North America’s midstream sector is in the crosshairs can it survive?

potential damage to watersheds and indigenous lands. After numerous court challenges were defeated, work was completed in late 2021, adding 380 000 bpd capacity.

In addition, the CAN$21.4 billion expansion of the 300 000 bpd Trans Mountain pipeline, which runs from Alberta to tidewater at Burnaby, British Columbia, is 45% complete. It will add 590 000 bpd of export capacity when the twinned line opens in 2023. Operators were forced to temporarily shut down the line in November, 2021, when torrential rains inundated the Lower Mainland region. The line was eventually restarted a month later, but not before refineries in the area ran out of crude and suspended operations.

The Montney shale in northeast British Columbia and northwest Alberta holds over 400 trillion ft³ of fluids-rich gas. Production exceeds 5 billion ft³/d, creating 169 000 bpd of natural gas liquids (NGLs) that is overwhelming current capacity. In August 2021, Keyera Corp finally began construction of its Key Access Pipeline System (KAPS) from northwestern Alberta to the Edmonton region. The 300 mile system, consisting of a 16 in. line for condensate and a 12 in. line for NGLs, is expected to be completed in 2023. The line had originally been slated for completion in 2022, but was delayed by COVID-19.

Also in August 2021, Brookfield Infrastructure Partners took over Inter Pipeline Ltd. with a CAN$8.6 billion offer to majority shareholders. The Toronto-based company initiated a hostile takeover bid in early 2021, having identified undervalued assets, including a crude pipeline network in Western Canada and the Heartland Petrochemical Complex under construction near Edmonton.

United States Crude production in the US suffered significantly from COVID, dropping from an all-time high of 13 million bpd in 2019 to 11 million bpd in 2020. Although production has been recovering, pipeline over-capacity has been a persistent headache. According to Wood Mackenzie, pipeline utilisation rates for crude pipelines in the US stood at 50% in late 2021; that compares to 60 - 70% utilisation rate prior to COVID-19.

Not all lines are suffering; in order to maintain flows, many midstream companies offered discounts. The Gray Oak Pipeline, for instance, has a 94% utilisation rate; its owner, Phillips 66, is offering uncommitted tariff rates below US$2.97/bbl, compared to US$4/bbl for competitors.

Shale oil is also making a recovery as crude prices rise above US$90. Permian crude production exceeded 5 million bpd in February, 2022, as rig counts rose and completion crews headed back to work. (To put that in context, if it were an OPEC member, the Permian basin would be the second highest producer, exceeded only by Saudi Arabia). The resurgence of production is expected to significantly ease low capacity rates in regional crude pipelines, bolstering midstream bottom lines.

In late 2021, Plains All American’s reconfigured Capline pipeline entered service. Originally built in 1967 to move imported crude north from Louisiana to the Patoka, Illinois hub, it eventually became a white elephant as domestic sources were developed. Now, the 1017 km, 40 in. pipeline has been reversed in order to deliver 200 000 bpd to the Gulf Coast.

The reversal has already had a direct impact on Canada’s exports from the US Gulf, which hit an alltime high of 266 000 bpd in December, 2021. Up until 2020, exports to countries other than the US had been hampered by a lack of tidewater terminals, rarely exceeding 70 000 bpd. Operators in the oilsands can now use Capline to access VLCCs in the Louisiana Offshore Oil Port (LOOP). With Venezuelan exports down dramatically and Mexico’s exports in doubt, India, China and other parts of Asia are seeking out Canadian heavy crude for their refineries.

Natural gas is also making a comeback. After suffering low prices through much of 2020 and early 2021, gas surged in late 2021 to finish the year at US$4.70/MMBtu. S&P Global Platts Analytics reported that Permian gas production, which stood at 13 billion ft³/d in late 2020, is expected to surpass 14 billion ft³/d in early 2022.

Much of that gas is heading south to Mexico. The country consumes over 8 billion ft3/d, but domestic gas production has been lagging. As CFE, Mexico’s national utility company, converts production from bunker-fuel, natural gas consumption is expected to rise significantly.

There are 20 gas lines in service crossing between the US and Mexico, with a total capacity of over 11 billion ft³/d. The Permian basin has seen several major lines come on-stream; Kinder Morgan’s Permian Highway Pipeline came online in early 2021, moving up to 2.1 billion ft³/d from the Waha hub in West Texas to the Gulf Coast, and Whitewater’s Aqua Blanca began operations in early 2021, transporting 1.8 billion ft³/d to the Waha hub. In November 2021, the 1.35 billion ft³/d Double E gas pipeline, a JV between Summit Midstream and ExxonMobil’s XTO Energy, entered service. The 135 mile line will accept gas from seven processing plants in New Mexico and Texas and deliver it to the Waha Hub, where it will have connectivity to East Texas and the Mexican border.

Challenges For the last several years, pipelines have been kicked around like political footballs. On his first day in the White House, President Biden cancelled TC Energy’s Keystone XL pipeline, a 2000 km express line designed to deliver 830 000 bpd of Alberta crude to the USGC. Over the course of 12 years, the proposed line had already been cancelled by the Obama administration and reinstated by the President Trump.

In November 2021, TC Energy Corporation formally filed a trade appeal under provisions of the North American Free Trade Agreement (NAFTA), seeking US$15 billion in damages. “The US decision to revoke the permit was

unfair and inequitable,” TC Energy said in its filing, blaming the US for putting Keystone XL on a 13 year ‘regulatory roller coaster’. While NAFTA has been superseded by the new US-Mexico-Canada Agreement, arbitration is still temporarily grandfathered for some legacy investments. The dispute will be heard before a three-member panel, one appointed by TC Energy, a second by the US and a third by agreement of both parties. The tribunal has the authority to award damages for lost profits and costs incurred.

Crude exporters in Canada face further pipeline complications. Enbridge Line 5 transports 540 000 bpd from Canada through Michigan to Ontario and Quebec. Enbridge has been doing extensive upgrades to the system to ensure safe operation. In late 2020, however, Michigan Governor Witmer ordered Line 5 to shut down operations by 13 May 2021, due to the potential for spills where it passes under the Straits of Mackinac in the Great Lakes. As an international pipeline between Canada and the US, Line 5 is governed by the 1977 Transit Pipelines Treaty, which contains provisions guaranteeing uninterrupted transit of light crude oil and natural gas liquids between the two countries. In October 2021, the federal government of Canada invoked Article Six of the treaty to instigate bilateral negotiations with the US federal government. The invocation of the treaty (which has never been used before), will oblige the Biden Administration to become involved in the dispute.

Sunoco’s Mariner East project is designed to collect natural gas liquids from the Marcellus shale formation in Pennsylvania and ship them to a tidewater terminal south of Philadelphia. The project consists of three pipelines carrying ethane, propane and butane, primarily used in the production of plastics. The project has been plagued by spills and infractions since construction began in 2017; Pennsylvania’s Department of Environmental Protection (DEP) has levied US$20 million in fines and numerous criminal charges. DEP finally halted construction in August 2020, after up to 28 000 gallons of drilling mud fluid was spilled into March Creek Lake State Park. Sunoco, which is now considering converting part of the system to refined products (such as gasoline, diesel and jet fuel), received permission from DEP to resume construction in late 2021. It now expects to finish the project in early 2022, two years after the initial completion date.

Methane leaks from gas facilities are a serious problem. The University of Arizona’s carbon mapper research initiative and the Environmental Defense Fund (EDF) conducted a three year survey in the Permian basin using drones equipped with methane-detecting sensors. They found that a small number of ‘super-emitting’ facilities, comprising just one tenth of 1% of energy infrastructure, emitted 100 000 tonnes of leaked methane annually. Because methane is a much stronger greenhouse gas (GHG) than CO2, the amount represents the equivalent emissions of half a million cars. In addition to well pads, compressor stations and processing plants, gathering pipelines were a significant contributor, accounting for 20% of emissions.

“The fact that some facilities are persistently leaking methane for years without detection or repair highlights the urgent need for comprehensive and transparent methane monitoring,” said Riley Duren, Chief Executive Officer for Carbon Mapper and Research Scientist at the University of Arizona. Under the Biden administration, the Environmental Protection Agency (EPA) is working with state regulator New Mexico Environment Department (NMED) to finalise rules governing regular monitoring of most natural gas sites in the Permian. In addition, the EPA is proposing federal rules that will require operators in all jurisdictions to track down and aggressively eliminate methane leaks.

The future The International Energy Agency (IEA) identifies ‘green’ hydrogen as one of the most significant innovation opportunities to reach its target of reducing CO2 emissions to net zero by 2050. Their assertion is based on the fact that hydrogen is an energy-dense molecule that can replace oil and gas in many applications, but does not emit CO2 when consumed.

North America already produces significant amounts of hydrogen; the US alone makes an estimated 10 million tpy. Almost all is ‘grey’ hydrogen, made from natural gas as both feedstock and energy source. Green hydrogen is produced entirely by renewable electricity, such as solar or wind power, which powers an electrolyser that splits water into hydrogen and oxygen.

In early 2021, the Biden administration issued an executive order mandating net-zero carbon emissions for the American economy no later than 2050. The US Department of Energy (DOE) noted that “clean hydrogen is a form of renewable energy that – if made cheaper and easier to produce – can have a major role in supporting President Biden’s commitment to tackling the climate crisis.”

The DOE and other federal agencies have set aside several billion dollars for research and development, with the goal of reducing the cost of clean hydrogen from US$5/kg to US$1/kg by 2030.

Because hydrogen causes standard pipeline steel to become brittle, dedicated networks are necessary to transport it. Over 1000 miles already exists in the Gulf Coast refinery region of Texas and Louisiana, but tens of thousands of new-build miles will be needed as hydrogen expands beyond refinery use into transportation, utilities and heating fuel.

In conclusion, opponents of fossil fuels in North America have waged an increasingly-successful battle by delaying or canceling pipelines. Both production and demand for fossil fuels is expected to persist for the next decade, however, and crude and gas pipelines will remain the most efficient, cost-effective, and safest means of transportation. In the longer term, as the economy transitions toward net-zero emissions, new hydrogen pipelines will create a significant investment opportunity for midstream companies.

Colin Scott PhD, PEng, Product Manager – Crack Management (IE), OneBridge Solutions, Canada, demonstrates how to uncover patterns in seemingly unrelated data.

The oil and gas pipeline industry, like many other industries in the world today, is undergoing a digital transformation. Pens and paper are increasingly being replaced with tablets and advanced computing, driven by artificial intelligence (AI) and development of machine learning (ML) algorithms that extract knowledge from big data. People today are able to connect online, working less often in big city offices and more often from their home offices. OneBridge Solutions, and its Cognitive Integrity Management (CIM) Software as a Service (SaaS) platform, is a leader in this new work model. OneBridge is helping pipeline operators streamline their business through the use of advanced data management, analytics and AI/ML to operate their business processes more efficiently and their pipelines more safely.

“We view digital transformation as a combination of three factors – data, analytics and network – the foundation of the CIM architecture,” said Tim Edward, OneBridge President. “CIM is a sophisticated data-hub which stores information and data that pipeline companies need to manage their assets. ML algorithms automate the ingestion of various data sets (e.g. ILI, NDT and environmental

data) which are then aligned to enable analytics and uncover patterns that are not otherwise determinable. This approach to data management is highly advantageous to traditional methodologies where information is kept in disparate databases without easy capability to determine cause and effect.”

It’s easy to take data for granted. Obviously, the more data we have, the more analysis we can perform. And compiling a network of data describing all aspects of a pipeline, inspections, operations, and geography, has clear advantages. But what we’re learning more and more at OneBridge, is that compilation and alignment of various data types compounds our understanding of the pipeline and its condition. It’s a snowball effect. This is something that can only be exploited with strong data ingestion and alignment algorithms.

On the surface, two integrity data sets would likely be considered twice as useful as one data set. But if those two data sets are somehow related, we can infer a third ‘comparison’ data set (A-B) from the first two. Adding another integrity data set would allow for three comparison data sets (A-B, B-C, A-C), and so on. At this point, some data scientists might offer a ‘combinations and permutations’-type analysis and use factorial mathematics to determine the total number of data sets and comparisons possible. This allows a compounding of our understanding of pipeline condition. But a closer look shows us there are even more data sets that can be inferred, because we can also use our comparison data sets in combination. What makes this effect even more powerful is that we can expand this learning across different tools, vendors and operators industry wide.

OneSoft President & COO, Brandon Taylor added, “OneBridge has over 100 000 miles of piggable pipe under subscription with our customers ingesting ILI, Hydro, NDE, pipe property data from connected GIS systems, and cathodic protection (CP) survey, etc. on a daily basis. We plan to roll out corrosion management and probabilistic risk management functionality this year, which will increase this snowball effect dramatically. We are very excited to be a leader in the digital transformation that is occurring within the industry.”

Let’s look at an example: consider a standard inline inspection (ILI) programme commissioned by a transmission pipeline operator. The vendor report provides a listing of depth measurements for all flaws identified on the pipeline (as well as many other properties). This first data

set is very useful on its own. It allows integrity engineers to perform failure pressure calculations and select the most severe flaws on the pipeline for dig and repair, or some other form of mitigation. A common second data Figure 1. Run over run comparison based on aligned data in a 3D graphical visualisation. set for most operators would be non-destructive evaluation (NDE) flaw depth measurements provided by field technicians. The ILI and field NDE data sets would be compiled to construct a trending (or ‘unity’) plot. This comparison provides the analysts with information on the quality of the ILI tool run. The calculated statistics of tool bias and precision provide a third data set from the first two. The snowball grows larger and integrity engineers can then adjust their dig and repair programmes with new insight. Operators and their analysts would then typically wait for the next scheduled inspection. The new ILI flaw depth measurements would be compared to the previous ILI depth measurements. The flaw-to-flaw depth comparison would allow for an estimate of a flaw specific growth rate, a derivative, and very useful, data set. The flaw growth rates would be used to estimate remaining lives and adjust reinspection intervals, if warranted. At this point, OneBridge would use CIM to perform an additional analysis that is not feasible to many operators due to time, resource, or software limitations. The new ILI depth measurements would be compared to the previous field NDE data. This is only possible if defects remain in the pipeline because of a previous decision to recoat or sleeve, and we assume there is no further flaw growth. This comparison allows CIM to perform pre-trending of the new ILI tool run. So, more statistics can be inferred without the costs of a full dig programme. Operators will likely perform some validation work using a partial dig programme. This represents a significant efficiency gain for the operator. The next scheduled inspection provides a third set of ILI flaw depth measurements. These can be pre-trended using both the first (full) and second (partial) field NDE data sets, which have already provided two sets of statistics describing the quality of those tool runs. The third ILI depth measurements allow for a multiple ILI flaw-to-flaw-to-flaw comparison and more information on flaw specific growth. If the flaws are corrosion or stress corrosion cracking (SCC) and a linear growth rate is assumed, the data may indicate corrosion dormancy, consistency, or even acceleration. If the flaws are cracks and fatigue growth is assumed, the data can be used to fit a non-linear equation and infer a Paris Law exponent from the data. If operational pressure cycling data can be analysed, a Paris Law coefficient can be inferred. Each data set builds on the existing knowledge, and the snowball grows larger. In some scenarios, the data comparisons can be combined for further study. The ILI and field NDE data