Midstream News

Shell sells Wheatstone LNG stake in Australia

Royal Dutch Shell plc has agreed to sell its 8% equity interest in the Wheatstone-Iago joint venture and 6.4% interest in the Wheatstone liquefied natural gas (LNG) project in Western Australia for a cash consideration of US$1,135 million to the Kuwait Foreign Petroleum Exploration Co. (KUFPEC). The Wheatstone LNG project produces 8.9 million tonnes per annum.

Shell CEO Ben van Beurden commented, "Shell will remain a major player in Australia's energy industry. However, we are refocusing our investment to where we can add the most value with Shell's capital and technology. We are making hard choices in our worldwide portfolio to improve Shell's capital efficiency."

The agreement with KUFPEC, an existing Wheatstone joint-venture partner, ensures that there will be no impact on existing commercial agreements.

Wison reports award for supply of 'first' LNG FRU

Wison Offshore & Marine reports the award of a binding agreement with Vessel Gasification Solutions (VGS) for the supply of the industry's first barge-based LNG floating regasification unit (FRU) to be installed offshore India.

The FRU, which will be owned by VGS, will consist of a newbuild, non-propelled barge equipped to perform the regasification and send out up to 1,000 MMscf/d of gas. The facility will be moored on a jetty structure located 8 km (5 mi) offshore Andhra Pradesh on India's eastern coast, to the northeast of the Kakinada Anchorage Port, alongside a permanent floating storage unit (FSU) that will be used as the LNG offloading point for trading tankers.

The FRU will be sized to allow for the future expansion of its regasification capability by an additional 750 MMscf/d of gas within the next few years in order to meet the rapidly growing natural gas requirements in the region.

Under the agreement, Wison Offshore & Marine affiliates will be responsible for the turnkey engineering, procurement, construction, installation, and commissioning (EPCIC) of the unit, and will lead the project from its Shanghai operational center, with construction to be performed at Wison's wholly owned fabrication facility located in Nantong, China.

Savage to provide Williston, Uinta crude transport via truck

Savage is expanding services at its terminals in the Uinta and Williston basins to include crude transportation via truck. With Savage's capability for crude by rail transloading services, the addition of truck transportation allows Savage to offer oil and gas companies a complete logistics solution from the wellhead to the refinery.

The Savage rail-served terminals in Trenton, North Dakota, and in Price and Salt Lake City, Utah, provide crude bound for key refinery markets access to rail transportation. Truck transportation fills the gap of getting the crude from the wellsite to these transload terminals. The Savage terminal in Price, Utah, is the first facility in the area to offer crude by rail origination services on the Union Pacific Railroad. The Savage terminal in Salt Lake City provides access to the Bingham & Garfield shortline. The Savage terminal in Trenton offers direct access to the BNSF mainline.

The Savage crude transportation terminals in Utah provide truck dispatch and transportation, rail car switching, railcar spotting, transloading and car storage related to crude handling for rail transport. In the Uinta Basin, Savage is now equipped to truck over 50,000 barrels and transload over 70,000 barrels of crude each week. In the Williston Basin, Savage has the capacity to truck over 10,000 barrels per day, and the company will add an additional 10,000 barrels per day capacity by February.

Texas LNG plans mid-sized US LNG export project

Texas LNG LLC reports that, on Dec. 31, 2013, it filed an application to the US Department of Energy (DOE) seeking authorization to export up to 2 million tonnes per annum (MTA) of liquefied natural gas (LNG) to Free Trade Agreement (FTA) and non-FTA markets. This follows Texas LNG's execution of an exclusive lease option agreement in December 2013 with the Port of Brownsville in South Texas to secure a location to develop its export project.

Vivek Chandra, CEO of Texas LNG, commented: "We expect to receive FTA export approval by the end of the first quarter or beginning of the second quarter of 2014, and non-FTA later in the year. In the meantime, we are progressing our engineering efforts and discussions with investors and LNG buyers."

Texas LNG will employ a toll processing business model whereby the LNG customer will pay Texas LNG a fee for converting natural gas into LNG.

"The Port of Brownsville's strategic geographic location as one of the closest ports to the Panama Canal will facilitate our efforts to source feed gas from South Texas gas fields such as the Eagle Ford, where large volumes of gas are currently flared and vented, thereby providing both a positive environmental and economic benefit to the region," Chanel continued.

Texas LNG's export facility concept involves a liquefaction barge to be fabricated offsite by a shipyard. At the Texas LNG site, the barge will be permanently "grounded" so that it will no longer be a floating vessel.

"Our unique barge-based liquefaction solution enables Texas LNG to minimize complex onshore civil construction works, reduce the need to construct large LNG tanks onsite, reduce the overall local environmental and labor impact, and expedite speed to market," Chandra said. "We are in discussions with shipyards and EPC contractors to design and construct the liquefaction barge and associated onshore facilities. We have also received favorable indications from both potential natural gas buyers and producers interested in committing supply."

Texas LNG anticipates that LNG export could begin in early 2018. The company plans to make a request to the Federal Energy Regulatory Commission to begin the pre-filing process by the end of 2014. Commencement of construction is subject to regulatory approvals and a final investment decision contingent upon Texas LNG obtaining satisfactory construction contracts and long-term customer contracts sufficient to underpin financing of the project.

Canyon begins development of Permian Basin midstream system

Canyon Midstream Partners LLC has begun development of a natural gas gathering, processing, and treating system in the Permian Basin (the James Lake System). The James Lake System is anchored by a 10-year gathering and processing agreement with a large oil and gas company.

The James Lake System will include a cryogenic gas processing plant in Ector County, Texas (the James Lake Plant), with an initial processing capacity of 70 million cubic feet per day and treating capabilities for natural gas containing hydrogen sulfide and carbon dioxide.

To supply the plant, Canyon is developing 40 miles of high-pressure gathering trunklines and three compressor stations that will connect to low-pressure field gathering systems that Canyon is constructing for its anchor customer in Ector County and Andrews County, Texas.

When completed in late 2014, the James Lake System will deliver residue gas into the El Paso Natural Gas pipeline and offer interconnections to multiple NGL lines in Ector County.

Japan Australia LNG ends Browse deal with Woodside

Woodside Petroleum Ltd. has provided an update on the Browse LNG project in Western Australia.

In connection with Woodside's sale of equity in the Browse LNG Development to Japan Australia LNG (MIMI Browse) Pty. Ltd. (MIMI) and advised to the Australian Securities Exchange (ASX) May 1, 2012: Woodside and MIMI entered into an agreement (JMA) to jointly market co-mingled LNG to the Asian market, primarily to Japanese customers; and Woodside and MIMI entered into a long-term sales and purchase agreement (SPA) for 1.5 million tons of LNG a year from the Browse LNG Development

The SPA was conditional upon a final investment decision on Browse being taken by Dec. 31, 2013.

Because the Browse joint venture participants decided not to proceed with an onshore development and to enter a Basis of Design for a floating LNG development concept, both parties recognize that this condition will not be satisfied. Consequently, MIMI has given Woodside notice terminating the SPA. The JMA has not been terminated.

Woodside and MIMI continue working actively on marketing of co-mingled LNG volumes in the Japanese market. In addition, Woodside remains in ongoing discussions with other regional customers regarding potential sales from its portfolio of Australian LNG developments, including Browse.


BRIEFS


AAR raises concern about energy transport tax

The Association of American Railroads (AAR) responded to Chicago Mayor Rahm Emanuel's proposal addressing the movement of energy products by rail.

AAR president and CEO Edward R. Hamberger said the industry supports the call for higher federal tank car standards, highlighting rail industry proposals in 2011 and 2013 and noting the industry's use of cutting edge safety technologies, such as its $4B investment in positive train control. Railroads concur with the Mayor's call for rail shippers to fully and accurately disclose and label the hazardous materials that railroads move, he added.

On the Mayor's proposal around improving liability insurance for the movement of hazardous materials, Hamberger noted that major freight railroads already carry as much insurance as is commercially available in the marketplace.

Hamberger raised concern about a suggested federal tax on the transport of energy products, however. "As we've seen with other federal tax and fee proposals, the end result is unfortunately that consumers often end up footing the bill."

Hunter elected chairman of Texas Pipeline Association

Michael T. Hunter, vice chairman and chief commercial officer of the general partner of Southcross Energy Partners LP, has been elected chairman of the Texas Pipeline Association.

Comprising 48 member companies, the Texas Pipeline Association represents the interests of intrastate pipelines.

Before his role at Southcross, Hunter served as the company's president. He has nearly 40 years of experience in the energy industry.

In addition to serving as the chairman of the Texas Pipeline Association, Hunter currently serves as the vice chairman of the Texas Energy Reliability Council.

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