Pipeline investments top €1 billion

Paul Boughton

The latest pipeline projects in the Middle East, Africa, North Sea and USA are worth in excess of €1 billion.

Petrofac has been awarded an engineering, procurement, installation and commissioning (EPIC) contract by Abu Dhabi Marine Operating Company (ADMA-OPCO) for Satah Al Razboot (SARB) package 3 project, offshore Abu Dhabi. The US$500 million (€377 million) contract will commence shortly and be delivered by April 2016.

The SARB project is a high priority, new field development off the northwest coast of Abu Dhabi. Drilling will be conducted from two artificial islands (SARB1 and SARB2) with the well fluid sent by subsea pipeline to a facility on Zirku Island for processing, storage and export.

Under the terms of the contract, Petrofac will deliver 200km of subsea pipelines for well fluid, water injection, gas injection, flare and export, along with 3km of onshore pipeline and 55 km of subsea power and communication cables. Further offshore the scope of the contract includes provision of two riser platforms and four flare platforms with four interconnecting bridges and one single point mooring buoy located at the north of Zirku Island.

The onshore scope of the contract includes the following: drilling utilities, foundations on SARB1 and SARB2, transport, install, hook up and assistance in the commissioning of the accommodation modules.

“We are delighted to have been chosen to deliver this important project as part of the high priority SARB development. This award is further confirmation of the increased demand we see for Petrofac to broaden its market leading EPC capability offshore, and we look forward to cooperating with ADMA-OPCO and meeting its fast track requirements on this highly significant development,” noted Yves Inbona, md of Petrofac’s offshore capital projects business.

Africa, North Sea and Texas

Saipem has been awarded two new engineering and construction offshore contracts in North and West Africa with a total value of approximately US$1.1 billion (€754 million).

In Egypt, the company has won a contract from Burullus Gas Company for the development of the West Delta Deep Marine Phase IXa Project about 90 km off the Mediterranean Coast of Egypt.

The scope of work encompasses engineering, procurement, installation, pre-commissioning and commissioning support of subsea facilities including pipelines in the West Delta Deep Marine Concession, where Saipem already successfully performed earlier subsea development phases. Facilities include rigid and flexible flowlines, umbilicals and other related subsea structures, to be installed in water depths up to 850 metres. Marine activities will be carried out between the second and the fourth quarter of 2014.

The second contract is for engineering, procurement, construction and installation of subsea facilities in Angola. It includes production and water injection pipelines and flowlines, rigid jumpers and other related subsea structures. Offshore activities will be performed between the second quarter of 2014 and the second quarter of 2015.

Fabrication for the two contracts will take place at Saipem’s Soyo and Ambriz yards in Angola.

In the North Sea, Subsea 7 has been awarded a contract from Talisman Sinopec Energy UK to install a 10 km pipeline bundle. The contract, valued at US$285 million (€215 million), is for the provision of subsea construction services in support of the company’s Montrose Area Redevelopment (MAR) project.

The contract scope includes the project management, engineering, procurement, fabrication and installation of two 5 km pipeline bundles. The pipeline bundle system will tie back the Cayley production wells to the new Bridge Linked Platform (BLP) at the Montrose Platform.

The contract scope also includes the procurement, fabrication and installation of a 17.5km production pipeline, water injection pipeline, gas lift pipeline and control umbilical to tie back the Shaw Field to the BLP.

Engineering and project management has already begun in the company’s Aberdeen office, with offshore operations due to commence in 2014.

Steph McNeill, Subsea 7’s vice president UK and Canada, said: “The complexity of this project further illustrates our bundle system’s unique ability to offer a highly cost-effective single product which neatly integrates all necessary pipelines and control lines.”

The pipeline bundle will be taken to its offshore location using the controlled depth tow method, a technique pioneered and developed by Subsea 7. The work involves the fabrication, assembly and testing of pipelines, control lines, umbilical tubing, carrier pipe and towhead structures before launching into Sinclair’s Bay. The pipeline bundle is then placed between two tugs and towed to the offshore location at a controlled depth below the surface. On arrival at the field, the bundle is lowered to the seabed, manoeuvred into position and the carrier pipe and towheads are flooded to stabilise the bundle into its final position.

The company has won a second contract, worth US$135 million (€102 million), from Shell UK for work on the Shell operated Fram oil and gas development in the Central North Sea.

The contract scope encompasses the engineering, procurement, fabrication and installation of a 4.5km in-field pipeline bundle of approximately 44-inch diameter, with integrated manifolds and tie-in structures (Fig. 1).

Project management and engineering work will commence immediately and will be managed from Subsea 7's offices in Aberdeen, with bundle fabrication taking place at Subsea 7’s Wester site fabrication yard in Wick. Offshore activities utilising a variety of Subsea 7 vessels are scheduled to commence and be completed in 2014.

In the USA, Enterprise Products Partners is to significantly expand its crude oil storage and distribution infrastructure serving the southeast Texas refinery market.

The expansion will be completed in phases with final completion expected in the fourth quarter of 2014. Upon completion, Enterprise will be positioned to provide refiners with access to an integrated system offering supply diversification, significant storage capacity and a high-capacity distribution system that will be pipeline-connected to southeast Texas refineries having an aggregate capacity of approximately 3.6 million barrels per day.

In addition, Enterprise’s crude oil Houston (ECHO) storage facility, which will be expanded to over six million barrels of capacity, will have access to Enterprise’s marine terminal at Morgan’s Point on the Houston Ship Channel.

Historically, these refineries have been primarily supplied by waterborne imports of crude oil. With the success of North American producers, crude oil from Eagle Ford, Permian, Midcontinent, Bakken and Canada is flowing into southeast Texas and displacing the waterborne crude oil imports. As production from these regions continues to grow, there will be a significant increase in crude oil bound for the Gulf Coast market, which currently lacks sufficient storage and has a fractured and constrained distribution system to handle these varying grades of crude oil.

This expansion includes an additional four million barrels of new crude oil storage capacity at Enterprise’s ECHO and Bertron facilities and approximately 55 miles of 24-inch and 36-inch pipeline to directly connect ECHO with the major refineries in the Southeast Texas market.

The company has also announced the development of a new 270-mile pipeline header system that will deliver ethane to petrochemical plants in the Gulf Coast region. As designed, the Enterprise Aegis Pipeline will originate at Enterprise’s Mont Belvieu, Texas liquids storage complex and have the capacity to transport ethane to multiple petrochemical facilities in Texas and Louisiana. The final design, including capacity and delivery points, will be determined once any further binding commitments are received at the conclusion of the project’s open commitment period.

Magellan Midstream adds 800 miles of pipeline

Magellan Midstream Partners has agreed to acquire approximately 800 miles of refined petroleum products pipeline from Plains All American Pipeline for US$190 million (€143 million).

“This acquisition utilises Magellan’s expertise in transporting and storing petroleum products,” said Michael Mears, chief executive officer. “These pipelines are a natural extension of our existing refined products distribution system and provide new markets for Magellan to serve.”

The acquisition includes approximately 550 miles of common carrier pipeline that distributes refined petroleum products in Colorado, South Dakota and Wyoming. The system includes four terminals with nearly 1.7 million barrels of storage.

Magellan also will acquire about 250 miles of common carrier pipeline that transports refined petroleum products north from El Paso, Texas, delivering products to Albuquerque, New Mexico, and transports products south to the Texas-Mexico border for delivery via a third-party pipeline within Mexico.

In addition, Magellan has plans to construct new pipeline and terminal infrastructure at the Galena Park, Texas, terminal to originate crude oil to Magellan’s Gulf Coast crude oil distribution system for delivery to refineries in the Houston and Texas City area.

“We are pleased to add crude oil as a service offering at our Galena Park terminal, continuing to expand Magellan’s growing crude oil footprint. Our Galena Park facility is ideally situated to handle crude oil for delivery to the Gulf Coast refinery hub via Magellan’s own pipeline network,” noted Mears.

This project, estimated to cost approximately US$50 million (€38 million), is expected to be fully operational by mid-2014.

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