Published by Benjamin Media, Inc. Volume 5 Issue 3 March 2012 ON THE COVER: Pigging tools help keep pipelines clean and flowing efficiently. Inline inspection tools, aka “smart” pigs, pinpoint internal damage and provide a method for mapping pipelines for asset management. 20 Squeal Like a Pig Whether “smart” or not, pigging tools keep pipelines squeaky clean. By Bradley Kramer FEATURES 26 To Rent or to Buy? Find some guidance about equipment options in today’s pipeline industry. By Karma Newberry 31 Talent Search The oil and gas industry is seeking a new generation of workers to fill the ranks. By Sylvia Vorhauser-Smith 34 Threading the Trenchless Needle … Precisely Phoenix-based Specialized Services Inc. employed a laser guided boring system at an underground liquids petroleum gas storage facility. By Randy Happel DEPARTMENTS 8 News 16 Market Watch 18 Project Roundup 38 Product Showcase 40 Calendar COLUMNS 6 Editor’s Message 42 Pipeline Perspectives MARKETPLACE 40 Index of Advertisers 41 Business Cards North American Oil & Gas Pipelines is published twelve times per year. Copyright 2012, Benjamin Media Inc., 1770 Main St., Peninsula OH 44264. USA All rights reserved. No part of this publication may be reproduced or transmitted by any means without written permission from the publisher. One year subscription rates: complimentary in the United States, Canada and Mexico. Single copy rate: $10. Subscriptions and classified advertising should be addressed to the Peninsula office. POSTMASTER: send Changes of Address to North American Oil & Gas Pipelines, P.O. Box 190, Peninsula OH 44264 USA. Canadian Subscriptions: Canada Post Agreement Number 7178957. Send change address information and blocks of undeliverable copies to Canada Express; 7686 Kimble Street, Units 21 & 22, Mississauga, ON L5S 1E9 Canada North American Oil & Gas Pipelines Magazine is not affiliated or associated with North American Pipe Corporation of Houston, Texas. 4 North American Oil & Gas Pipelines | MARCH 2012 napipelines.com Editor’s Message Fear Dependence vs. Energy Publisher Independence Bernard P. Krzys Right now a debate rages in the U.S. Congress about a pipe- Associate Publisher line that could improve energy independence, but faces difficult Robert D. Krzys challenges from those who spread fears of contaminated aqui- Editor fers. In the Northeast, vast deposits of natural gas lie in wait James W. Rush for drillers to access this potent source of fuel, but fear mongers Associate Editor spread half-truths and misinformation about hydraulic fractur- Bradley Kramer ing and polluting the environment. And so it goes. These days, the oil and gas industry resembles a nasty political race, rather than a Contributing Staff Editors robust business market. Between the Keystone XL project tapping into oil sands in Al- Sharon M. Bueno Andrew Farr berta and the development of shale plays throughout North America, particularly in the Keith Gribbins Marcellus and Utica regions, the potential for energy independence is ripe — if only we Pam Kleineke could shed our dependence on fear. Kelly Pickerel The primary object of that fear tends to be the environment, and certainly the pipe- line industry must strive to be a good steward of the land. You can see the effort that Graphic Designers TransCanada has made to ensure the safety of its Keystone XL pipeline proposal, endur- Sarah E. Hayes Chris Slogar ing three years of rigorous review. Granted, oil and gas has taken it on the chin over the Elizabeth C. Stull last two years, with an unfortunate string of high-profile leaks, starting with BP’s disaster in the Gulf of Mexico in April 2010. Marketing Director BP just settled with a group representing individuals and businesses of the Gulf Kelly Dadich Coast, agreeing to pay $7.8 billion in damages. After two years, including a yearlong Regional Sales Managers moratorium, deepwater drilling has finally started to regain momentum in the Gulf. Ryan Sneltzer The Deepwater Horizon incident was terrible, in the loss of 11 human lives and the Dan Sisko damage to the ecosystem. Afterward, however, the industry seemed to suffer from a Audience Development Manager piling-on effect. The PG&E pipeline explosion in San Bruno, Calif. The Enbridge spill in Alexis R. White Marshall, Mich. Exxon’s Silvertip pipeline leak near Billings, Mont. It seemed we were reporting a new incident every other week. Web & Interactive Manager Mark Gorman While pipelines remain the safest method of transporting oil and gas, these events sparked a vigorous campaign against the industry. Yet, the fears that opponents spread Conference Event Coordinator about oil and gas development and transportation pose an opportunity to enlighten. Vicki Losh The United States consumed 19.1 million barrels of petroleum products per day in 2010, according the U.S. Energy Information Administration, and 49 percent of that Editorial Advisory Board was imported from other countries. While a significant portion of U.S. petroleum im- Cortez Perotte ports originated in the Middle East and Venezuela, the majority (25 percent) came from Pipeline Product Engineer/Industry Representative, Caterpillar Inc. Canada. Expanding that relationship by approving the Keystone pipeline is a no-brainer, but Todd Porter the U.S. Senate failed to speed up approval of the project during a March 8 vote. Law- Vice President of Business Development, New Century Software Inc. makers vowed to try, try again. Expanding production of the shale plays should also take little thought. A study by Eric Skonberg Cleveland State University, released Feb. 28, reported that shale drilling could add $5 Principal Engineer, Trenchless Engineering Corp. billion to Ohio’s economy by 2014 and add about 66,000 jobs. Penn State conducted a Don W. Thorn similar study in 2011 that showed broad economic benefits from activities in the Marcel- President, Welded Construction LP lus shale. Indeed, expansion warrants caution. With such rapidly developing technol- Kevin Waschuk ogy, the industry must take strides to maintain safety and educate the public about the Vice President, Waschuk Pipe Line Construction Ltd. processes used in extracting oil and gas from shale. Bob Westphal Growth promotes growth. In the coming year, the oil and gas industry has a tremen- Senior Vice President, Michels Corp. dous opportunity to continue expanding, but first it must dispel fears and demonstrate Editorial & Advertising Offices safe practices. Education is crucial in winning over public appeal. 1770 Main St., P.O. Box 190 Peninsula, OH 44264 USA (330) 467-7588 • Fax: (330) 468-2289 www.napipelines.com e-mail: [email protected] Reprints Brad Kramer Wright’s Media Associate Editor Ph: 877-652-5295 [email protected] Fax: 281-419-5712 BPA Worldwide Membership Applied for February 2012 6 North American Oil & Gas Pipelines | MARCH 2012 napipelines.com North America News BP Settles With Gulf Coast Group for $7.8 Billion Agreement to Resolve Economic Loss and Medical Claims From 2010 Oil Spill BP will pay $7.8 billion to ease the damage from the 2010 Deepwater Horizon oil spill in the Gulf Coast. The company announced it reached a settlement with the Plaintiffs’ Steer- ing Committee (PSC), subject to final written agreement, to resolve the substantial majority of legitimate economic loss and medical claims stemming from the tragedy. The PSC acts on behalf of individual and business plaintiffs in the Multi-District Litigation proceedings pend- ing in New Orleans (MDL 2179). “From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region, and we’ve worked hard to deliver on that commitment for nearly two years,” said Bob Dudley, BP Group CEO. “The pro- posed settlement represents significant prog- ress toward resolving issues from the Deepwa- ter Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast.” BP estimates that the proposed $7.8 billion BP has agreed to a settlement with the group associated with the Gulf Coast region settlement will be paid from a $20 billion trust, affected by the 2010 Deepwater Horizon oil spill. (Photo courtesy of BP p.l.c.) which was established to satisfy claims arising from the oil spill. The settlement includes a commitment of $2.3 billion to help resolve economic loss related to the accident and oil spill. Other costs to be paid claims related to the Gulf seafood industry. from the Trust include state and local government claims, Prior to the proposed settlement, BP had spent more than state and local response costs, natural resource damages and $22 billion toward meeting its commitments in the Gulf. BP related claims, and final judgments and settlements. It is not has paid out more than $8.1 billion to individuals, businesses possible at this time to determine whether the $20 billion and government entities. In addition, BP has spent approxi- Trust will be sufficient to satisfy all of these claims as well mately $14 billion on operational response. as those under the proposed settlement. Should the Trust This proposed settlement is not expected to result in any not be sufficient, payments under the proposed settlement increase in the $37.2 billion charge (which included the would be made by BP directly. $20 billion charge taken in respect of the trust) previously The proposed settlement does not include claims against recorded in BP’s financial statements. BP’s current expecta- BP made by the U.S. Department of Justice or other federal tion is that the provision for litigation and claims, which in- agencies (including under the Clean Water Act and for Natu- cludes the claims covered by this proposed settlement, will ral Resource Damages under the Oil Pollution Act) or by the increase by approximately $2.1 billion with no net impact states and local governments. The proposed settlement also to either the income or cash flow statements, because this excludes certain other claims against BP, such as securities and is a settlement that is expected to be payable from the Trust.