Nicholas Newman Pipeline Coatings Magazine June 2016
The United States and Canada have one of the most extensive integrated oil, gas and petroleum pipeline networks in the world. Canada is the largest foreign supplier of oil to the US. Its 24,000 mile of pipelines moves 3.4 million barrels of crude oil and other liquids daily reports the EIA in April 2016. The US natural gas grid alone is made up of 305,000 miles of interstate and intra-state transmission pipelines, interspersed with more than 1,400 compressor stations, which together, moved around 26.79 trillion cubic feet(Tcf) of natural gas last year (reports the EIA). In the last few years North America has enjoyed rapid expansion in pipeline construction in response to the shale oil and gas energy boom and the resulting large-scale switch from coal- to- gas power generation. Nevertheless, new development has not been unaffected by the growing influence of the green lobby, competition from renewables in traditional markets and the dramatic collapse in oil and gas prices since the summer of 2014 to below $40 a barrel.
Problems facing the pipeline sector
Pipeline builders and operators have come under scrutiny following accidents such as the oil rupture on the NEXEN pipeline in Alberta, which released 31,500 barrels of bitumen reports energyfuse July 2015. Furthermore, in response to the recent collapse in oil prices, production fell by 700,000 barrels a day in the year to April 2016 causing 59 oil and gas producers to file for bankruptcy since January 2015, thereby reducing pipeline traffic and so pipeline operators’ revenues and growth prospects. Today, pipeline projects involve considerably more than drawing a line on a map and building it. They can require negotiating complex processes to win approval from tiers of government, negotiating social acceptance from diverse groups of stakeholders along the entire route as well as winning customers for their oil or gas as a pre-requisite for obtaining investment.
The rise of the Green lobby
There is growing opposition to new pipelines from the public, special interest groups including landowners and environmentalists, as well as the renewables industry and its supporters, which, all too often fear competition from cheap gas for electricity generation. Increasingly, consumers are objecting to having to pay towards the costs of gas pipelines serving their local new or coal-to-gas converted power stations. A case in point is that of Southern California Gas Co. and San Diego Gas & Electric scheme to build a 63-mile gas pipeline reports Associated Press April 2016 which was met by considerable customer opposition.