Pipeline Construction - 09 SEP-OCT 2009

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The premier publication covering the business of pipeline construction in North America.

Text of Pipeline Construction - 09 SEP-OCT 2009

For more information go to napipelines.com/info

Volume 2

Issue 2

September/October 2009

ON THE COVER: Butch Graham, senior auctioneer at Ritchie Bros.

Auctioneers, has helped oil and gas pipeline professionals buy and sell equipment for more than two decades. He shows up at industry events all over the world, helping with fundraising and leading some to call him the voice of the oil and gas industry.

16

A Voice That SellsBy Bradley Kramer

Talking with Butch Graham about the oil and gas pipeline industry.

FEATURES

22 28 32 36

Directional Drilling Tackles Tricky Terrain

One project went through hard rock in Georgia, and the other crossed a busy harbor in Virginia. Michels Directional Crossing and Mears Group Inc. drill through the challenges.

Delivering Pipelines by Air Finding Approval

Vacuum technology helps improve the safety and operational costs of lifting pipes on a jobsite. By Leanne ButkovicA look at how the Federal Energy Regulatory Commission (FERC)

approves infrastructure projects, sets rates and enforces the oil and gas market. By Bradley Kramer

Deconstructing Worksite HazardsBy George Kennedy

Review the basics of Job Safety Analysis, a simple, inexpensive and effective management tool that can help reduce worksite hazards.

DEPARTMENTS

8 12 14 40 46 6

News Project Roundup Market Watch Product Showcase: ROW/Land Clearing Events Calendar

COLUMNSEditors Message

MARKETPLACE

45 46

Business Cards Index of Advertisers

NORTH AMERICAN PIPELINES is published bi-monthly. Copyright 2009, Benjamin Media, Inc., P.O. Box 190, Peninsula, OH 44264. All rights reserved. No part of this publication may be reproduced or transmitted by any means without written permission from the publisher. One-year subscription rates: complimentary in the United States and Canada, and $99.00 in other foreign countries. Single copy rate: $10.00. Subscriptions and classified advertising should be addressed to the Peninsula office. Periodical Postage Paid at Peninsula, Ohio and at additional mailing offices. POSTMASTER: send address changes to NORTH AMERICAN PIPELINES, P.O. Box 190, Peninsula, OH 44264 USA. Canadian Subscriptions: Canada Post Agreement Number 40040393. Send change of address information and blocks of undeliverable copies to P.O. Box 1051, Fort Erie, ON L2A 6C7.

4

North American Pipelines | SEPTEMBER/OCTOBER 2009

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Editors MessageThe Energy to Push ThroughThe global economy continues to slowly lift itself from this deep downturn, and oil and gas infrastructure projects have hit the brakes. Or have they? After strong years of growth from 2006 to 2008, when natural gas pipeline construction helped fuel the recent boom years, the industry has cut back on building largescale transmission lines, according to Jeff Wright, director of energy projects for the Federal Energy Regulatory Commission (FERC). After approving almost 6,000 miles of pipeline projects in the last three years, the commission has approved only 172 miles for 2009. But dont bother running for cover. The sky is not falling like everybody says, says Ritchie Bros. Butch Graham, who assured me when I spoke with him for this issues cover story (on page 16) that pipeline contractors will help pull us out of the recession. Indeed, Wright says that while the miles of pipeline projects might be down, capacity is increasing as pipeline owners build support infrastructure for the pipelines and storage facilities. Many of the projects that were approved in the last few years are still in the construction phases, like the two natural gas projects we cover in this issue. Michels Directional Crossing and Mears Group completed two major expansion projects with horizontal directional drilling (see page 22). Regardless of what happens, the world needs energy, and energy needs infrastructure. Pipeline projects continue to move forward albeit at a slower pace than in the past few years and more projects are waiting in the wings. You can read about what FERC has in its approval process and other regulatory issues in Finding Approval (on page 32). The oil and gas industry is even finding ways to coexist with alternative and renewable energy sources, as Chevron just started building a 29-megawatt solar steam plant at one of its oil fields in Coalinga, Calif. (New York Times, Aug. 24). The power plant will be used to inject steam into the oil wells to enhance production. Forbes magazine put ExxonMobil on its cover as the Green Company of the Year for investing $600 million on developing algae farms to produce automotive gasoline and continuing to boost its natural gas production. Hows that for green? Despite some slowdowns in the industry, the pipeline industry is resilient. We all need energy to push through our challenges and keep business moving.Publisher Bernard P Krzys . Associate Publisher Robert D. Krzys Editor James W. Rush Associate Editor Bradley Kramer Contributing Staff Editors Sharon M. Bueno Keith Gribbins Jason Morgan Pam Stask Creative Director W. M. Conley Graphic Designers Sarah Hayes Chris Slogar Elizabeth C. Stull Marketing Manager Kelly Dadich Regional Sales Managers Ryan Sneltzer Dan Sisko Circulation Manager Alexis R. Tarbet Web & Interactive Manager Mark Gorman Conference Manager Michelle Magyar

Editorial & Advertising Offices 1770 Main St., P Box 190 .O. Peninsula, OH 44264 USA (330) 467-7588 Fax: (330) 468-2289 www.napipelines.com e-mail: info@benjaminmedia.com Reprints Wrights Reprints Ph: 877-652-5295 Fax: 281-419-5712

Bradley Kramer Associate Editor bkramer@benjaminmedia.com

6

North American Pipelines | SEPTEMBER/OCTOBER 2009

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North America NewsAlberta Clipper Pipeline Project Ready to Set SailEnbridge to Assist Enbridge Energy Partners With U.S. Alberta Clipper Fundingoil and natural gas infrastructure, says Terrance McGill, The 1,000-mile Alberta Clipper Pipeline expansion president of the partnerships management company and from Alberta, Canada, to the United States is set to begin of its general partner. construction now that funding is in place. Enbridge Inc. The joint funding arrangement for Alberta Clipper and Enbridge Energy Partners have concluded a joint fundsubstantially reduces the equity required to complete ing agreement under which Enbridge will effectively fund the permanent funding for these projects down to a two-thirds of the $1.2 billion U.S. segment of the Alberta level that we can likely accommodate through sale of Clipper crude oil pipeline project. The company expected to non-strategic assets, or a traditional private or pubbegin construction soon after receiving approval from the U.S. Department of State on Aug. 20. The Alberta Clipper project consists of a 36in. diameter pipeline and associated pumping and terminal facilities from Hardisty, Alberta, to Superior, Wis. This 1,000-mile (1,607-km) segment is designed to resolve expected capacity constraints. The segment from Hardisty to the U.S. border is being undertaken by Enbridge Pipelines Inc., a wholly owned subsidiary of Enbridge Inc., at an estimated cost of $2.4 billion CAD. The segment from the U.S. border to Superior is being undertaken by Enbridge Energy Partners through Enbridge Energy, Limited Partnership. Both segments are scheduled to be in service by mid-2010. The initial capacity of the line will be 450,000 barrels per day of heavy crude, expandable at very low cost, through the addition of pumping facilities, to 800,000 barrels per day. Under the terms of the agreement, Workers lay welded pipe in a trench in Hardisty, Alberta, where the Alberta Clipper Enbridge will participate in the debt financPipeline will continue toward the U.S. market via Superior, Wis. ing that Enbridge Energy Partners raises for lic placement of partnership units, McGill says. As a the project, and will fund two-thirds of the projects equity result, these projects should all be accretive and we will requirements directly into Enbridge Energy, Limited Partavoid the dilution, which would otherwise result from nership, the subsidiary of Enbridge Energy Partners that is a very large equity issue, given current market condiconstructing the project. tions. At the same time, with Enbridge participating in Enbridge will be entitled to two-thirds of the earnings the debt, which needs to be issued for Alberta Clipper, it and cash flow that Enbridge Energy, Limited Partnership, will reduce our call on debt markets and should improve generates from the base project. Enbridge and Enbridge our borrowing rates. Energy Partners will each have a right of first refusal on Enbridge Energy Partners is now well positioned to each others investment in the project, and Enbridge Energy consider new opportunities as they arise, McGill says. Partners will retain the right to fund up to 100 percent The joint funding for the U.S. segment of Alberta Clipof any expansion and dilute Enbridges interest down per is a win-win for Enbridge and Enbridge Energy Partners correspondingly. The terms of the agreement were reviewed and our shippers, says Patrick Daniel, president and chief and approved by a committee of Enbridge Energy Partners executive officer of Enbridge Inc. For shippers, it should independent directors. result in lower tolls because Enbridge Energy Partners cost In addition to Alberta Clipper, Enbridge Energy Partto finance the debt component of Alberta Clipper should ners is undertaking a number of very attractive growth opbe reduced. portunities including the expansion of our North Dakota Daniel also adds: Based on Enbridges current capital system to accommodate increased Bakken sh