, which is really not a way of expediting projects," Natural Resources Defense Council's Canada project director Anthony Swift says. The White House has not responded to requests for comment.
Pipeline developers reject the contention that permitting has been rushed. Dominion Energy, which is developing the Atlantic Coast pipeline, says the project went through an exhaustive review that took four years to complete. The company says federal agencies have "diligently addressed" errors that courts have found with a few of the permits. EQT, which is developing the Mountain Valley pipeline, and TransCanada did not respond to requests for comment.
And the permitting push has succeeded for some projects. Trump signed an order in early 2017 seeking expedited approval for the 525,000 b/d Dakota Access pipeline, helping it start service about four months later. The pipeline was allowed to stay open even after a judge ordered part of the permit to be revised. Trump's order was "instrumental" in finishing the pipeline, project developer Energy Transfer Partners says.
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Tankers can take TMX crude mid-May: Trans Mountain
Tankers can take TMX crude mid-May: Trans Mountain
Calgary, 1 May (Argus) — Commercial operations for the 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline in western Canada have officially started today, but tankers will not be able to load crude from the line until later this month. Line fill activities, which began on 16 April, are still ongoing for the C$34bn ($25bn) project that stretches from Edmonton, Alberta, to the docks in Burnaby, British Columbia. About 70pc of the volumes needed are in the 1,181 kilometre (733 mile) line, Trans Mountain said on Wednesday. "As of today, all deliveries for shippers will be subject to the Expanded System tariff and tolls, and tankers will be able to receive oil from Line 2 by mid-May," Trans Mountain said. Aframax-size crude tankers started to take position on the west coast last month in anticipation of the new line. But the inability to deliver crude at Burnaby, while still having to pay full tolls, was a concern raised by several shippers on 23 April. "Trans Mountain must be able to receive, transport and deliver a shipper's contract volume," the shippers said in a letter to the CER. The ability to deliver the crude is "clearly central and fundamental qualities of firm service." The CER in November approved interim tolls for the system that will further connect Albertan oil sands producers to Pacific Rim markets. Shippers will, at least initially, pay C$11.46/bl to move crude from Edmonton, Alberta, to the Westridge terminal in Burnaby, British Columbia. The fixed portion accounts for C$10.88/bl of this and has nearly doubled from a C$5.76/bl estimate in 2017. The Canada Energy Regulator (CER) on 30 April gave Trans Mountain a green light to put TMX into service , ending years of uncertainty that the project would ever be completed. The expansion project, or Line 2, nearly triples the capacity of Canadian crude that can flow to the Pacific coast, complementing the original 300,000 b/d line, or Line 1, that has been operating since 1953. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canada’s TMX pipeline ready to move crude: Update
Canada’s TMX pipeline ready to move crude: Update
Adds regulatory approvals received. Calgary, 30 April (Argus) — Canada's 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline can now start moving volumes to the Pacific coast after receiving final regulatory approvals today, more than a decade after the project was first conceived. The Canada Energy Regulator (CER) approved Trans Mountain's final applications on Tuesday, giving the midstream company a green light to put its C$34bn ($25bn) project into service. Trans Mountain had recently maintained its commitment to being ready by 1 May. The expansion nearly triples the existing 300,000 b/d Trans Mountain line that runs from Edmonton, Alberta, to Burnaby, British Columbia. Also expanded was the Westridge Marine Terminal from one dock to three, all capable of loading Aframax-sized vessels. The line will provide Canadian oil sands producers with a significant export outlet without having to first go through the US. Much of the new volume to flow on TMX is expected to be heavy sour crude. Federally-owned Trans Mountain had submitted applications as recent as 15 April for the final section of the pipeline about 140 kilometers (87 miles) east of the line's terminus in Burnaby. The final applications concerned piping, valves and other components at two pipeline inspection device traps and the mainline pipe between the two traps. The traps were added for safety assurance when the operator was allowed by CER to use a smaller diameter pipe as part of the Mountain 3 deviation. Mountain 3 was the last segment of the pipeline to be constructed because of delays relating to difficult terrain while tunneling. The "golden weld" marking the end of construction occurred on 11 April, according to Trans Mountain. A group of shippers last week expressed concern that TMX would not be ready for commercial service by 1 May. The pipeline had been marred by legal challenges and cost over-runs since it was first proposed in 2013 by its then-owner US midstream firm Kinder Morgan. The Canadian government took ownership of it in 2018. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
New US rule may let some shippers swap railroads
New US rule may let some shippers swap railroads
Washington, 30 April (Argus) — US rail regulators today issued a final rule designed to help customers switch railroads in cases of poor rail service, but it is already drawing mixed reviews. Reciprocal switching, which allows freight shippers or receivers captive to a single railroad to access to an alternate carrier, has been allowed under US Surface Transportation Board (STB) rules. But shippers had not used existing STB rules to petition for reciprocal switching in 35 years, prompting regulators to revise rules to encourage shippers to pursue switching while helping resolve service problems. "The rule adopted today has broken new ground in the effort to provide competitive options in an extraordinarily consolidated rail industry," said outgoing STB chairman Martin Oberman. The five-person board unanimously approved a rule that would allow the board to order a reciprocal switching agreement if a facility's rail service falls below specified levels. Orders would be for 3-5 years. "Given the repeated episodes of severe service deterioration in recent years, and the continuing impediments to robust and consistent rail service despite the recent improvements accomplished by Class I carriers, the board has chosen to focus on making reciprocal switching available to shippers who have suffered service problems over an extended period of time," Oberman said today. STB commissioner Robert Primus voted to approve the rule, but also said it did not go far enough. The rule adopted today is "unlikely to accomplish what the board set out to do" since it does not cover freight moving under contract, he said. "I am voting for the final rule because something is better than nothing," Primus said. But he said the rule also does nothing to address competition in the rail industry. The Association of American Railroads (AAR) is reviewing the 154-page final rule, but carriers have been historically opposed to reciprocal switching proposals. "Railroads have been clear about the risks of expanded switching and the resulting slippery slope toward unjustified market intervention," AAR said. But the trade group was pleased that STB rejected "previous proposals that amounted to open access," which is a broad term for proposals that call for railroads to allow other carriers to operate over their tracks. The American Short Line and Regional Railroad Association declined to comment but has indicated it does not expect the rule to have an appreciable impact on shortline traffic, service or operations. Today's rule has drawn mixed reactions from some shipper groups. The National Industrial Transportation League (NITL), which filed its own reciprocal switching proposal in 2011, said it was encouraged by the collection of service metrics required under the rule. But "it is disheartened by its narrow scope as it does not appear to apply to the vast majority of freight rail traffic that moves under contracts or is subject to commodity exemptions," said NITL executive director Nancy O'Liddy, noting it was a departure from the group's original petition which sought switching as a way to facilitate railroad economic competitiveness. The Chlorine Institute said, in its initial analysis, that it does not "see significant benefit for our shipper members since it excludes contract traffic which covers the vast majority of chlorine and other relevant chemical shipments." By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
First TMX cargo booked on Aframax to China
First TMX cargo booked on Aframax to China
Houston, 30 April (Argus) — The first cargo shipped on the Trans Mountain Expansion (TMX) crude pipeline is scheduled to load on an Aframax in Vancouver, British Columbia, beginning 18 May for June delivery in China, according to sources with knowledge of the transaction. Suncor provisionally booked the Aframax Dubai Angel for a Vancouver-China voyage at $3.5mn lumpsum, equivalent to $6.39/bl for Access Western Blend, market participants said. In March, China's state-run Sinochem purchased the first TMX cargo — 550,000 bl of Canadian Access Western Blend — for June delivery. The shipping fixture would mark the first Vancouver-China crude delivery since May 2023, according to Vortexa, a possible indicator of steady Asia-Pacific demand to come with increased maritime access for Canadian oil producers. China already receives heavy sour Canadian crude re-exported from the US Gulf coast, with about 110,000 b/d arriving in 2023, Vortexa data show. The new 590,000 b/d pipeline begins commercial service on 1 May, with three Aframax-capable berths at Vancouver's Westridge Marine Terminal, up from one previously. An oversupply of Aframax crude tankers on the west coast of the Americas in anticipation of TMX-driven demand pressured Vancouver-loading rates to six-month lows on 19 April , according to Argus data, but market participants expect demand to increase beginning in the second half of May. Three regulatory approvals remained under assessment by the Canada Energy Regulator (CER) on 30 April. The applications concern piping, valves and other components at two pipeline inspection device traps and the mainline pipe between the two traps. The traps were added for safety assurance when the operator was allowed by CER to use a smaller diameter pipe as part of the Mountain 3 deviation. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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