Enbridge Pipeline Expansion
The Canadian Press
CALGARY - The race to ship crude to Gulf Coast refineries has intensified, as Enbridge Inc. announced plans to invest nearly $4 billion on two expanded U.S. pipeline proposals.
Canada's largest crude transporter (TSX:ENB) said late Monday its proposed Seaway project between the oversupplied Cushing, Okla., storage hub and the Gulf will be scaled up by 450,000 barrels per day, bringing that project's total capacity to 850,000 barrels per day.
And its proposed Flanagan South line from the Chicago area down to Cushing has been expanded to a 36-diameter line with a capacity of 585,000 barrels per day. Enbridge had earlier envisioned using a 30-inch diameter pipe. Together with its existing Spearhead pipeline, customers will be able to ship 775,000 barrels per day from Flanagan, Ill. to Cushing.
The two projects will give producers in Western Canada and in the booming Bakken region of Saskatchewan, North Dakota and Montana "timely, economical and reliable options to deliver a variety of crudes to refinery hubs throughout the heart of North America and now as far as the Gulf Coast," said CEO Pat Daniel in a release.
"The commitments secured in these open seasons will support additional infrastructure to meet the growing transportation needs of these producers and the U.S. Gulf Coast refiners, contributing to North America's energy security into the foreseeable future."
Enbridge's main rival, meanwhile, has its own plans to help relieve the supply glut at Cushing that has depressed North American crude prices and eroded the bottom line of producers recently.
TransCanada Corp. (TSX:TRP) recently announced plans to build the most urgently needed portion of its controversial Keystone XL oil pipeline as a US$2.3-billion stand-alone project that would connect crude from Cushing with Texas refineries.
That project is targeted to come into service in mid- to late-2013.
The move came after the Obama administration rejected the entire US$7.6-billion undertaking, which would have connected crude from Alberta's oil sands to the U.S. Gulf Coast, passing six U.S. states along the way.
The president said a tight deadline imposed by congressional Republicans didn't allow enough time to review a new route around an ecologically sensitive region in Nebraska, so his administration had no choice but to reject the whole project.
Because the separate Gulf project would not cross an international border, it doesn't need a Presidential Permit from the U.S. State Department to proceed.
Last week, U.S. President Barack Obama pushed for the speedy approval for the southern leg of TransCanada's Keystone XL pipeline as he insisted oil has an important place in his national energy plans.
TransCanada intends to refile for a new Presidential Permit for the northern part of the line ending up in Steele City, Neb., as soon as it works out a new route through Nebraska.
Scotia Capital Matthew Akman said the Enbridge expansions could raise that company's growth rate by as much as 15 per cent a year through 2015 — and also puts it in a superior position to TransCanada.
"We see the potential for Enbridge to announce success in its second Gulf Coast Access open season in the coming weeks, despite TransCanada's recent announcement of its own Cushing-to-Gulf Coast" plans, Akman said in a note to clients.
"And, while TransCanada's preliminary proposal for an East Coast oil pipeline stole investor attention last week, it is Enbridge that is better positioned for delivering Alberta volumes to Eastern Canada and the U.S."
Enbridge's Flanagan pipeline, expected to be in service by mid-2014, will be built along the route of its existing Spearhead pipeline from southeast of Chicago to Oklahoma.
The existing Seaway pipeline's former south-to-north flow is being reversed to bring crude from Cushing south, and its initial phase is expected to be in service around mid-year. The twinning project announced Monday would be in service in 2014.
Both projects will cost Enbridge $3.8 billion, including $2.8 billion for the Flanagan project and $1 billion for the twin line and extension of Seaway, which is partly owned by Enterprise Products Partners LP.
SEE OTHER TOP STORIES IN THE ENERGY DIGITAL CONTENT NETWORK
The projects are good news for Enbridge's Canadian Mainline, as they will draw more oil through the major conduit connecting Western Canadian crude to the East, UBS Investment Research analyst Chad Friess wrote in a note to clients.
"In particular, we see further investments in gathering infrastructure for the U.S. Bakken, which, along with growth in Canadian light/heavy should necessitate an expansion of the Mainline itself," he wrote.
UBS has increased its post-2014 earnings forecast by five per cent. Between 2014 and 2015, it now expects Enbridge's diluted earnings per share will rise 13 per cent to $2.19 because of the two U.S. projects and the investments that results.
Enbridge had previously signalled expansions to its projects were possible, so the recent news did not come as a surprise, wrote Desjardins Securities analyst Pierre Lacroix in a research note.
"However, the announcement of the southern leg of Keystone XL may have tempered some optimism regarding ENB’s endeavours," he said.
Enbridge operates about 24,613 kilometres of crude pipeline, delivering on average more than 2.2 million barrels per day of oil and liquids.
Its shares rose 22 cents to $38.45 in afternoon trading on the Toronto Stock Exchange.
Why Transmission & Distribution Utilities Need Digital Twins
As with any new technology, Digital twins can create as many questions as answers. There can be a natural resistance, especially among senior utility executives who are used to the old ways and need a compelling case to invest in new ones.
So is digital twin just a fancy name for modelling? And why do many senior leaders and engineers at power transmission & distribution (T&D) companies have a gnawing feeling they should have one? Ultimately it comes down to one key question: is this a trend worth our time and money?
The short answer is yes, if approached intelligently and accounting for utilities’ specific needs. This is no case of runaway hype or an overwrought name for an underwhelming development – digital twin technology can be genuinely transformational if done right. So here are six reasons why in five years no T&D utility will want to be without a digital twin.
1. Smarter Asset Planning
A digital twin is a real-time digital counterpart of a utility’s real-world grid. A proper digital twin – and not just a static 3D model of some adjacent assets – represents the grid in as much detail as possible, is updated in real-time and can be used to model ‘what if’ scenarios to gauge the effects in real life. It is the repository in which to collect and index all network data, from images, to 3D pointclouds, to past reports and analyses.
With that in mind, an obvious use-case for a digital twin is planning upgrades and expansions. For example, if a developer wants to connect a major solar generation asset, what effect might that have on the grid assets, and will they need upgrading or reinforcement? A seasoned engineer can offer an educated prediction if they are familiar with the local assets, their age and their condition – but with a digital twin they can simply model the scenario on the digital twin and find out.
The decision is more likely to be the right one, the utility is less likely to be blindsided by unforeseen complications, and less time and money need be spent visiting the site and validating information.
As the energy transition accelerates, both transmission and distribution (T&D) utilities will receive more connection requests for anything from solar parks to electric vehicle charging infrastructure, to heat pumps and batteries – and all this on top of normal grid upgrade programs. A well-constructed digital twin may come to be an essential tool to keep up with the pace of change.
2. Improved Inspection and Maintenance
Utilities spend enormous amounts of time and money on asset inspection and maintenance – they have to in order to meet their operational and safety responsibilities. In order to make the task more manageable, most utilities try to prioritise the most critical or fragile parts of the network for inspection, based on past inspection data and engineers’ experience. Many are investigating how to better collect, store and analyze data in order to hone this process, with the ultimate goal of predicting where inspections and maintenance are going to be needed before problems arise.
The digital twin is the platform that contextualises this information. Data is tagged to assets in the model, analytics and AI algorithms are applied and suggested interventions are automatically flagged to the human user, who can understand what and where the problem is thanks to the twin. As new data is collected over time, the process only becomes more effective.
3. More Efficient Vegetation Management
Utilities – especially transmission utilities in areas of high wildfire-risk – are in a constant struggle with nature to keep vegetation in-check that surrounds power lines and other assets. Failure risks outages, damage to assets and even a fire threat. A comprehensive digital twin won’t just incorporate the grid assets – a network of powerlines and pylons isolated on an otherwise blank screen – but the immediate surroundings too. This means local houses, roads, waterways and trees.
If the twin is enriched with vegetation data on factors such as the species, growth rate and health of a tree, then the utility can use it to assess the risk from any given twig or branch neighbouring one of its assets, and prioritise and dispatch vegetation management crews accordingly.
And with expansion planning, inspection and maintenance, the value here is less labor-intensive and more cost-effective decision making and planning – essential in an industry of tight margins and constrained resources. What’s more, the value only rises over time as feedback allows the utility to finesse the program.
4. Automated powerline inspection
Remember though, that to be maximally useful, a digital twin must be kept up to date. A larger utility might blanche at the resources required to not just to map and inspect the network once in order to build the twin, but update that twin at regular intervals.
However, digital twins are also an enabling technology for another technological step-change – automated powerline inspection.
Imagine a fleet of sensor-equipped drones empowered to fly the lines almost constantly, returning (automatically) only to recharge their batteries. Not only would such a set-up be far cheaper to operate than a comparable fleet of human inspectors, it could provide far more detail at far more regular intervals, facilitating all the above benefits of better planning, inspection, maintenance and vegetation management. Human inspectors could be reserved for non-routine interventions that really require their hard-earned expertise.
In this scenario, the digital twin provides he ‘map’ by which the drone can plan a route and navigate itself, in conjunction with its sensors.
5. Improved Emergency Modelling and Faster Response
If the worst happens and emergency strikes, such as a wildfire or natural disaster, digital twins can again prove invaluable. The intricate, detailed understanding of the grid, assets and its surroundings that a digital twin gives is an element of order in a chaotic situation, and can guide the utility and emergency services alike in mounting an informed response.
And once again, the digital twin’s facility for ‘what-if’ scenario testing is especially useful for emergency preparedness. If a hurricane strikes at point X, what will be the effect on assets at point Y? If a downed pylon sparks a fire at point A, what residences are nearby and what does an evacuation plan look like?
6. Easier accommodation of external stakeholders
Finally, a digital twin can make lighter work of engaging with external stakeholders. The world doesn’t stand still, and a once blissfully-isolated powerline may suddenly find itself adjacent to a building site for a new building or road.
As well as planning for connection (see point 1), a digital twin takes the pain out of those processes that require interfacing with external stakeholders, such as maintenance contractors, arborists, trimming crews or local government agencies – the digital twin breaks down the silos between these groups and allows them to work from a single version of the truth – in future it could even be used as part of the bid process for contractors.
These six reasons for why digital twins will be indispensable to power T&D utilities are only the tip of the iceberg; the possibilities are endless given the constant advancement of data collection an analysis technology. No doubt these will invite even more questions – and we relish the challenge of answering them.