US pipeline giant digs in on North Dakota expansion

Opponents of the Dakota Access oil pipeline march out of their main camp near Cannon Ball. Thousands opposed the pipeline in support of Native American tribes and environmental groups. (Reuters)
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Updated 03 July 2020

US pipeline giant digs in on North Dakota expansion

  • Real-time information on fuel demand is the ultimate prize for hard-pressed analysts — but it’s proving hard to find

NEW YORK: US pipeline company Energy Transfer has taken the rare step of invoking force majeure — normally used in times of war or natural disaster — to prevent oil firms from walking away from a proposed expansion of the controversial Dakota Access pipeline, according to two sources familiar with the matter.

Energy Transfer wants to nearly double the size of the line, and some companies that signed up say it is no longer necessary due to the sharp fall in US oil production after the coronavirus pandemic. North Dakota is one of the costliest spots in the US to produce crude, and its output has dropped by about one-third from last year, more than most other oil-producing states.

DAPL is the largest pipeline running out of North Dakota’s Bakken shale basin. It has capacity to ship 570,000 barrels per day (bpd) of crude to its endpoint in Illinois. Users say an expansion to 1.1 million bpd is unlikely to be filled because the state’s production is not expected to rebound soon.

“Honestly, DAPL is not needed,” said one customer who committed to space on the expanded line, speaking on condition of anonymity.

“They’re trying to build a house that all these people signed up for. Even if there’s no longer a need for the house, you can’t really walk away from it. Would I like to get out? Yes, for sure.”

Energy Transfer, however, has invoked force majeure because it could not get the permits by a certain date, according to one shipper on the line and another familiar with the declaration. That buys the company more time to get regulatory approvals and prevents customers from walking away from their commitments.

The company declined to comment on the force majeure. Energy Transfer spokeswoman Lisa Coleman reiterated previous company statements that it has received enough interest to increase the pipeline’s capacity.

Pipelines are generally built after companies find customers willing to commit to shipping oil. That helps pipeline builders to line up financing for such projects, which take years to complete. Contracts to use future pipeline space usually allow customers to walk away from those agreements when substantial delays occur.

In an April filing with Illinois regulators, Energy Transfer said that “not one shipper has sought to withdraw from an existing agreement” despite the oil downturn and that demand exceeds DAPL’s current capacity. The company said in legal filings that the downturn is temporary.

North Dakota’s production has dropped by 450,000 bpd, down from a peak of nearly 1.5 million bpd reached last year, according to the Energy Information Administration’s data.

The expanded line is expected to enter service in late 2021.

At least a half-dozen US oil pipeline projects have been put on hold indefinitely so far this year, according to US Energy Department data. US production has dropped from a record
12.9 million bpd in late 2019 to roughly 11 million bpd.

DAPL drew thousands of people to North Dakota in 2016 in support of Native American tribes and environmental groups protesting the line’s initial construction. It eventually started in mid-2017 after months of delays.

To expand the line, Energy Transfer needs approval from regulators in North Dakota, South Dakota, Iowa and Illinois.

The first three have said yes, but environmental groups brought numerous legal challenges in Illinois starting a year ago. They argued the application was improperly filed and that an expansion increases the risk of large-scale leaks. The challenges may force the company to resubmit its application.

“They’re in force majeure right now because they did not get the permits,” one source with direct knowledge of the matter said.

An administrative law judge in Illinois could issue findings on the legal dispute as early as this month, though there is no timeline for that report. Once those findings are released, and both Energy Transfer and the opposition respond, the Illinois Commerce Commission will vote on whether the expansion can go forward. That vote has not been scheduled.

Even if producers wanted to fight Energy Transfer’s declaration of force majeure, they may be hesitant to initiate legal action due to the time and cost involved, said Ted Borrego, who has practiced oil and gas law for over 45 years and teaches at the University of Houston Law Center.

“Rarely will you see a shipper trying to bail out of a contract,” he said.

DAPL customers such as Hess Corp. and refiner Marathon Petroleum, which invested in the original DAPL project, declined to comment specifically on any contractual agreements on DAPL or on the proposed expansion. Continental Resources, another large Bakken producer, did not respond to requests for comment.

“Hess believes that DAPL has and will continue to be a critical piece of US energy infrastructure, which allows for transportation of crude oil into expanded domestic markets in the US and abroad,” company spokesman Rob Young said.

Bakken crude producers generally break even on drilling at a price of about $46.50 a barrel, according to Deutsche Bank analysts, higher than other parts of the country. The US crude oil benchmark is trading just below $40, after averaging just $17.50 in April and $33.70 in May.

While output in North Dakota has rebounded somewhat from its fall in May to less than 1 million bpd, production is expected to remain lower than its peak.

“At the moment I don’t think the demand is there from shippers for more DAPL, given the decline in Bakken output,” said Sandy Fielden, director of oil and products research at Morningstar in Austin, Texas. 


Spanish movie studio Minimo to invest $250m in Saudi joint venture

Updated 20 min 34 sec ago

Spanish movie studio Minimo to invest $250m in Saudi joint venture

  • Minimo VFX will open a headquarters in Riyadh in early 2022
  • Minimo helped produce The Dark Knight, Avatar and Harry Potter

RIYADH: Spanish film studio Minimo VFX plans to invest $250 million in the Saudi market through a joint venture with a local company, said CEO Felix Balbas.

“Our partnership with the Saudi Next Level Co. consists of opening a regional headquarters in Riyadh and localizing the film content industry, as well as training Saudis and empowering them globally,” Felix told Asharq on Thursday.

Minimo was involved in the production of films including The Dark Knight, Avatar, The Mission, Doom, and Harry Potter.

It will begin operations in Riyadh in early 2022 with a team of about 45 employees, offering production, logistical and advisory services for visual effects, long and short films, television shows and advertisements, he said.

Filmmaking and the screening of films is a recent phenomenon in the Kingdom after Saudi Arabia allowed the opening of cinemas in 2018.

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Saudi Arabia to auction mining licenses in 2022

Updated 18 June 2021

Saudi Arabia to auction mining licenses in 2022

RIYADH: Saudi Arabia plans to auction two major mining licenses in 2022 for commodities including gold, copper and zinc, as the Kingdom aims to triple the mining
sector’s contribution to the national gross domestic product (GDP) to SR240 billion ($64 billion) and double the number of jobs to 470,000 by 2030.
The auction was announced by Vice Minister for Saudi Mining Affairs Khalid Al-Mudaifer during an interview with S&P Global on the sidelines of the Gulf Petrochemicals and Chemicals Association (GPCA) Leaders Forum in Dubai this week.
Looking ahead, Al-Mudaifer said: “We expect to see an increase in international investment in mining, particularly because demand for minerals around the world is growing fast.
According to geological surveys dating back 80 years, the Kingdom has an estimated reserve of untapped mining potential valued at $1.3 trillion.” Saudi Arabia’s mining industry has already attracted some major foreign investors. American industrial corporation Alcoa has a 25.1 percent stake in two companies, Ma’aden Bauxite and Alumina and Ma’aden Aluminum, as part of $10.8 billion joint venture with the Saudi Arabian Mining Company (Ma’aden) located in Ras al-Khair Industrial City in the Eastern Province.
The Mosaic Company, a fertilizer producer, has a 25 percent stake in the $8 billion Ma’aden Wa’ad Al-Shamal Fertilizer Production Complex located in Wa’ad Al Shamal Minerals Industrial City in the north of Saudi Arabia. Furthermore, Barrick Gold has a 50 percent stake with Ma’aden in the Jabal Sayid underground Copper Mine and Plant.
Al-Mudaifer said that a new mining law, which came into force on Jan. 1, 2021, will help attract more foreign investors because it treats them equally with local investors.
“We have already received a number of applications for exploration licenses from locals and are also in conversations with a number of international mining businesses,” he said.
Speaking at the GPCA forum, Al-Mudaifer described how the Kingdom’s mining sector remained resilient throughout the pandemic.
“The government’s robust response to controlling the pandemic, paired with our thoughtful approach to executing the country’s mining strategy, has enabled us to continue moving forward with our industry transformation,” said Al-Mudaifer.
He also highlighted the launch of the National Geological Database, which provides online access to 80 years of national records of geological, geophysical and geochemical information, and the introduction of a new web-based platform called Ta’adin, which will be the single point of access for mining license applications, issuance and information.
Saudi Arabia plans to launch a comprehensive geological survey to map the country’s mining potential. “The mining sector recently invested $500,000 to launch our Regional Geological Survey Program, designed to collect the essential data required for mineral exploration in the Kingdom,” Al-Mudaifer told S&P Global.
“The five-year program will conduct geophysical and geo-chemical surveys and create detailed mapping of more than 700,000 square kilometers of the mineral-rich Arabian Shield area in Saudi Arabia,” he said.
The Vision 2030 reform plan identified the mining sector as a potential third pillar of the Kingdom’s industrial growth, alongside petroleum and petrochemicals. The country is investing SR14 billion to develop the sector.
“We have emerged more confident than ever that mining in the Kingdom is on the fast track to becoming the third pillar of Saudi industry.” the vice minister said.
About $45 billion in private and public sector investments have gone into the mining sector over the past decade, mainly in phosphate and aluminum production.
“Saudi Arabia has some of the world’s largest reserves of phosphate, and so we are investing in major phosphate projects such as Ma’aden’s large-scale phosphate complex, Phosphate 3,” Al-Mudaifer said.
The $6.4 billion Phosphate 3 expansion will make Ma’aden one of the top three global phosphate fertilizer producers and Saudi Arabia the second largest phosphate fertilizer exporter worldwide.


Egypt to start electric car production from mid-2022

Updated 18 June 2021

Egypt to start electric car production from mid-2022

  • Thirteen electric vehicles will be tested on Egyptian streets from next month

CAIRO: Egypt will begin testing electric cars on the country’s streets from July, ahead of plans to launch full-scale production of the vehicles from mid-2022.

Thirteen imported electric vehicles will be tested on Egyptian streets from next month, Hisham Tawfik, minister of the Egyptian public enterprise sector, said while attending the launch of the Nasr E70 electric car.

Nine of the electric cars will be tested by drivers nominated by Uber, the global ride-hailing company, he added.

The Nasr E70 is scheduled to start production in mid-2022 with the El Nasr Automotive Manufacturing Company, an affiliate of the Ministry of Public Enterprise Sector’s Metallurgical Industries Company.

Tawfik said that the ministry began studying the electric car production project in mid-2019 as part of efforts to reform and develop its affiliated companies, including the revival of El Nasr Automotive Company.

FASTFACT

E70

The Nasr E70 is scheduled to start production in mid-2022 with the El Nasr Automotive Manufacturing Company.

The project is in line with the global move toward electric cars and aligns with President Abdel Fattah El-Sisi’s directives to localize the manufacture of vehicles used for clean energy.

The Dongfeng Corporation, one of the largest automobile producers in China, is partnering in the production of the Nasr E70 vehicle, the minister said.

An agreement between El-Nasr and Dongfeng was signed in June 2020 following months of negotiations.

The Ministry of Public Enterprise Sector recently released images of the first electric car of its kind in the country.

El Nasr CEO Hani El-Khouly said that three types of electric car models will be available in Egypt, based on battery capacity.

Batteries initially will be made in China, with production later shifting to Egypt.

Trials of the imported cars will continue for up to four months under a range of Egyptian conditions and with different drivers.

The Nasr E70 can reach a speed of 145 kilometers per hour and travel up to 400 km on a single charge.

El-Khouly said that a delegation from China will arrive in Egypt in July to follow up on the tests.

Government subsidy of the car will total about EGP50,000 ($13,333) to support the local market, he said.


From Australia to Hong Kong, internet outages disrupt services

Updated 18 June 2021

From Australia to Hong Kong, internet outages disrupt services

  • Many of the outages were reported by people in Australia trying to do banking, book flights and access postal services.
  • Brief internet service outages are not uncommon and are only rarely the result of hacking or other mischief

SYDNEY: A wave of brief Iinternet outages hit the websites and apps of dozens of financial institutions, airlines and other companies across the globe Thursday.

The Hong Kong Stock Exchange said in a post on Twitter Thursday afternoon Hong Kong time that its site was facing technical issues and that it was investigating. It said in another post 17 minutes later that its websites were back to normal.

Internet monitoring websites including ThousandEyes, Downdetector.com and fing.com showed dozens of disruptions, including to US-based airlines.

Many of the outages were reported by people in Australia trying to do banking, book flights and access postal services.

Australia Post, the country’s postal service, said on Twitter that an “external outage” had impacted a number of its services, and that while most services had come back online, they are continuing to monitor and investigate.

Many services were up and running after an hour or so but the affected companies said they were working overtime to prevent further problems.

Banking services were severely disrupted, with Westpac, the Commonwealth, ANZ and St. George all down, along with the website of the Reserve Bank of Australia. Services have mostly been restored.

Virgin Australia said flights were largely operating as scheduled after it restored access to its website and guest contact center.

“Virgin Australia was one of many organizations to experience an outage with the Akamai content delivery system today,” it said. “We are working with them to ensure that necessary measures are taken to prevent these outages from reoccurring.”

Akamai counts some of the world’s biggest companies and banks as customers.

Calls to Akamai, which is headquartered in Cambridge, Massachusetts, but has global services, went unanswered.

The disruptions came just days after many of the world’s top websites went offline briefly due to a problem with software at Fastly, another major web services company. The company blamed the problem on a software bug that was triggered when a customer changed a setting.

Brief internet service outages are not uncommon and are only rarely the result of hacking or other mischief. But the outages have underscored how vital a small number of behind-the-scenes companies have become to running the internet.


International companies to invest in Egyptian green hydrogen projects, says minister

Updated 17 June 2021

International companies to invest in Egyptian green hydrogen projects, says minister

  • Egypt has signed MOU for 1GW green hydrogen project
  • Other EU companies set to partner with Egypt's private sector

RIYADH: International companies are interested in investing in green hydrogen production in Egypt, according to Minister of Electricity and Renewable Energy Mohamed Shaker.

“There are companies from the European Union that will enter into partnerships with the Egyptian private sector,” he said.

The Egyptian government has signed an MoU with Siemens for the first project to produce green hydrogen with a capacity of 1 megawatt, doubling to 2 megawatts over five years, he said.

“Green hydrogen will be the world’s fuel in the next few years, and I see that Egypt started early in this field,” he added.

Work is currently underway to develop and formulate a strategy for the hydrogen industry in Egypt through a ministerial committee in which the Ministry of Petroleum and Mineral Resources participates as a main member, according to previous statements by the Minister of Petroleum and Mineral Resources Tarek El Molla.

Egypt is planning to invest up to $4 billion in a project to generate green hydrogen gas through water electrolysis, Shaker said this week.

The project is currently in the feasibility studies stage, in consultation with the Sovereign Fund of Egypt and a group of concerned ministries, and will be presented next week, he said.

The United States is planning to increase funding to Egypt to help it convert to solar energy and move away from fossil fuels, US special envoy for climate John Kerry said in Cairo on Wednesday.

Egypt is planning to double the state’s funding for green projects to 30 percent of its overall investment plan during the fiscal year 2021/2022 and to raise it to 50 percent by 2024/2025.