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New Pipeline Will Supply Marcellus Natural Gas to Mid-Atlantic

PennEast Pipeline Company, LLC announced plans to construct a 100-mile pipeline intended to bring natural gas produced in the Marcellus Shale region to Pennsylvania and New Jersey. PennEast is a joint project of AGL Resources, NJR Pipeline Company, a subsidiary of New Jersey Resources, South Jersey Industries and UGI Energy Services.

The PennEast Pipeline is designed to provide natural gas service to the equivalent of 4.7 million homes, up to 1 Bcf per day. The pipeline will begin in Luzerne County in northeastern Pennsylvania and end at Transco's Trenton-Woodbury interconnection in New Jersey. PennEast is investing nearly $1 billion to build the pipeline with the costs split among the four entities.

PennEast will begin preliminary engineering studies in the coming months, along with a formal application before the Federal Energy Regulatory Commission (FERC). If all local, state and federal entities approve in a timely fashion, construction of the pipeline could begin in 2017. 

Bakken, Eagle Ford Producing More Than 2.6 Million B/D

Oil production from shale formations in North Dakota and Texas increased by more than 86,000 barrels per day (b/d) or 3.4% in July, according to Bentek Energy, an analytics and forecasting unit of Platts.

In North Dakota, the active oil rig count is close to 200 and the highest level in nearly two years, according to Jack Weixel, Bentek Energy director of energy analysis.

"Oil production gains from the Bakken and Eagle Ford shale formations are a major reason why U.S. imports of crude oil have dropped to levels not seen since the mid-1990s," said Weixel. Bentek data analysis showed that from July 2013 to July 2014, total U.S. crude oil production increased more than 1.5 million b/d.

Crude oil production in the North Dakota section of the Bakken shale formation of the Williston Basin averaged nearly 1.2 million b/d in July, according to Bentek. This was 280,000 b/d higher than the July 2013 level. Oil production from the Eagle Ford formation averaged 1.5 million b/d last month, up 411,000 b/d from July 2013. 

U.S. Chemical Production Up; All Regions Post Gains

According to the American Chemistry Council’s U.S. Chemical Production Regional Index, chemical production expanded by 0.4% in July following an downwardly revised 0.2% gain in June.

Manufacturing output accelerated during July, and on a three-month moving average (3MMA), production of the nation’s overall manufacturing sector was 0.6% higher. Within the manufacturing sector, output in many key chemistry end-use markets expanded, including appliances, motor vehicles, aerospace, construction supplies, machinery, fabricated metal products, computers, semiconductors, plastic products, rubber products, plywood, printing and furniture.

Also measured on a 3MMA basis, overall chemical production was again mixed. There were gains in the output of chlor-alkali and other inorganic chemicals, plastic resins, synthetic dyes and pigments, industrial gases, consumer products, and pharmaceuticals. These gains were partially offset by declines in the production of fertilizers, pesticides, organic chemicals, synthetic fibers, synthetic rubber, coatings, and adhesives.

Compared to July 2013, total chemical production in all regions was ahead by 1.2% on a year-over-year (Y/Y) basis, up from a revised 0.9% Y/Y gain in June. Chemical production was up from a year ago in all regions, except the Gulf Coast. Comparing the seven months of 2014 to that in 2013, chemical production was up 0.8% nationally, with all seven regions posting gains. 

$900 Million Crude Pipeline Connecting Oklahoma-Tennessee

Plains All American Pipeline will construct the Diamond Pipeline, a 440-mile, 20-inch crude oil pipeline that will provide capacity of up to 200,000 barrels per day of domestic sweet crude from the Plains Cushing, OK terminal to the Valero Memphis Refinery, and the ability to access Valero Energy Partner's Collierville pipeline. The total project investment is expected to be approximately $900 million and is expected to be completed in late 2016.

Valero holds an option until January 2016 to become a partner in the Diamond Pipeline and purchase a 50% interest. Construction of the pipeline will enhance the refinery's long-term ability to produce gasoline, diesel and jet fuel for the greater Memphis and eastern Arkansas area. 

Gulf Coast Refiners to Invest More in Retrofits

“The Texas Gulf Coast will be ground zero for a push to equip refineries to handle a flood of light crude unlocked in the U.S. shale boom, but the investments will be relatively conservative” Jim Jones, of the petrochemical consulting firm Turner, Mason and Company, told FuelFix.

“Refiners won’t spend the big bucks they dropped when they retooled to handle heavy, high-sulfur crude several years ago, largely because it’s cheaper and simpler to modify a refinery to process lighter crude.”

The Gulf Coast is the center of most of this new investment “because transporting crude to the East and West coasts remains costly. A dearth of east-west pipelines means crude must be shipped by tanker or rail, at costs that trim refiners’ profits,” says Jones.  

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• Attracting Talent
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