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GAMBLING WITH THE GRID

Kwasi Kwarteng, the business secretary for the UK government, sought to assure the House of Commons last month that there is no danger of the UK running out of gas this winter, amid fears about a breakdown in the structure of the European and global gas markets. Welcome to an extraordinary autumn in the UK, in which spiralling gas and electricity prices and very low national gas reserves signal an impending energy crisis. The tightness in the global gas market is a result of several factors: 40% of US gas production was temporarily shut in during hurricane season; Latin America is experiencing its worst drought in a century and this has cut hydro power in Brazil, Argentina and Chile, forcing a move to LNG. China, the world’s biggest importer of gas, has been upping its LNG imports, in part due to drought, as well as a rise in domestic gas demand. As a result of this explosion in Asian demand, much less LNG is reaching Europe, and that’s before you take into account energy supply chain disruption due to COVID-19. As countries reopened from COVID-19 lockdowns this summer, high-thanexpected demand contributed to the shortage of gas, and also stunted domestic ability to stockpile gas during warmer months, when demand tends to be weaker. It’s worth noting that Gazprom chose not to bid for top up gas flows for the month of October in pipeline routes traversing Ukraine and Poland, placing more pressure on the Nord Stream and the (as yet uncertified) Nord Stream 2 pipelines. The global gas supply squeeze being felt all over the world is set to have a particularly forceful impact on the UK, since the UK is sitting on scant gas storage, having cut storage capacity to 1.7% of annual demand (a long way south of the normal buffer of 20%) and having outsourced the costly task of storage to countries in continental Europe (who are themselves low on stored reserves). A wet, cold spring this year depleted European gas inventories. Poor wind power generation levels in recent months have certainly had an impact on the amount of energy the UK can extract from renewable sources. Now doom-filled headlines in UK newspapers warn of a return to a three-day working week and blackouts (as seen in the 1970s) as industrial stoppages become an increasing reality. High power prices are already curtailing operations: the gas price surge has triggered fertilizer plant closures, including US-owned CF Fertilizers, which has ceased output at two UK factories. Steelmakers have reported disruptions to production due to current energy costs. The European Steel Association has said that the bloc risks being

THE THE priced out of the global market due to surging energy prices. TIGHTNESS IN TIGHTNESS IN THE GLOBAL THE GLOBAL The UK’s National Grid was forced to turn to coal-fired power stations at short notice GAS MARKET GAS MARKET IS A RESULT IS A RESULT early in September, asking EDF to fire up a power station that had been on standby. OF SEVERAL OF SEVERAL Consumer groups in the UK are urging households to

FACTORS FACTORS be prepared for steeply rising bills and price pressures have led to a handful of utility suppliers going out of business, as they fail to meet the cost of purchasing raw energy. Kwarteng said that talk of a return to the three-day week is “alarmist, unhelpful and completely misguided”. The government has held emergency talks with Ofgem, the UK energy regulator. Speaking to MPs in the House of Commons about the issue of supply, Kwarteng said that the UK is not “at the mercy of Russian gas”. He argued that electricity security can be maintained under a wide range of scenarios and that the UK is not reliant on just one source of gas: “The UK also benefits from an excellent relationship with Norway, one of our most important and reliable energy partners and that delivers nearly 30% of our total gas supply ... [I] welcome the announcement from Equinor today that gas production will significantly increase from the 1st of October this year to support the UK and European demand.” The UK may need more than that to fend off a winter of discontent.

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A Launchpad company from BP

Alberta Indigenous Opportunities Corporation (AIOC) has announced that it has provided up to a CAN$40 million loan guarantee to support eight Indigenous Communities in the Wood Buffalo Region, to finance a 14.25% ownership interest in the Northern Courier Pipeline System (NCP System) including the Pipeline and associated storage facilities.

The participating Indigenous Communities are Athabasca Chipewyan First Nation, Chipewyan Prairie First Nation, Fort McMurray First Nation, Fort Chipewyan Metis Local 125, Fort McKay Metis Nation, Fort McMurray Local Council 1935, Willow Lake Metis Nation and Conklin Metis Local 193.

The NCP System consists of 90 km of bitumen and diluent pipeline connecting the Fort Hills Oil Sands project in Northern Alberta with Suncor’s facilities in Fort McMurray. Originally constructed by TransCanada Pipeline Limited (TCPL) in January of 2018, TCPL will transfer ownership of the NCP system in 2021 to the newly formed Northern Courier Pipeline Limited Partnership (NCPLP), which will be 85% owned by the Alberta Investment Management Corporation (AIMCo) and 15% owned by a Limited Partnership between the Indigenous Communities and Suncor Energy. The Limited Partnership ownership stake will see 14.25% of the NCP system owned by the Indigenous Communities, with Suncor acting as operator and owner of the remaining 0.75%.

“When evaluating proposals at AIOC, we are looking for projects that will result in long-term prosperity for the communities involved,” said Alicia Dubois, CEO of AIOC. “The NCP System will ensure that the eight Indigenous Communities involved have long term active participation and steady own-source revenue streams, the impacts of which will serve generations to come.” This loan guarantee secures direct Indigenous ownership of pipeline infrastructure within the traditional territories of the eight Indigenous Communities involved and will enhance the contributions of each Community in the local economy of the Wood Buffalo Region.

“This investment is more than a financial transaction, it is a step forward for Canada,” said Ron Quintal, President of Fort McKay Métis Nation. “The future of responsible extractive resource development in Canada must be one where Indigenous Communities are real partners that derive long-term benefits for housing, training and education. This should be a model used across the country. Investment in the energy sector is a clear path for indigenous communities to finally realise economic reconciliation.”

Pipeline technology specialist, STATS Group, has successfully completed the largest number of simultaneous pipeline isolation projects in its 23 year history.

During the 2021 summer shutdown season, STATS supported six separate Tecno Plug isolation deployments in the UK North Sea, on pipelines ranging from 20 in. to 36 in. in diameter. The projects were on critical pipeline systems on behalf of multiple clients, with the isolation periods ranging from 10 to 45 days.

Isolation activities were carried out onshore and offshore at various locations and included the use of STATS Remote Monitoring System, which allowed Tecno Plug isolation tools to be monitored continuously via satellite from STATS Remote Monitoring Centre in Kintore, Aberdeenshire. The satellite monitoring technology enables customers to reduce site Personnel on Board (POB) requirements on their oil and gas installations during breaking of containment activities, whilst still ensuring that the isolation status is continually monitored.

The summer shutdown period also saw a surge in demand for STATS Process Plant Solutions which supported both North Sea and international clients with the provision of vapour barrier and localised weld testing services, with many requirements being delivered in quick turnaround times, due to the inevitability of unforeseen scopes that appear.

In addition, STATS worked closely with multiple North Sea Operators in the manufacture and installation of its Topside Mechanical Pipe Connectors.

Enbridge Inc. has announced that it has entered into a definitive purchase agreement with EnCap Flatrock Midstream to acquire Moda Midstream Operating, LLC for US$3 billion in cash, subject to closing adjustments. The acquisition will significantly advance the company’s US Gulf Coast export strategy and connectivity to lowcost and long-lived reserves in the Permian and Eagle Ford basins.

“We’re very excited about acquiring North America’s premium, very large crude carrier (VLCC) capable, crude export terminal,” commented Al Monaco, President and Chief Executive Officer of Enbridge. “Over the last several years we’ve been building a strong position in the US Gulf Coast through both natural gas and crude infrastructure. Our strategy is driven by the important role that low cost, sustainable North America energy supply will play in meeting growing global demand. With close proximity to world-class Permian reserves, and with cost effective and efficient export infrastructure, our new Enbridge Ingleside terminal will be critical to capitalising on North America’s energy advantage.”

Central to the transaction, Enbridge will acquire a 100% operating interest in the Ingleside Energy Center (to be renamed the Enbridge Ingleside Energy Center (EIEC)), located near Corpus Christi, Texas, US – one of North America’s largest crude export terminals, which loaded 25% of all US Gulf Coast crude exports in 2020. This state-of-the-art terminal, built in 2018, comprises 15.6 million bbls of storage and 1.5 million bpd of export capacity.

Enbridge will also acquire a 20% interest in the 670 000 bpd Cactus II Pipeline, a 100% operating interest in the 300 000 bpd Viola pipeline, and a 100% operating interest in the 350 000 barrel Taft Terminal. Together with EIEC, these pipeline and storage assets provide a fully integrated light crude export platform.