Page 38 - Plastics News March 2017

INTERNATIoNAL NEWS

Judicial review ordered for Chicago PE pipe project

llinois utility regulators ordered another round of low-income residents who contend the board failed to do
Ihearings March 1 into massive cost overruns of a 20-year its job of keeping heating costs affordable for customers
program to replace old and leaky gas mains in Chicago already struggling to pay bills. After listening to public
as rate payers complain the steeper price tag could comments, the commission voted unanimously to direct
drastically increase heating bills. an administrative law judge to review the project and
hold hearings about prioritizing gas leaks, reevaluating
the budget and determining the average annual impact
on customer bills. The scope of the investigation is broad
and will delve into why costs remain stubbornly high
even after the natural gas utility came under the new
management of WEC Energy Group in 2015. Following
the meeting, Peoples Gas issued a statement saying it has
made significant improvements in rolling out its system
modernization program and it remains committed to
working with ICC and stakeholders.
“our modernization program replaces an outdated natural
gas delivery system, which consists of thousands of short
segments of cast and ductile iron pipe, some installed
Costs have skyrocketed to $6.8 billion, from a 2009 estimate more than a century ago,” the statement says. “The
of $2.6 billion, for the Peoples Gas project, which started benefits of the program will result in Chicagoans receiving
in 2011 and calls for replacing 2,000 miles of cast and the safe, reliable and modern natural gas distribution
ductile iron pipe with polyethylene pipe by 2030. The utility system they deserve.” Based in Milwaukee, WEC Energy
got legislative approval to charge the system’s 830,000 Group acquired Peoples Gas and other Midwest utilities
customers for the program aimed at improving safety and from Chicago-based Integrys Energy Group in 2015.
reliability. But critics say the project has been plagued by
delays, mismanagement and budget overruns, and that Hyundai and Ahdaf to develop
something needs to be done to contain costs. petrochem in Iran
Tony Radoszewski, president of the Plastics Pipe Institute,
a trade group based in Irving, Texas, doubts the price of Hyundai Engineering (HEC) and Iran’s state-run Ahdaf
the PE pipe is a big factor in the escalating cost of the Investment Company have signed a US$3.2 bln agreement
Chicago project. “Pipe is one of the smallest components to develop the second phase of the Kangan petrochemical
of an installation. “Labor, machinery and rehabilitation of plant, making HEC one of the biggest foreign investors
roads after you tear them up are going to be your biggest in Iran’s downstream. The second phase of Kangan
costs, not the pipe. In the whole scheme of a project, pipe petrochemical projects is planned to produce 1 mln tpa of
is one of the lowest percentages of the total bids, and ethylene, 500,000 tpa of mono-ethylene glycol, 350,000
the price of polyethylene hasn’t fluctuated that greatly tpa of high-density polyethylene and 350,000 tpa of low-
in the last five to six years.” Customers could see their density polyethylene. The Ahdaf Investment Company, a
utility bills double in the next 14 years, according to Illinois subsidiary of the oil Pension Fund Investment Company, has
Attorney General Lisa Madigan. However, Peoples Gas says already invested €120 mln to cover 30% of the cost of the
it expects bills to increase by 2.7 percent a year, which is first phase, which is aimed at extracting gas liquids from
less than her estimate.Any rate hikes will be a hardship South Pars. Kangan is near Phase 12, which produces 65mn
for some customers. The Illinois Commerce Commission m³/d of gas. The deal, known as Phase II of the Kangan
(ICC) faced sharp criticism at its March 1 meeting from Petro Refining Complex, will be constructed in four years.

Plastics News | March 2017 38