US regulator raises concerns about weights on energy pipelines

MOSCOW (MRC) — A US regulator's preliminary investigation into the biggest oil pipeline spill this year has raised a red flag that could trigger an extensive and costly inspection of tens of thousands of miles of underground energy lines, said Hydrocarbonprocessing.

The 5,000-bbl leak on TransCanada Corp's Keystone pipeline on Nov. 16 in South Dakota might have stemmed from damage caused by a weight put in place when it was built in 2008, the Pipeline and Hazardous Materials Safety Administration said in a report published on Tuesday. Weights are used to prevent pipelines from moving and reduce the risk of damage or ruptures when water tables rise.

The regulator's finding has implications for the 2,687-mi pipeline and others throughout the world. The weights, which tip the scales at 7,000 lbs (3,175 kg) or more, are commonly used, but only the pipeline operators know where they are located.

Damage from weights "could happen on other segments of this pipeline and other pipelines," said Najmedin Meshkati, professor of civil and environmental engineering at the University of Southern California. The Keystone pipeline carries 590,000 bpd from Alberta's oil sands to US refineries. TransCanada's proposed Keystone XL line would add another 830,000 bpd of capacity.

Nebraska officials approved the construction of that line even after the leak, although it is still unclear if TransCanada will build it. Depending on the results of the full investigation, construction plans for new lines such as the Keystone XL may need modification. Existing lines may also have to be checked, a difficult and potentially expensive undertaking.

US regulators do not have specific information on the types of weights or their locations because pipeline companies are not required to submit data, said Carl Weimer, executive director of the non-profit Pipeline Safety Trust. PHMSA did not respond to requests for comment on this question.

The Canadian Energy Pipeline Association also said operators, not regulators, keep tabs on this information. "We would not have an inventory; that would need to come from the individual companies,” said Carla Beynon, a spokeswoman for the industry group.

On Tuesday, PHMSA ordered TransCanada to clean up the site and analyze data on the location of other weights on the Keystone line where the land may have similar characteristics as where the leak occurred. TransCanada would not say how many weights were placed along the pipeline, which runs through several states and Canadian provinces, during construction.

In one of those states, the North Dakota Public Service Commission, which regulates pipelines, has asked for briefings with TransCanada on its monitoring procedures. Commissioners are also waiting to see the full PHMSA report and results of testing on the damaged section of pipeline.

"If there are issues on how this pipeline was designed and constructed, we will certainly be concerned," said commission Chairman Randy Christmann.
MRC

Shell Midstream Partners to acquire additional assets from Shell

MOSCOW (MRC) — Shell Midstream Partners, L.P. entered into a purchase and sale agreement to acquire from wholly owned subsidiaries of Shell a 100% interest in five products terminals and partial interest in two Gulf of Mexico corridor pipelines and in two strategic onshore pipelines for USD825 MM, said Hydrocarbonprocessing.

The acquisition price reflects an approximate 7.9 times multiple of the assets' forecasted 2018 adjusted earnings before interest, taxes, depreciation and amortization and is expected to be immediately accretive to unitholders. Shell Midstream Partners intends to fund the acquisition with borrowings under new and existing credit facilities. The acquisition is expected to close on or around Dec. 1, 2017, subject to customary closing conditions.

Highlights of the assets to be acquired: A 100% interest in Triton West LLC which owns the Anacortes, Colex, Des Plaines, Portland, and Seattle products terminals. The terminals are strategically located with take-or-pay contracts with wholly owned subsidiaries of Shell. Each contract has an initial term of 10 yr with options to extend up to 20 yr. The acquisition of the products terminals builds upon Shell Midstream Partners' strategy to access assets across Shell's broad asset base.

A 22.9% interest in Mars Oil Pipeline Company LLC (Mars) and a 22% interest in Odyssey Pipeline LLC (Odyssey). Both Mars and Odyssey serve high growth areas of the Gulf of Mexico. Following the closing of the transaction, Shell Midstream Partners will own 71.5% of Mars and 71% of Odyssey.

A 10% interest in Explorer Pipeline Company (Explorer) and a 41.48% interest in LOCAP LLC (LOCAP). Explorer owns an 1,830-mi products pipeline extending from Gulf Coast refineries to the upper Midwest. LOCAP owns a 55-mi common carrier crude pipeline from the LOOP Clovelly Salt Dome facility to the active trading hub of St. James, Louisiana.

The terms of the acquisition were approved by the conflicts committee of the Board of Directors of the General Partner of Shell Midstream Partners, which is comprised entirely of independent directors. This committee was advised by Tudor, Pickering, Holt & Co. as to financial matters and Akin Gump Strauss Hauer & Feld LLP as to legal matters.
MRC

SK Advanced to restart PDH plant in Ulsan

MOSCOW (MRC) -- SK Advanced is likely to brought on-stream its propane dehydrogenation (PDH) plant following a maintenance turnaround, as per Apic-online.

A Polymerupdate source in South Korea informed that the company has planned to complete maintenance at the plant by mid-December, 2017. The plant was taken off-line for turnaround on November 20, 2017.

SK Advanced, a joint venture of South Korea?s largest LPG supplier SK Gas and Advanced Petrochemical Company (APC) of Saudi Arabia.

Located in Ulsan, South Korea, the plant has a propylene production capacity of 600,000 mt/year.

As MRC informed before, in May 2016, SK Advanced Co. began trial production of propylene at its completed PDH plant in Ulsan, South Korea. Commercial operations started in the second quarter of 2016.

SK Advanced, a joint venture of South Korea's largest LPG supplier SK Gas and Advanced Petrochemical Company (APC) of Saudi Arabia.
MRC

China state companies reach for new markets as 2017 diesel exports surge

MOSCOW (MRC) — Chinese state companies are shipping diesel to new buyers in the Middle East and Latin America as exports of the fuel head towards a record, and independent refiners could help raise the outbound sales even higher next year, multiple sources said, as per Hydrocarbonprocessing.

At least one of the independent refiners is looking to invest in fuel storage in southern Malaysia and others are setting up offices in Singapore, anticipating that Beijing is going to ease its export policy for the independent companies, said the sources involved in the shipment of diesel from China.

The world's second-largest oil consumer exported 13.2 MMt of diesel over January to October, up nearly 9% from a year ago, according to customs data. Monthly exports hit a record high in March, and exports for 2017 are on course for the most ever for a year. If Beijing lifts its ban on China's independent refiners exporting refined fuel, diesel exports could hit another record next year, the sources said.

"(China's Ministry of Commerce) may award more product export quotas for 2018 and include independents, (though) volumes are unlikely to be massively higher than the 44 MMt issued this year," said Nevyn Nah, a Singapore-based analyst at Energy Aspects.

China's diesel surplus comes amid an expansion of its refinery capacity and a slowdown in domestic demand. Chinese refineries have also upgraded to meet new fuel standards, and that means the nation's exports can increasingly be sold into Europe and Australia, traders said. For instance, Unipec, the trading arm of Asia's largest oil refiner Sinopec, started diesel exports to Europe this year and is shipping what is likely the first Chinese-origin cargo to New York harbor.

Unipec has also started shipping diesel to Latin America, exporting a few medium-range sized cargoes in the second half of the year, said a source familiar with the matter. China's state-owned Zhenhua, a unit of defense conglomerate China North Industries Group Corp (NORINCO), has for the first time won a tender to supply about 25% of the nearly 2.4 MMt of diesel required by Iraq in 2018.

"The Chinese are likely to increase their market share in both North and South America as they take advantage of arbitrage opportunities," Energy Aspects' Nah said. Several teapots have set up offices in Singapore and are growing their presence in the oil-trading hub.

At least one of them is looking to invest in oil product storage in southern Malaysia, a source close to the matter said, adding that details are still being worked out. "We expect the Chinese government to allow exports next year or by 2019, so we want to be ready when that happens," the source said.
MRC

Honeywell UOP awarded major contract in Kuwait

MOSCOW (MRC) -- Honeywell announced today that Kuwait Integrated Petroleum Industries Company (KIPIC) will use a range of process technologies from Honeywell UOP for the expansion of its refining and petrochemical complex at Al-Zour, south of Kuwait City, as per Hydrocarbonprocessing.

Honeywell UOP will supply technology licenses, design services, key equipment, and state-of-the-art catalysts and adsorbents to produce clean-burning fuels, paraxylene, propylene and other petrochemicals.

"When completed, this will be the largest integrated refinery and petrochemicals plant ever constructed in Kuwait," said John Gugel, vice president and general manager, Process Technology and Equipment at Honeywell UOP. "In addition to aromatics and propylene, the Euro-V fuels it will produce will be the cornerstone of Kuwait’s clean fuels initiative."

The project includes a 50 Mbpd RFCC complex with ethylene and propylene recovery, and a 24 Mbpd Honeywell UOP Selectfining unit to produce low-sulfur gasoline. Two Honeywell UOP Merox units will be used to treat propane for propylene production, and isobutane to make clean-fuels blending components, including MTBE produced by a UOP Ethermax unit. Also included is a Butamer unit to convert normal butane to isobutane.

The contract also includes a 66 Mbpd CCR Platforming unit with a 74 Mbpd naphtha hydrotreater to make gasoline blend stock, and an LD Parex aromatics complex--including the Honeywell UOP Sulfolane, Isomar and Tatoray processes - to make 1.4 MMtpy of paraxylene, a primary ingredient in plastics.

In addition, an Oleflex propane dehydrogenation unit will produce 660 Mtpy of polymer-grade propylene - another basic component in the production of plastics, synthetic rubber and gasoline additives.

Honeywell UOP is a leading licensor of process technology for the production of aromatics. As of last year, Honeywell UOP licensed more than 100 complexes and more than 700 individual process units for the production of aromatics, including more than 300 CCR Platforming process units, 158 Sulfolane units, 80 Isomar units, 58 Tatoray units, 100 Parex units and 60 Oleflex units worldwide.

Kuwait Integrated Petroleum Industries Company (KIPIC) is a new subsidiary of Kuwait Petroleum Corporation (KPC) set up by State of Kuwait to manage refinery, petrochemicals and LNG import operations in the Al-Zour complex.

As MRC informed before, in early March 2017, Honeywell announced that Jiangsu Sailboat Petrochemical Company, Ltd. had started its UOP Advanced Methanol-to-Olefins (MTO) unit during a 10-day test to confirm successful operation. It has an annual production capacity of 833,000 mtpy, making it the largest single-train MTO unit in the world.
MRC