Underground Construction - January 2020 - 19

Jeff Awalt | Executive Editor

Global Pipeline Construction Outlook 2020
For those who thought producer retrenchment in U.S. shale basins, global trade wars
or middling commodity prices would stop
pipeline expansion dead in its tracks: Move
along, folks. There's nothing to see here.
Sure, there's been a marked exhale
since previous exhilarating highs, but the
pipeline construction business is starting oﬀ the new year with a solid project
backlog. And, even in those cases where
market fundamentals have seemed to put
projects on the brink, operators have been
far more inclined to delay than abandon
them outright.
Their optimism is mostly running on the
same fuel as it was a year ago. Oil and gas
companies are operating leaner and generally are better positioned to weather low
prices. Worldwide energy markets, particularly in developing regions, are continuing
their shift toward natural gas, requiring
signiﬁcant investment in infrastructure for
exporting and importing countries alike.
There are concerns, to be sure. U.S. shale
producers are struggling. Tariﬀs have weakened in areas where excess pipeline capacity
has, for the moment, at least, outpaced
demand. Rapid development of liquefaction
and LNG export facilities in some regions
may undercut ﬁnancial support for planned
pipelines and infrastructure on the drawing
boards in other areas of the world.
That is to say, the energy industry is just
as cyclical and subject to external impacts
as ever, from weather to politics. At the
outset of 2020, however, it's a pretty good
time to be a pipeliner.
Here's an update on some of notable pipeline activity taking place across key regions:

NORTH AMERICA
Pipeline Miles Under Construction: 8,076
Pipeline Miles Planned: 24,092
Total: 32,168

The dramatic rise in oil and gas production
from shale basins in the United States
was a big driver of pipeline construction
activity in 2019, with the Permian Basin
of West Texas and New Mexico leading the
way. A number of pipeline projects started
construction as Permian oil production
outpaced pipeline takeaway capacity, and
major projects of more than 2,100 miles
of pipe and 2.5 MMbpd of capacity came
online in the latter months of 2019.
There are at least three more Permian
crude oil pipelines planned for completion
in the next two years. Red Oak Pipeline, a
joint venture of Plains All American and
Phillips 66, announced in June that they
approved ﬁnancing for the project, which
is projected to begin transporting 400,000
bpd to Houston and multiple locations
along the Texas Gulf Coast in 2021.
Jupiter Energy secured funding for a 650mile crude oil pipeline from the Permian to
the Brownsville, Texas, for targeted completion this year. Jupiter is also planning
up to 10 MMb of storage along with three
docks in the Port of Brownsville and a very
large crude carrier (VLCC) loading facility
oﬀshore the city, near the border of Mexico.
The Wink to Webster Pipeline is a joint
venture among aﬃliates of ExxonMobil,
Plains All American, MPLX, Delek US and
Rattler Midstream. The project, underpinned by a signiﬁcant volume of longterm commitments, is expected to add 1
MMbpd of crude and condensate capacity
upon startup in 2021.
Fast-rising oil production in the Permian
Basin has led to soaring levels of associated gas production, resulting in pipeline
bottlenecks, depressed prices and record
levels of gas ﬂaring by oil producers. Those
constraints began to ease with the late
September startup of Kinder Morgan's 2
Bcf/d Gulf Coast Express - one of three

major Permian Basin gas pipelines slated to
come online through 2023.
Others include the 430-mile Permian
Highway Pipeline, a joint venture of Kinder
Morgan and EagleClaw Midstream scheduled for startup in early 2021, and Whistler
Pipeline, designed to transport 2 Bcf/d of
gas through 475 miles of 42-inch pipeline
from the Waha hub to Aqua Dulce, on the
Texas Gulf Coast, starting in 2021. The
proposed 625-mile Permian Global Access
Pipeline also would originate at Waha and
deliver to the growing LNG center along
the Sabine River, north of Lake Charles, La.
Kinder Morgan said in December, however, that it will likely put on hold its plans
to build the Permian Pass pipeline, which
would deliver 2 Bcf/d to the southeast Texas
LNG market. The company has not reset
a schedule for the project, except to say it
would probably be delayed beyond 2022.
In Canada, where Alberta production
has been constrained by a lack of pipelines,
Calgary-based Enbridge has made steady
progress toward the replacement of its
Line 3 crude oil pipeline. The project,
which has been plagued by environmental
activists, was found in December to pose
no serious threat to Lake Superior if crude
oil ever leaked from the line. The latest
environmental review was one of a series
of hurdles Enbridge has faced in gaining
construction approval from the U.S. state
of Minnesota. Last month, Enbridge
announced it began commercial operation
of the Canadian section of Line 3.
Also in Canada, Trans Mountain restarted construction in December on parts of its
pipeline expansion to nearly triple the ﬂow
of crude from Alberta's oil sands to the
British Columbia coast. The Canadian government, which bought Trans Mountain in
2018 from Kinder Morgan Canada, hopes
to complete its expansion to 890,000
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Underground Construction - January 2020

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