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U.S. gas line capacity rising EIA report shows 15 bcf in new capacity added to grid in ‘07, mostly Rockies, Texas production By Eric Lidji Petroleum News
A pack of new expansion and construction projects completed last year added more capacity to the domestic natural gas pipeline grid than in any year in at least a decade, according to a new government report.
The 50 interstate projects brought into service in 2007 added nearly 15 billion cubic feet of daily capacity to the natural gas pipeline system covering the United States, according to a report from the Energy Information Administration, the statistical arm of the U.S. Department of Energy.
“The amount of pipeline construction activity we’re seeing now and going forward for the next couple of years is really exceptional,” said Damien Gaul with the EIA.
The recent upswing can be traced to a near doubling of natural gas production in Texas and the Rocky Mountain states between 1998 and 2006, even as production decreased nationally by 1 percent during that same time, according to the report.
Several of the new pipeline projects completed last year connected to new liquefied natural gas import terminals built in the Gulf of Mexico to handle overseas supplies coming to the United States by tanker.
Grid helps disperse supply By detailing new and proposed additions to the Lower 48 pipeline grid, the report profiles the market that a large gas pipeline headed south from the North Slope of Alaska would hope to enter, a market where pipeline companies are rapidly responding to demand.
Whereas recent pipeline construction connected to new industrial facilities, much of the construction this past year connected to new gas fields under development, Gaul said.
The increase in pipeline capacity last year follows a trend going back to 2005, when the domestic grid saw year-over-year growth for the first time since 2002, a powerhouse year with nearly 13 bcf of new daily capacity added along more than 3,500 miles of pipeline.
The interstate pipeline grid currently moves more than 155 bcf of gas along 212,000 miles of pipe every day, creating what the report describes as “nearly a continental phenomenon linking most production regions, including those in Canada, to multiple market centers and associated consuming regions.”
Those interconnections promote competition among different basins and allow producers to disperse large gas fields, like those on the North Slope, across the country, rather than having to flood a single nearby region with new supply, according to Gaul.
“If you didn’t have a grid, it would be very difficult to find a market to take all that gas,” Gaul said.
The new capacity added last year is highly regional.
The southwest and Gulf Coast region covering Texas and its four neighboring states added 7 bcf of natural gas capacity last year, the largest single year increase in at least a decade for the area.
Meanwhile, the six-state Midwest region around Chicago and the Great Lakes saw only 460 million cubic feet of new gas capacity last year, the smallest annual increase for that region since reporting began in 1998. States in the southeast saw similar slow growth.
Scope of Alaska pipelines The report also highlights the scope and scale of several proposed projects in Alaska, not only the two competing large natural gas pipelines, but also a smaller, in-state pipeline.
As has been repeatedly claimed, either of the two proposed mainlines for connecting the North Slope to markets in the Lower 48 would most likely become the largest private construction project in North American history.
A 1,700-mile pipeline from the North Slope to Alberta would be as long as all of the new domestic pipelines brought online last year.
And at $26 billion, the low end of a broad cost range topping out around $41 billion, the Alaska gas pipeline would cost roughly as much to build as the 200 interstate pipeline projects currently in planning stages for the next three years.
But those projects, some of which are mutually exclusive, would bring an additional 103 bcf of gas online every day through 10,100 miles of pipe. By comparison, a large Alaska gas pipeline headed through Canada would carry 4.5 bcf in daily capacity, the same size as the tenth largest gas project brought online in 2007.
A big Alaska gas pipeline into Canada has long been expected to dwarf industry standards for cost, but even a relatively smaller in-state gas pipeline would rank among the largest capital projects in the industry.
At $3.3 billion or more, an 800-mile in-state gas pipeline proposed by the Enstar Natural Gas Co. and the Alaska Natural Gas Development Authority would qualify as one of the larger capital projects in the industry. The combined cost of all 50 interstate gas pipeline projects built in the Lower 48 last year totaled around $4.3 billion.
New phase of Rockies Express The longest and most expensive of those projects, the second phase of the Rockies Express Pipeline in Wyoming, carries 750 million cubic feet of gas each day through 192 miles of pipeline at a cost of around $560 million.
As the largest pipeline built in the United States in more than 20 years, the Rockies Express will eventually run 1.8 bcf a day from Colorado to locations as far east as Pennsylvania, connecting with more than 25 existing pipelines along the way.
By establishing a new infrastructure corridor across the country, the Rockies Express provides access to new markets for producers in Colorado and Wyoming who had previously been forced to sell regionally or shut-in production, Gaul said.
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