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Abstract The technically recoverable conventional natural gas resources in the developed and known undeveloped fields on the Alaska North Slope (ANS) total about 37 trillion cubic feet (Tcf). No significant commercial use has yet been made of this large natural gas resource because the economics have not yet been favorable to support development of a gas transportation system. Two gas utilization options were evaluated, a gas-to-liquids (GTL) conversion option and a liquefied natural gas (LNG) option that involves a gas pipeline from Prudhoe Bay to Valdez Alaska. Both options are profitable and can provide a 10% rate of return on investment for the gas project developers using the Energy Information Administration (EIA) 1995 Reference Oil Price forecast, which assumes real growth in oil prices. The two fields evaluated for major gas sales to the gas projects, Prudhoe Bay and Point Thomson, receive a better return than they do without major gas sales. Of the two options, development of a 300 thousand barrel per day (MBPD) GTL facility for conversion of gas to a liquid hydrocarbon product, compatible with North Slope crude oil and transportable in the Trans Alaska Pipeline System (TAPS), provides a significant economic advantage over the LNG option. The GTL option would provide sufficient hydrocarbon liquids to keep TAPS operational for an additional 10 to 15 years beyond its potential shut down point in about 2015 as conventional North Slope oil production dwindles with depletion and pipeline operating costs per barrel transported soar. Introduction The technically recoverable conventional natural gas resources in the developed and known undeveloped oil and gas fields on the Alaska North Slope (ANS) total about 37 Tcf. No significant commercial use has yet been made of this large natural gas resource because there are no facilities in place to transport this gas to current markets, which are outside of the North Slope. To date the economics have not been favorable to support development of a gas transportation system. In addition to the known gas resources, the U.S. Geological Survey's (USGS) most recently published estimate of technically recoverable conventional natural gas resources in undiscovered fields in Northern Alaska has a mean value of 64 Tcf. Figure 1 is a map showing the known oil and gas accumulations and selected dry holes and suspended wells on the North Slope. Although discoveries of oil and gas have been made across Northern Alaska, the only development that has occurred is around the Prudhoe Bay field. This also points to the significance of the infrastructure developed because of the super giant Prudhoe Bay field It is unlikely that any of the other North Slope fields would have been developed without facility cost-sharing made possible by the development of the Prudhoe Bay infrastructure, including TAPS. About 25 Tcf of the 37 Tcf technically recoverable gas is estimated to be available for sale. The balance will be consumed in oil and gas production operations on the North Slope. These known gas resources coupled with the potential for large additional gas discoveries in Northern Alaska, make it important for the U.S. Department of Energy (DOE), industry, and the state of Alaska to evaluate and assess the options for development of this vast gas resource to obtain the maximum benefit for the nation, and to determine the impact that development would have on U.S. domestic energy supply. jobs, and balance of payments. P. 531
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- North America > United States > Alaska > North Slope Basin > Prudhoe Bay Field (0.99)
- North America > United States > Alaska > North Slope Basin > Point Thomson Field (0.99)
- North America > United States > Alaska > North Slope Basin > Kuparuk River Field (0.99)
- Management > Asset and Portfolio Management > Project economics/valuation (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (1.00)
Abstract The implementation of Federal Energy Regulatory Commission ("FERC") Order No. 636 will result in major changes in the operations of interstate natural gas pipelines and the way natural gas is bought, sold, and transported. Instead of a "bundled" service for which the customer pays one price for gas, transportation, storage and related services, interstate pipelines will offer a menu of services from which customers can choose. This paper discusses the major changes brought about by Order No. 636 and focuses on the "unbundling" of interstate pipeline services and the resulting operational changes, the development of market centers, and the role of storage in this new environment. Introduction With the issuance of Order Nos. 636, 636-A, and 636-B, the FERC catapulted interstate natural gas pipelines and the whole natural gas industry into a new era of restructured services and increased competition in the sale of natural gas and related services. By "unbundling" the prepackaged merchant service traditionally offered by the interstate pipelines into its individual components and requiring separate charges for each component, the FERC paved the way for gas producers and marketers to provide gas sales and related services on an equal basis with the service offered by the pipelines. Background The Origins of Open Access Transportation On April 8, 1992, FERC issued Order No. 636 which established new regulations and policies for open access transportation by interstate pipelines. P. 467^
- Energy > Oil & Gas > Midstream (1.00)
- Government > Regional Government > North America Government > United States Government (0.54)
- North America > United States > West Virginia > Appalachian Basin (0.99)
- North America > United States > Virginia > Appalachian Basin (0.99)
- North America > United States > Tennessee > Appalachian Basin (0.99)
- (7 more...)
- Facilities Design, Construction and Operation > Pipelines, Flowlines and Risers (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (0.46)
Abstract The dynamics of the natural gas industry are Changing dramatically due to major federal regulatory policy shifts, and growth of the gas transport and policy shifts, and growth of the gas transport and spot gas markets. Gas industry sales and transport activities had traditionally been regulated front wellhead to burnertip, but competition is growing due to: o growth in 3rd party transport volumes o growth in non-regulated gas marketing o pipeline gas supply portfolios being reformed o negotiation of new gas supply contract terms o take-or-pay problems being worked down o deregulation of the traditional pipeline's roles to allow marketing of new services o swings in spot market gas prices vs. volumes moved o number of new pipeline projects proposed o storage treads The above 9 treads will be analyzed in the paper for their impacts on the future of the gas paper for their impacts on the future of the gas industry. The seven years of the American Revolution era characterized the struggle by which the colonies that were to become the United States won independence front British regulation of colonial commerce. We could say that the 7 years from 1985 to 1992 is the American pipeline revolution era, characterized by the struggle to free interstate pipelines front their overly restrictive regulation of the past. Let's turn back the pages of history and look first at some recent history: (1) TRANSPORTATION In 1984, before we ever heard of Orders 436 and 500, the interstate pipeline ratio of gas sales to transport was 95/5, just 5% of volumes handled were transport only. In 1988, it flip-flopped to 30/70. In essence, this means 30% were term sales and we can assume essentially all of the transport volumes at 70% were spot. What will the ratio be in the 1990's? It is my conjecture that in 1991 or 1992 when yearround supply and demand come near balance, 50% of all gas will be sold by then under long term contracts and 50% will still be sold spot, with spot defined as contracts of 1 year or less duration. We think without the warm January this winter, we would have clipped our January and February peaks in 1Q 1989. This winter we were close to reaching balance in the gas market. In the 1990's buyers will adopt the portfolio approach and buy term supply on a first basis front producers and pipelines and buy 50% spot front producers and marketers, including pipeline marketing affiliates. pipeline marketing affiliates. This 50/50 portfolio will ensure non-switchable core users will be adequately supplied and that more price sensitive fuel-switchables can use gas and/or alternate fuels. (2) SUPPLY The bubbles' not gone yet! At least 1 TCF of surplus natural gas is estimated to be available in 1989, a 35% drop front the year prior, says ETA, of the status of the "bubble". EIA's base case assumptions are that the GNP 2.5% per year, U.S. gas reserves are 187 TCF recoverable and that gas prices are still below resid prices through the and of 1995. P. 333
- Energy > Oil & Gas > Upstream (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- Government > Regional Government > North America Government > United States Government (0.61)
- Facilities Design, Construction and Operation > Pipelines, Flowlines and Risers (1.00)
- Management > Energy Economics > Market analysis /supply and demand forecasting/pricing (0.89)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (0.69)
Abstract The transportation of natural gas has been defined by some as the movement or conveyance of natural gas from the area of production to the market or ultimately the consumer. The subject paper describes the evolution of state and federal regulations imposed on the transportation of natural gas. The paper also discusses in detail the various FERC transportation programs which producers, pipelines, local distribution companies, producers, pipelines, local distribution companies, and brokers can use to transport natural gas to markets throughout the United States. Finally, the paper discusses Chevron's participation in this paper discusses Chevron's participation in this evolving transportation environment as seen from the largest producer of natural gas. In conclusion, with the natural gas industry changing its structure for transportation programs so quickly, it is imperative that an understanding of today's transportation programs and regulation be achieved. This paper outlines the structure of transportation regulation as well as develops an understanding for the FERC transportation program available today. Introduction The state at which natural gas exists (a vapor at atmospheric temperature and pressure) calls for a very different mode of transportation unlike its cousin oil. Historians have said that the Chinese piped gas through bamboo pipes as early as the tenth piped gas through bamboo pipes as early as the tenth century. In 1872, gas was successfully transported 5 1/2 miles through cast iron pipe to bring waste gas from oil wells to Titusville, Pennsylvania for 250 customers., It wasn't until after the end of World War II that technological improvements in the construction of high pressure steel pipe fostered the cross country transportation network that we are familiar with today. Government involvement in the gas industry started with the earliest uses of natural gas. Prior to 1938, the regulation of the gas industry, if at all, was at the local and state levels. Beginning with the passage of the Interstate Commerce Act in 1887, Congress continued to broaden the field of federal regulatory legislation in many new directions. In 1906, Congress had amended the Interstate Commerce Act to specifically exclude pipelines for the transportation of natural gas from the jurisdiction of the Interstate Commerce Commission. It wasn't until 1938 that interstate pipelines became subjected to federal regulation by the passage of the Natural Gas Act of 1938(NGA). The NGA granted the Federal Power Commission, predecessor to the Federal Energy Regulatory Commission (FERC), jurisdictional power to regulate the transportation of natural gas in interstate commerce, to regulate the sale of natural gas for resale in interstate commerce, and to regulate gas companies engaged in the transportation or resale. In 1954, the major regulatory case of Phillips Petroleum vs. Wisconsin was acted on by the Supreme Petroleum vs. Wisconsin was acted on by the Supreme Court. The Supreme Court declared that the Federal Power Commission had the authority to regulate at Power Commission had the authority to regulate at the wellhead, the price of natural gas charged by a producer to a pipeline company which sold it in producer to a pipeline company which sold it in interstate commerce. Prior to the 1970's, the price of natural gas on intrastate markets had been close to the price on interstate markets. In the early 1970's, this trend changed and the intrastate prices increased sharply above the interstate price. This trend was due to the fact that regulated interstate pipelines were unable to compete with the unregulated pipelines were unable to compete with the unregulated gas of the intrastate pipeline markets where the gas commanded a significantly higher price.
- North America > United States > Wisconsin (0.44)
- North America > United States > Texas (0.28)
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (0.70)
- Facilities Design, Construction and Operation > Pipelines, Flowlines and Risers > Offshore pipelines (0.54)
SPE Member ABSTRACT: As the natural gas industry in the United States started expanding, states started imposing regulations on the sale, transportation and distribution of gas. In the 1920's, the U.S. Supreme Court issued three famous decisions which spawned the birth of the federal regulation of interstate sale and transportation of gas. In 1938, the U.S. Congress passed the Natural Gas Act (NGA) which empowered the Federal Power Commission to regulate interstate commerce of gas. In 1954, the Supreme Court, in its Phillips Petroleum decision, imposed federal regulation on the wellhead prices of natural gas sold in the interstate market which eventually resulted in low prices and gas shortages in the 1970's. In 1978, the Congress passed the Natural Gas Policy Act (NGPA) passed the Natural Gas Policy Act (NGPA) which resulted in increased gas prices. The higher prices increased supplies and decreased demand, thus causing a gas surplus. The unprecedented gas surplus in the 1980's resulted in competition at wellhead but this competition could not be extended to the burnertip due to the monopoly ownership of the gas transportation and distribution facilities. In response to this situation, both federal and state regulatory agencies have issued a number of decisions during the last three to four years which are causing a revolutionary changes in the natural gas industry and it is expected that the competitive forces will play a bigger role than at any time in the past in the restructuring of the gas industry. Introduction The U.S. natural gas industry expanded rapidly during the 1950's and 1960's. The gas demand increased as a result of the wellhead price control which was maintained at relatively low levels. The gas supplies started declining substantially, especially since 1973 when the unregulated prices of alternate fuels started climbing rapidly. The enactment of the Natural Gas Policy Act (NGPA) in 1978 provided a great economic stimulant to gas exploration by allowing increases in gas prices. The increased gas prices also prices. The increased gas prices also resulted in lower gas demands and the result was an excess of gas supplies over demand. Further, the gas prices for the first time started exceeding the prices of alternate fuels. This prices of alternate fuels. This resulted in the appearance of gas to gas competition and gas to alternate fuel competition. This unprecedented situation brought about a series of regulations at FERC. The famous orders which drastically changed the traditional gas industry structure were Order Nos. 249, SMP programs, the Order No. 380 series, Order No. 436, Order No. 451 and Order No. 500; Order Nos. 436 and 500 having the most significant impact. The interstate pipeline's major role changed from that of both the seller and transporter of gas to becoming mainly the transporter of gas. As a result, in 1987, the interstate pipeline's transported gas increased pipeline's transported gas increased substantially. P. 499
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- Management (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (1.00)
Summary Changes in the U.S. natural gas market over recent years have caused competition to move from a regional to a national market. This has focused the attention of regulators on gas transportation. This paper briefly reviews federal and state regulations on natural gas transportation and transportation rates. Introduction In recent years. the natural gas market in the u.s. has been experiencing drastic changes. The gas market has changed from a sellers' to a buyers' market. and gas prices have declined substantially and are still experiencing a downward trend. The competition among sellers has increased enormously. and the competition in the natural gas market has moved from the regional to the national market. with purchasers seeking out new supplies from a much broader spectrum of suppliers. This changed situation has focused the attention of regulators on gas transportation because transportation has been a major bottleneck in the way of increased competition. In this paper, a brief review of regulations related to gas transportation and transportation rates at both federal and state levels will be presented. Gas Transportation Federal Regulations. A large number of interstate pipelines. and to some extent intrastate pipelines. have been transporting gas since the early stages of the natural gas industry. In recent years. as more focus has been directed to transportation, the Federal Energy Regulatory Commission (FERC) issued a number of orders and approved several gas-transportation programs proposed by interstate pipelines. The most notable earlier FERC orders were Orders 46, 60, 234-B, and 319. FERC Order 46 relates to transportation for distributors. and Order 60 relates to transportation by one interstate pipeline on behalf of another pipeline. At present, there are three major types of applications for transportation filed before FERC. These are generally known as Sec.7(c). Sec. 311. and Order 436. Section 7(c) Transportation. FERC issued Orders 234-B and 319 to permit transportation under Sec. 7(c) of the Natural Gas Act (NGA). Sec. 7(c) allows exceptions from certificate requirements for certain types of temporary or emergency transportation arrangements. In other words. FERC's rules (Subpart F of 18 CFR. Part 157). permitted interstate pipelines to obtain FERC's authority to engage in a number of transportation contracts in a single filing under Sec. 7(c). Pregrant of abandonment and approval for construction of necessary facilities was included in the blanket certificate. Transportation on behalf of a high-priority end user or an end user that owns or purchases gas from a producer, intrastate pipeline, or local distribution company (LDC) was authorized without prior notice to the FERC for a term of 5 years (10 years if the end user owned the production). For a longer term, prior notice was required. Transportation on behalf of an LDC. intrastate pipeline, or interstate pipeline was also authorized on prior notice. The notice of the FERC had to describe the parties and the transactions and had to include a copy of the contract. For a temporary, experimental period extending from Aug. 5, 1983, to June 30, 1985, gas not dedicated to interstate commerce before enactment of the Natural Gas Policy Act of 1978 (NGPA) could be transported for any end user under a blanket certificate. Transportation without notice was authorized for 120 days, and transportation for a longer period was authorized after notice. Self-Implementing Sec. 311 Service. In addition to blanket certificates under Sec. 7(c). FERC permits both interstate and intrastate pipelines to transport gas under Sec. 311 of the NGPA, generally without prior notice or approval by FERC. Sec. 311(a) (1) authorizes transportation by interstate pipelines on behalf of intrastate pipelines, LDC's, and Hinshaw pipelines. Sec. 311(a)(2) permitted intrastate pipelines to transport gas for interstate pipelines, LDC's, Hinshaw pipelines, and end users. If the intrastate pipeline sought transportation for an end user, the end user had to qualify under Subpart F of Part 157. Order 436. FERC issued Order 436 on Oct. 9, 1985, to open the access to transportation on a nondiscriminatory basis. This order has been hailed as a major cornerstone in the area of gas regulation. Order 436 does not require any pipeline to become an "open-access" transportation. but it requires that any pipeline offering transportation under Order 436 must provide service to all customers on a nondiscriminatory basis. Part A deals with the transportation aspect. The effective date for Part A was Nov. 1, 1985. The ruling provides for a suitable transition period for fundamental choices in the industry, such as what services to offer, how to structure basic contractual arrangements, and how to allocate the risks and fixed costs. The items that are covered during the transition period include "grandfathering" of certain transactions, applications for self-implementing transportation authority, setting of rates under the rate conditions, and the exercising by firm-sales customers of the conditional opportunity to reduce or to change the manner in which they purchase their natural gas requirements. These items and the respective implementation dates are addressed below. Ongoing NGPA Sec. 311 Transportation. Ongoing self-implementing transportation service (Secs. 284.105 and 284.125) on or before Oct. 9, 1985, may be continued until the earlier of (1) expiration of original or extended term of the authorized transportation agreement, or (2) Oct. 9, 1987. The rate conditions for Sec. 284.7 (including interim rates) apply to previously authorized transactions by interstate pipelines. Transportation arrangements under Sees. 284.107 and 284.127 are also grandfathered except for rate conditions (interstate pipelines) and reporting conditions (interstate and intrastate pipelines). The new reporting requirements were effective Nov. 1, 1985. Order 319 - Blanket Certificate Transportation on Behalf of High-Priority End-Users. Sec. 284.223(g)(1) provides that those end users whose transportation agreements had commenced on or before Oct. 9, 1985, are fully authorized as certificated. Rate conditions of Sec. 284.7, consistent with the general rule, will apply. Federal Regulations. A large number of interstate pipelines. and to some extent intrastate pipelines. have been transporting gas since the early stages of the natural gas industry. In recent years. as more focus has been directed to transportation, the Federal Energy Regulatory Commission (FERC) issued a number of orders and approved several gas-transportation programs proposed by interstate pipelines. The most notable earlier FERC orders were Orders 46, 60, 234-B, and 319. FERC Order 46 relates to transportation for distributors. and Order 60 relates to transportation by one interstate pipeline on behalf of another pipeline. At present, there are three major types of applications for transportation filed before FERC. These are generally known as Sec.7(c). Sec. 311. and Order 436. Section 7(c) Transportation. FERC issued Orders 234-B and 319 to permit transportation under Sec. 7(c) of the Natural Gas Act (NGA). Sec. 7(c) allows exceptions from certificate requirements for certain types of temporary or emergency transportation arrangements. In other words. FERC's rules (Subpart F of 18 CFR. Part 157). permitted interstate pipelines to obtain FERC's authority to engage in a number of transportation contracts in a single filing under Sec. 7(c). Pregrant of abandonment and approval for construction of necessary facilities was included in the blanket certificate. Transportation on behalf of a high-priority end user or an end user that owns or purchases gas from a producer, intrastate pipeline, or local distribution company (LDC) was authorized without prior notice to the FERC for a term of 5 years (10 years if the end user owned the production). For a longer term, prior notice was required. Transportation on behalf of an LDC. intrastate pipeline, or interstate pipeline was also authorized on prior notice. The notice of the FERC had to describe the parties and the transactions and had to include a copy of the contract. For a temporary, experimental period extending from Aug. 5, 1983, to June 30, 1985, gas not dedicated to interstate commerce before enactment of the Natural Gas Policy Act of 1978 (NGPA) could be transported for any end user under a blanket certificate. Transportation without notice was authorized for 120 days, and transportation for a longer period was authorized after notice. Self-Implementing Sec. 311 Service. In addition to blanket certificates under Sec. 7(c). FERC permits both interstate and intrastate pipelines to transport gas under Sec. 311 of the NGPA, generally without prior notice or approval by FERC. Sec. 311(a) (1) authorizes transportation by interstate pipelines on behalf of intrastate pipelines, LDC's, and Hinshaw pipelines. Sec. 311(a)(2) permitted intrastate pipelines to transport gas for interstate pipelines, LDC's, Hinshaw pipelines, and end users. If the intrastate pipeline sought transportation for an end user, the end user had to qualify under Subpart F of Part 157. Order 436. FERC issued Order 436 on Oct. 9, 1985, to open the access to transportation on a nondiscriminatory basis. This order has been hailed as a major cornerstone in the area of gas regulation. Order 436 does not require any pipeline to become an "open-access" transportation. but it requires that any pipeline offering transportation under Order 436 must provide service to all customers on a nondiscriminatory basis. Part A deals with the transportation aspect. The effective date for Part A was Nov. 1, 1985. The ruling provides for a suitable transition period for fundamental choices in the industry, such as what services to offer, how to structure basic contractual arrangements, and how to allocate the risks and fixed costs. The items that are covered during the transition period include "grandfathering" of certain transactions, applications for self-implementing transportation authority, setting of rates under the rate conditions, and the exercising by firm-sales customers of the conditional opportunity to reduce or to change the manner in which they purchase their natural gas requirements. These items and the respective implementation dates are addressed below. Ongoing NGPA Sec. 311 Transportation. Ongoing self-implementing transportation service (Secs. 284.105 and 284.125) on or before Oct. 9, 1985, may be continued until the earlier of (1) expiration of original or extended term of the authorized transportation agreement, or (2) Oct. 9, 1987. The rate conditions for Sec. 284.7 (including interim rates) apply to previously authorized transactions by interstate pipelines. Transportation arrangements under Sees. 284.107 and 284.127 are also grandfathered except for rate conditions (interstate pipelines) and reporting conditions (interstate and intrastate pipelines). The new reporting requirements were effective Nov. 1, 1985. Order 319 - Blanket Certificate Transportation on Behalf of High-Priority End-Users. Sec. 284.223(g)(1) provides that those end users whose transportation agreements had commenced on or before Oct. 9, 1985, are fully authorized as certificated. Rate conditions of Sec. 284.7, consistent with the general rule, will apply. Section 7(c) Transportation. FERC issued Orders 234-B and 319 to permit transportation under Sec. 7(c) of the Natural Gas Act (NGA). Sec. 7(c) allows exceptions from certificate requirements for certain types of temporary or emergency transportation arrangements. In other words. FERC's rules (Subpart F of 18 CFR. Part 157). permitted interstate pipelines to obtain FERC's authority to engage in a number of transportation contracts in a single filing under Sec. 7(c). Pregrant of abandonment and approval for construction of necessary facilities was included in the blanket certificate. Transportation on behalf of a high-priority end user or an end user that owns or purchases gas from a producer, intrastate pipeline, or local distribution company (LDC) was authorized without prior notice to the FERC for a term of 5 years (10 years if the end user owned the production). For a longer term, prior notice was required. Transportation on behalf of an LDC. intrastate pipeline, or interstate pipeline was also authorized on prior notice. The notice of the FERC had to describe the parties and the transactions and had to include a copy of the contract. For a temporary, experimental period extending from Aug. 5, 1983, to June 30, 1985, gas not dedicated to interstate commerce before enactment of the Natural Gas Policy Act of 1978 (NGPA) could be transported for any end user under a blanket certificate. Transportation without notice was authorized for 120 days, and transportation for a longer period was authorized after notice. Self-Implementing Sec. 311 Service. In addition to blanket certificates under Sec. 7(c). FERC permits both interstate and intrastate pipelines to transport gas under Sec. 311 of the NGPA, generally without prior notice or approval by FERC. Sec. 311(a) (1) authorizes transportation by interstate pipelines on behalf of intrastate pipelines, LDC's, and Hinshaw pipelines. Sec. 311(a)(2) permitted intrastate pipelines to transport gas for interstate pipelines, LDC's, Hinshaw pipelines, and end users. If the intrastate pipeline sought transportation for an end user, the end user had to qualify under Subpart F of Part 157. Order 436. FERC issued Order 436 on Oct. 9, 1985, to open the access to transportation on a nondiscriminatory basis. This order has been hailed as a major cornerstone in the area of gas regulation. Order 436 does not require any pipeline to become an "open-access" transportation. but it requires that any pipeline offering transportation under Order 436 must provide service to all customers on a nondiscriminatory basis. Part A deals with the transportation aspect. The effective date for Part A was Nov. 1, 1985. The ruling provides for a suitable transition period for fundamental choices in the industry, such as what services to offer, how to structure basic contractual arrangements, and how to allocate the risks and fixed costs. The items that are covered during the transition period include "grandfathering" of certain transactions, applications for self-implementing transportation authority, setting of rates under the rate conditions, and the exercising by firm-sales customers of the conditional opportunity to reduce or to change the manner in which they purchase their natural gas requirements. These items and the respective implementation dates are addressed below. Ongoing NGPA Sec. 311 Transportation. Ongoing self-implementing transportation service (Secs. 284.105 and 284.125) on or before Oct. 9, 1985, may be continued until the earlier of (1) expiration of original or extended term of the authorized transportation agreement, or (2) Oct. 9, 1987. The rate conditions for Sec. 284.7 (including interim rates) apply to previously authorized transactions by interstate pipelines. Transportation arrangements under Sees. 284.107 and 284.127 are also grandfathered except for rate conditions (interstate pipelines) and reporting conditions (interstate and intrastate pipelines). The new reporting requirements were effective Nov. 1, 1985. Order 319 - Blanket Certificate Transportation on Behalf of High-Priority End-Users. Sec. 284.223(g)(1) provides that those end users whose transportation agreements had commenced on or before Oct. 9, 1985, are fully authorized as certificated. Rate conditions of Sec. 284.7, consistent with the general rule, will apply. Ongoing NGPA Sec. 311 Transportation. Ongoing self-implementing transportation service (Secs. 284.105 and 284.125) on or before Oct. 9, 1985, may be continued until the earlier of (1) expiration of original or extended term of the authorized transportation agreement, or (2) Oct. 9, 1987. The rate conditions for Sec. 284.7 (including interim rates) apply to previously authorized transactions by interstate pipelines. Transportation arrangements under Sees. 284.107 and 284.127 are also grandfathered except for rate conditions (interstate pipelines) and reporting conditions (interstate and intrastate pipelines). The new reporting requirements were effective Nov. 1, 1985. Order 319 - Blanket Certificate Transportation on Behalf of High-Priority End-Users. Sec. 284.223(g)(1) provides that those end users whose transportation agreements had commenced on or before Oct. 9, 1985, are fully authorized as certificated. Rate conditions of Sec. 284.7, consistent with the general rule, will apply.
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Midstream (1.00)
Abstract Order 436 is the Federal Energy Regulatory Commission's bid to convert the natural gas pipeline industry, traditionally regulated as a natural monopoly, into a semi-competitive and more efficient transportation industry. This paper analyzes the market environment into which Order 436 was introduced, reviews the background and provisions of the landmark action, and assesses its effects, particularly on the pipeline industry. The paper concludes that the Order puts many pipelines into an untenable position given pipelines into an untenable position given the current market context and has not fully anticipated further market changes. Introduction Recent actions of the Federal Energy Regulatory Commission (FERC) have provided a means by which many if not all of the nation's interstate pipelines will become open-access transporters of natural gas over the coming months, rather than remaining exclusively "merchant" pipeline which buy and then resell natural gas. Under current market circumstances many pipelines will be financially threatened pipelines will be financially threatened by such a transition, and the pipelines recognize this fact. The transition is nonetheless likely, driven by competition among pipelines for market share when the market is in overall decline and there is considerable spare capacity. Pending regulatory actions related "o "old gas" prices will, if adopted, only increase the prices will, if adopted, only increase the potential problems faced by most potential problems faced by most pipelines. The pipelines' current dilemma is pipelines. The pipelines' current dilemma is the result of natural gas market changes they did not anticipate. It has been compounded by the effect of the FERC's recent actions, doing much to enable the market to circumvent the exposed and out of-line positions of the pipelines, doing little to enable the pipelines to change or abandon these positions. The resulting changes for the natural gas market may be profound. THE MARKET AS ORDER 436 FOUND IT The impacts of Order 436 are a function not only of its provisions but of the market circumstances into which it was introduced. The natural gas market had experienced tumultuous changes during the two decades previous to Order 436. This section presents a summarized and greatly simplified view of those changes and the market environment on the eve of open-access pipeline transportation. Gas availability had gone from surplus in the 1950s and 1960s to shortage in the 1970s and to surplus again in the 1980s. Gas was a very inexpensive fuel in the 1950s and 1960s as a result of federal regulation and the lingering influence of the major low cost reserves dedicated to the major trunk pipelines when they were first built. pipelines when they were first built. Increasing demand collided with diminishing reserves in the early 1970s and the unregulated intrastate market outbid the regulated pipelines for the reserves that were available. The results were major curtailments in the interstate system and great pressure for higher prices both to stimulate supply and to reduce excess demand. P. 15
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- Facilities Design, Construction and Operation > Pipelines, Flowlines and Risers (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (0.89)
Abstract This study investigates some of the reasons why the natural gas which is produced along with the oil at Prudhoe Bay is not being delivered to a market and three of the possible methods of delivering this gas energy to a market. These three alternatives include a proposal to build a natural gas pipeline through Canada, a liquefied natural gas (LNG) proposal and a proposal to manufacture fuel grade proposal and a proposal to manufacture fuel grade methanol from the natural gas at Prudhoe Bay which would be shipped through the existing Trans Alaska Pipeline System. A brief review of the engineering, Pipeline System. A brief review of the engineering, economic, environmental, supply/demand and market aspects, and most importantly the political considerations affecting the selection of any of these three alternatives is presented. The concern over marketability of gas delivered through the proposed pipeline through Canada is responsible for this proposal being held in abeyance, even though it was politically selected as the Alaskan Natural Gas Transportation System in 1977 If an alternative System is to be selected, action should be taken before there is a political decision to force the construction of the pipeline through Canada. From virtually every viewpoint the methanol proposal is the most reasonable method of delivering proposal is the most reasonable method of delivering the Prudhoe Bay gas energy to a market. It is shown that either of the other alternatives would result in the cost of the Prudhoe Bay gas energy being higher than the cost of energy from imported oil or natural gas. Introduction Petroleum Engineers usually take for granted that once a domestic hydrocarbon reservoir is found and defined, it can relatively easily be connected to the excellent pipeline transportation system which exists in the lower 48 states. overseas this is not always the case because sources and markets are often separated not only by great distance but by broad bodies of water. But with the discovery of the Prudhoe Bay field 16 years ago, we were faced with a new, major problem; namely, not only transporting massive amounts of oil and gas almost 5000 miles to markets but doing so for a part of this route through a unique arctic environment. For the oil, this problem was solved by the combination of the TAPS and a tanker fleet; for the gas, the problem is still with us. problem is still with us. Prudhoe Bay natural gas is the largest hydrocarbon resource now being produced but not being utilized in any significant way in our country. A small fraction of the produced solution gas is being used to operate some of the oil pumping stations for TAPS and for oilfield operations, but most is being reinjected. At one time it was said that reinjection could only be practiced until about 1985, but now it is reported that this can be done indefinitely. While this has the technical advantage of pressure maintenance until gas breakthrough produces unacceptably high GORS, the practice of recompressing the gas for injection in practice of recompressing the gas for injection in itself consumes about a part of the gas. Over a period of years and from the energy standpoint, this period of years and from the energy standpoint, this can become a costly practice. There is little point in reciting here a detailed history of the proposals for transporting Prudhoe Bay gas or the energy contained therein to Prudhoe Bay gas or the energy contained therein to the lower 48 states. The early proposals of the Arctic Gas consortium to build a gas pipeline east from Prudhoe Bay into Canada and then south through the Mackenzie River Valley was turned down by a Canadian judge even after a relatively thorough engineering study. The El Paso plan to build a gas pipeline south across Alaska to its southern coast pipeline south across Alaska to its southern coast and a LNG plant plus tankers for the trip to the Western United States was considered to be more costly and potentially more hazardous than the Arctic Gas approach. Finally, a proposal for a 4800-mile gas line through Alaska, Canada, and then some of the lower 48 states was accepted by both Canadian and US governments as the Alaskan Natural Gas Transportation System (ANGTS), mainly on the basis of incredibly low cost estimates as well as threats of gas shortages in future cold winters. P. 359
- Energy > Oil & Gas > Upstream (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- Materials > Chemicals > Commodity Chemicals > Petrochemicals (0.94)
- Government > Regional Government > North America Government > United States Government (0.66)
- Facilities Design, Construction and Operation > Pipelines, Flowlines and Risers (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (1.00)
The paper examines the feasibility of shipping liquefied natural gas (LNG) from the Arctic by submarine tanker. Among the advantages of an under-ice commercial transport system, the authors include the safe, reliable movement of LNG on a regular schedule unimpeded by surface weather conditions; the minimum environmental impact on the fragile Arctic ecology; and the economic superiority over alternative systems by the adaptation of a well-proven technology. Conceptual designs of two such mammoth submarines, both nuclear and nonnuclear powered, are illustrated.
- Energy > Oil & Gas > Midstream (1.00)
- Government > Regional Government > North America Government > United States Government (0.69)
- North America > United States > Alaska > Arctic Ocean > Arctic Basin > Amerasia Basin > Canadian Basin (0.89)
- North America > Canada > Quebec > Arctic Platform (0.89)
- North America > Canada > Nunavut > Arctic Platform (0.89)
Introduction The successful development of the major supplies of natural gas in Prudhoe Bay, Alaska was expected to follow the President's selection in 1977 of the Alaskan Highway proposal to construct a pipeline across Canada and deliver Arctic natural gas to the lower-48 states. Five years later, the proposed Alaska Natural Gas Transportation System (ANGTS) continues to encounter serious obstacles to its successful development. The partnership of private gas and oil companies sponsoring the pipeline project recently announced a new delay (to 1989) in the projected completion date, and this announcement has sparked new interest in alternative ways to develop the gas present in Alaska's North Slope reserves. Many alternatives appear technically feasible, but successful development will depend on the superior economics necessary to attract the tens of billions of dollars needed as finance capital. If the gas is to reach market without moving through Canada, marine technology will play a role in delivering the gas products. products. In a recent study for the Maritime Administration of the U.S. Department of Transportation, scores of alternatives using marine technology were evaluated. Although most of the marine systems proved uneconomical, a few systems offer potentially attractive alternatives to a trans-Canada pipeline system. Background Alaska's North Slope contains significant natural gas resources, but a harsh environment and remote location have hindered development of these resources. Estimates place proved reserves for the Prudhoe Bay field (see Figure 1) at about 29 trillion cubic feet (Tcf), approximately one-sixth of U.S. proved reserves. Additional Arctic gas supplies await complete exploration and development. Since 1977, development years have focused on the proposed trans-Canada pipeline system. Recent events, including changes in: o the world oil market, o ANGTS cost estimates, o U.S. gas policy, and o marine technology justify consideration of a broad range of alternative development options. Recognizing the importance to the nation of the North Slope gas fields, Congress passed the Alaska Natural Gas Transportation Act (ANGTA) in 1976. This legislation aimed (1) "to provide a means for making a sound decision" that provided for presidential and congressional participation in the selection of a transportation system; and (2) "to expedite (system) construction and operation." The system selected in 1977, proposed by a consortium of gas transmission companies, would parallel the Trans-Alaska Oil Pipeline as far south as Delta Junction and would then Pipeline as far south as Delta Junction and would then proceed through Canada to deliver gas to the West proceed through Canada to deliver gas to the West Coast and the Midwest through its western and eastern legs, respectively (see Figure 1). The gas companies sponsoring the proposed pipeline project have repeatedly encountered problems arranging project have repeatedly encountered problems arranging financing for the project. Earlier this year, Congress passed a set of waivers concerning financial restrictions imposed by the previous ANGTA legislation. Waived items included prohibitions on equity participation in the project by the gas producers (major- oil companies) and billing consumers producers (major- oil companies) and billing consumers for project costs prior to delivery of Alaska natural gas. ANGTS problems continue to outweigh apparent progress. The ANGTS pipeline company sponsors have progress. The ANGTS pipeline company sponsors have reached a tentative agreement with North Slope gas producers concerning equity participation, and the producers concerning equity participation, and the state of Alaska recently received a report that recommended limited state participation in ANGTS financing. Nevertheless, the pipeline project sponsors recently announced an additional two-year delay on the target date for the system to become operational (to 1989). While Arctic pipeline technology advanced through ANGTS design and testing efforts, other technologies that could contribute to Arctic gas development have also advanced. p. 61
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
- Energy > Oil & Gas > Midstream (1.00)
- North America > United States > Alaska > North Slope Basin > Prudhoe Bay Field (0.99)
- North America > Canada > Quebec > Arctic Platform (0.89)
- North America > Canada > Nunavut > Arctic Platform (0.89)
- Asia > Japan (0.89)
- Facilities Design, Construction and Operation > Pipelines, Flowlines and Risers (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (1.00)
- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Compressed natural gas (CNG) (0.87)