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I N N O V AT I O N S • J A N U A R Y -
M A R C H 2 0 1 4
Changing Directions:
Repurposed Pipelines Meet
Growing Energy Demands
M A R K E T R E P O R T
The oil and gas industry’s approach to change has often been
compared to the formation of fossil fuels themselves: slow, steady, and
done under pressure.
But these days, energy companies are stepping up the pace.
For one thing, they’re being forced to respond to altered market
conditions arising from new shale and tar sands activity. Take for
example the production growth in the Marcellus Shale, which covers
approximately 95,000 square miles (152,883 km) of the northeastern
United States. When a region this size goes from being a natural
gas importer to a natural gas exporter in just a few short years,
infrastructure changes need to be made… and fast.
Yet building a new pipeline to carry the new flow
is a proposition that can easily run into the billions of
dollars and take years to complete. The Keystone XL
pipeline, announced in 2008, is a prime example, with
an estimated cost of over US$7 billion, and a fate that
remains uncertain. Instead, to accommodate the rapid
change, the industry is taking a less expensive, quicker
route: the repurposing of existing lines.
Reversing Fortunes
Before the Marcellus boom, communities in
Pennsylvania and West Virginia relied largely on natural
gas from the western United States for heat and the
raw materials for manufacturing. But with natural gas
now pouring out of the enormous shale formations, the
region has acquired a home field advantage. Because this
new local production is more than sufficient to meet
current local demand, there’s enough capacity left over
to ship some out to other states and even up to Canada.
It took a pipeline reversal to change the area’s role
from energy importer to exporter: By flipping the flow
of a southbound pipeline to run northward, the pipeline
operator is now ferrying Marcellus gas to power-hungry
markets in southern Ontario and Quebec.
While reversing pipelines may be expedient, there
are additional risks that can occur when a pipeline
is modified to “do something it wasn’t expected to
do in the first place,” says Dr. Mike Kirkwood, T.D.
Williamson (TDW) Director of Business Development,
Transmission. With increasing demand for energy plus
the ardent development of unconventional resources
and new products placing more stress on existing
oil and gas transportation systems than ever before,
Kirkwood believes the number of pipeline reutilizations
will continue to increase in the future. He wants to
make sure operators are taking the appropriate integrity
measures so that reversed and repurposed pipelines don’t
suffer unexpected consequences.
Case in point, the recent pipeline disasters in
Michigan and Arkansas. Both pipelines had been
repurposed to transport diluted bitumen – dilbit – from
Canada’s tar sands into the United States before they
ruptured, each causing millions of dollars of damage.
Although both pipelines had undergone government-
required inspections, the risk assessment criteria used
didn’t appropriately characterize the weaknesses that
ultimately produced their failures.
With the United States recently approving a twin
reversal and expansion project to cross the Canadian
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