North American Oil & Gas Pipelines

JUN 2018

North American Oil & Gas Pipelines covers the news shaping the business of oil and gas pipeline construction and maintenance in North America, including pipeline installation methods, integrity management innovations and managerial strategies.

Issue link:

Contents of this Issue


Page 19 of 43

tions but we are in the middle of robust near, medium and long- term growth at TransCanada. Our project backlog extends well past 2020 to ensure we are meeting the needs of our current and future customers. Riess: I've heard the same chatter in the industry. As long as the current Administration is in office, we can expect more projects to be permitted and built. There is a lot of concern that a change in political party after the next election would result in an ad- ministration against fossil fuel production and in favor of more renewable sources. What impact do the newly established U.S. steel tariffs have on your business? Osborn: The U.S. steel tariffs definitely will have an impact on our business from material costs, the ability to get them in a timely fashion and also with today's demand for construction equipment. This will drive up equipment costs and the ability to get it in a timely fashion. At the end of the day, it will drive costs up which, at some point, will hit all consumers by increasing the cost of oil and natural gas. Throughout U.S. history, tariffs have often surprised us with un- anticipated results and responses from the affected countries. As for the oil and gas industry, most of the steel for large diameter pipe comes from outside the United States. We just do not make an ade- quate amount of it here in the quantities and metallurgies necessary to fulfill the upcoming/scheduled projects. What regulatory challenges face the pipeline industry? Riess: By far it's the permitting. Previously, a decent sized proj- ect would have taken 12 months to be permitted, now it takes twice as long. The permitting agencies are under incredible stress dealing with activists intentionally flooding the system with questions asked in many different ways to further delay the pipe- line approval process. Because the agencies are obligated to an- swer each question, it is no surprise that it takes two to three years for a pipeline project approval. Waugh: Traditionally, the Canadian National Energy Board (NEB) was the regulatory authority for most of the major pipeline construction projects in Canada. Pipeline owner companies needed to develop construction and long-term stewardship plans to gain the NEB's approval. Earlier this year, the federal government proposed changes in the form of the Canadian Energy Regulator Act. If ap- proved and enacted, there will no doubt be a different set of regula- tory issues for our industry. Is it more favorable to work in the United States or Canada considering these challenges? Dearing: Currently, it feels more favorable to work in the United States, as the approval process has been easier. Waugh: I believe the regulatory environment in Canada is cur- rently much more challenging for the pipeline owners. Osborn: I'm not sure one country has any advantage over the other. Both are challenged with similar issues but under different processes. I think it's important that our governments continue to try to gain alignment. The natural resources Canada has are critical to the United States in order to be able to keep up with the demand and lessen our need for imports from the Middle East and South America. How have higher oil prices affected the pipeline industry? Craig: We're already seeing egress bottlenecks in the prolific Permian and Western Canadian production basins, as well as de- pressed local basis differentials, so higher benchmark oil prices may not incentivize the increased production activity many are predict- ing until we can develop, permit and execute additional takeaway pipeline infrastructure. Waugh: The oil and natural gas prices have a big impact for our industry. Higher prices instill expansion confidence and generate more CAPEX dollars for the pipeline owners. Riess: It's been a positive. Higher oil prices mean more produc- tion, and that drives demand to build more pipelines to move prod- uct. It's a lot like what happened with the shale plays, there's a lot of pipeline going in the ground when prices are good. Will the U.S. exit from the Iran nuclear deal have an impact on pipelines? Osborn: Yes, it should be a wake-up call to the American pub- lic that we should be looking at getting supplies from friendly and neighboring countries like Canada and building the infrastructure within our own boundaries to meet our needs. This is the impor- tance of getting political support for pipelines and streamlining the regulatory process here in the states. Craig: I'm not going to speculate on that but will offer that the instability in the Middle East should further incentivize us to responsibly produce and transport our continent's plentiful energy resources. Are environmental activists still having a big impact on the industry as the intense protests of DAPL did? How is that opposition today? Dearing: Yes, they still have an impact, still protesting. It goes back to educating the public on the safety of oil and gas pipeline transportation. Craig: We anticipate continuing to see opposition to the safe and responsible development of our continent's energy production and transmission systems. Effective engagement with as well as educa- tion and management of these organizations will be as critical a component as ever in the planning, construction, and operation of interstate pipelines across North America for the foreseeable future. Waugh: Environmentalists do have an impact on many pipeline projects. While their passion is commendable, their message is based on faulty information and beliefs. Despite the dependence we have on oil in all aspects of our lives, and the need for oil and pipeline 20 North American Oil & Gas Pipelines | JUNE 2 018

Articles in this issue

Archives of this issue

view archives of North American Oil & Gas Pipelines - JUN 2018