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Planned and approved U.S. pipelines carry $28 billion price tag.

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Despite turmoil in the financial markets and oil prices that are the lowest since 2003, the U.S. natural gas industry appears likely to remain one of the stronger performers in the energy sector. Supporting this is the Energy Information Administration's (EIA) report, Additions to Capacity on the U.S. Natural Gas Pipeline Network: 2007.

In fact, figures in the report indicate that approximately 200 projects, representing a potential 10,100 miles of new pipeline and 103 Bcf/d of capacity, are being planned or have been approved by U.S. regulatory authorities. If all were actually completed, about 2% more pipeline miles would be added to the national pipeline grid and overall network capacity would increase by more than 38%. Current estimates for the cost of this effort total almost $28 billion.

The report states that development of a number of proposed new LNG import facilities along the coastline of the U.S., as well as some in Canada and Mexico, if realized, will continue to spark pipeline proposals. Each facility requires natural gas pipeline laterals to transport vaporized LNG to interconnections with interstate and intrastate natural gas pipelines. A substantial amount of pipeline capacity additions over the next three years will also come from the intense development activity in the Rockies and the northeast Texas producing areas.

The 14-page report also examines new natural gas pipeline capacity added to the U.S. natural gas pipeline system during 2007 and the areas of the country where those additions were concentrated.

Capacity additions in 2007 totaled nearly 14.9 Bcf/d of deliverability (Fig. 1). Moreover, about 1,700 miles of pipeline were installed, the highest in any year since 2003, (Fig. 2). The nation's interstate natural gas pipeline grid includes more than 155 Bcf/d of capacity and 212,000 miles of pipelines, while the intrastate capacity exceeds 32 Bcf/d and pipeline systems extend more than 76,000 miles.

The primary focus of this article is on regional review sections which identify areas where significant infrastructure growth has occurred and where activity through 2010 is likely to take place.

Central Region. The report indicates this region as having experienced significant infrastructure growth in the past several years as producers ramped up supplies, including unconventional production in the form of coalbed methane. The most significant infrastructure development in the central region is construction of Rockies Express, an interstate pipeline with planned capacity of 1.8 Bcf/d.

The 713-mile Rockies Express-West segment of the pipeline, which runs from the Cheyenne Hub in Wyoming to an interconnection with Panhandle Eastern Pipeline in Audrain County, MO received FERC approval on April 19, 2007 and was completed in May 2008. Rockies Express-East, now under construction, will extend the pipeline 638 miles to the Clarington Hub in Monroe County, OH. The Rockies Express-East portion is expected to reach full service in June. Along its proposed route, Rockies Express will interconnect with more than 25 intrastate and interstate pipelines transporting natural gas from the Gulf region as well as the Midcontinent, allowing for a readjustment of continental flows and price competition between Rockies production and supplies from other parts of the country.

As to planned projects, El Paso Corp. has received binding commitments for more than 1.1 Bcf/d from customers under 10-15-year contracts for the Ruby Pipeline Project. The California Public Utilities Commission approved plans by PG&E Corp. to bring in Rockies gas on the proposed $3 billion pipeline.

Colorado Interstate Gas Co. plans to expand its natural gas pipeline transmission system that serves the Raton Basin. The expansion will provide 130 MMcf/d of incremental firm capacity from the Las Animas County, CO area of the growing Raton Basin northward along the Front Range of Colorado to the Cheyenne Hub. In-service date for the 118mile, 16-inch line is targeted for mid 2010.

Midwest: Pipeline activity continues to lag, accounting for only 13 miles of new pipelines in 2007 and just 460 MMcf/d of new capacity, the lowest annual increase in capacity since at least 1998. Construction activity is projected to pickup in 2009-10, particularly with completion of the Rockies Express-East that will bring additional capacity into the Midwest. Future expansions also hold promise for increased construction activity.

Northeast: The level of pipeline construction is likely to increase in 2009-10 as long-planned system expansions take place and flows from new LNG facilities and existing facility expansions begin. Thirty-two projects, totaling as much as 8.5 Bcf/d of capacity, have been announced, submitted for regulatory review, or approved for development during 2008 and 2009. However, it is uncertain how many of these projects will be completed, especially those that have yet to be filed with the FERC.

Under consideration are numerous proposals to expand existing infrastructure to provide an outlet for increased supplies from the Rockies, once the Rockies Express is complete. National Fuel Gas Co. has proposed a 324-mile pipeline to deliver Rockies gas from Ohio to Coming, NY while Texas Eastern Transmission's Northern Bridge expansion would provide incremental capacity from Ohio to Oakford in the Philadelphia-Camden metropolitan area that is scheduled for completion in late 2009.

Another proposed outlet for increased supplies from the Rockies is Williams Companies' proposed Rockies Connector Pipeline, which would extend 250 miles, connecting its Transco Station 195 in York County, PA to the eastern terminus of the Rockies Express in Ohio. The owners of the Rockies Express Pipeline have proposed extending the pipeline further east to Linden, NJ by 2011.

Southeast: Several projects are either under construction or proposed to regulatory authorities to bring supplies from the Southwest. The expansions relate more to supplies from new unconventional resource development in northeastern Texas, Barnett Shale, and parts of Oklahoma and Arkansas including Fayetteville Shale.

For example, Texas Gas Transmission (TGT), which is a 5,900-mile pipeline owned by Boardwalk Pipeline Partners, began construction in mid 2008 on its Fayetteville and Greenville Laterals. The projects are designed to provide takeaway capacity for natural gas from the Fayetteville Shale area in north-central Arkansas. The Fayetteville lateral will be a 166-mile, 36-inch pipeline transporting up to 1.3 Bcf/d. Once completed, it will traverse several counties in Arkansas and interconnect with TGT in Coahoma County, MS. Capacity additions to the Fayetteville lateral will require construction of additional compression facilities expected to be completed in 2010. The Greenville lateral will be a 96-mile pipeline with a capacity of 768 MMcf/d, extending from TGT's mainline near Greenville, MS east to Kosciusko, MS. The total cost of the Fayetteville and Greenville Laterals project is expected to be $1.3 billion.

Significant capacity was added in the region in 2008 in conjunction with completion of the first of three natural gas storage caverns at the Southern Pines Energy Center in Green County, MS by SGR Holdings' subsidiary, SG Resources Mississippi L.L.C. It has 29 miles of dual 24-inch bidirectional natural gas pipelines and associated facilities that connect with the FGT system, Transco's Mobile Bay Lateral (4A), Destin and Gulf South pipelines. Mississippi Hub LLC is nearing completion of a large underground storage complex (eventually able to hold 30 Bcf) and related pipelines near Jackson, MS. The owners of the complex are constructing a short large-diameter pipeline with capacity of 1.2 Bcf/d.

Southwest and Gulf of Mexico: Production increases, particularly in the Barnett Shale play of the Fort Worth Basin and other areas of northeast Texas, have created greater demand for takeaway capacity and more pipeline interconnects. Completed projects in 2007 included a number of enhancements to the interstate grid and connections between market centers.

In 2008, Gulf South Pipeline Co. completed a natural gas pipeline with capacity of 1.7 Bcf/ from the Carthage area to the Perryville Hub in northeast Louisiana. There are multiple inter connections with other interstate pipelines such as ANR Pipeline Co. and Tennessee Gas Pipeline Co. The project includes an extension to Jackson, MS where it will interconnect with the Transcontinental Gas Pipe Line system, allowing shippers to access Northeast and Southeast markets.

Gulf South's Southeast Expansion to Mississippi includes 112 miles of 42-inch pipeline with 1.2 Bcf/d of capacity. This project will be expanded with addition of compression of up to 2.2 Bcf of peak-day transmission capacity. Gulf South expects this additional capacity to be in service shortly to coincide with the start of the Gulf Crossing project.

Capacity additions are scheduled in the next several years in the Southwest as a result of increased investment in LNG infrastructure. By the close of 2009, four new LNG import facilities are expected to have the capacity to deliver as much as 7.6 Bcf/d of vaporized LNG into the existing natural gas pipeline network in the region, most of it into the interstate network.

Another planned project is Atlas Pipeline Partners' 160-mile Tenark Pipeline extension from Ozark's existing interstate natural gas transmission system in White County, AR to points of interconnection with Trunkline Gas Co. and Texas Gas Transmission near Dyersburg, TN. Projected in-service date is November 2010.

The report notes that because much of the LNG construction activity is in the Gulf of Mexico region, existing extensive infrastructure will be employed by project sponsors to get supplies to market. Moreover, the number of proposed new LNG import facilities along the coastline of the U.S., if realized, likely will continue to spark new pipeline proposals.

West: Although pipeline construction activity is likely to continue to be limited in the next few years, several significant projects are under way. A host of other LNG-related projects are also active, most of which would involve construction of new pipelines. Most of the project timelines have slipped considerably beyond 2010. For example, Crystal Clearwater Port intends to build a deepwater port offshore California to receive LNG, along with a 12.6-mile, 32-inch pipeline to bring the supplies onshore. While these plans are moving forward, the expected completion date for the Clearwater Port is now 2011.

Palomar Gas Transmission, a newly formed joint venture of TransCanada Corp. and Northwest Natural Gas Co., announced plans to build a 220-mile, 36-inch pipeline extending from TransCanada's existing GTN System in central Oregon to NW Natural's distribution system near Molalla, OR. If approved, it is scheduled to begin service in late 2011.

El Paso Natural Gas plans to build the Arizona Natural Gas Storage Project. The plan is to solution mine four caverns in the Picacho bedded salt. The four caverns will have a total capacity of 3.5 Bcf of natural gas. Some nine miles of 30-inch pipe will be required to connect the storage facility to El Paso's interstate transmission network to move gas to Phoenix and Tucson. The timeline calls for an in service date of mid-2011.

Additional Information. For a copy of the EIA report, visit www.eia.doe. gov. Questions or comments on the report may be directed to Damien Gaul at Damien.gaul@eia.doe.gov or James Tobin at james.tobin@eia.doe.gov.

(Excerpted from a study by Damien Gaul and James Tobin, Energy Information Administration, Washington, D.C.)
Figure 1. Natural Gas Pipeline Capacity Additions, 1998-2010

 Actual Potential

1998 8,460
1999 6,517
2000 6,983
2001 9,262
2002 12,848
2003 10,423
2004 7,661
2005 8,198
2006 12,705
2007 14,859
2008 47,419
2009 34,462
2010 21,270

Note: Only projects under construction or approved that were judged
to have the most likelihood of being completed in 2008 were included
in 2008.

Source: Energy Information Administration, Gas Tran Natural Gas
Transportation Information System, Natural Gas Pipeline Projects
Database, as of May 2008.

Note: Table made from bar graph.

Figure 2. Additions to Pipeline Mileage, 1998-2010

 Actual Potential

1998 2,432
1999 2,338
2000 1,998
2001 1,391
2002 3,571
2003 2,243
2004 1,459
2005 1,152
2006 1,582
2007 1,663
2008 4,407
2009 3,696
2010 1,955

Note: Only projects under construction or approved that were judged
to have the most likelihood of being completed in 2008 were included
in 2008. Remaining unlikely 2008 scheduled projects included under
2009.

Source: Energy Information Administration, Gas Tran Natural Gas
Transportation Information System, Natural Gas Pipeline Projects
Database, as of May 2008.

Note: Table made from bar graph.
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Title Annotation:Pipeline & Gas Journal's PIPELINE CONSTRUCTION OUTLOOK '09
Publication:Pipeline & Gas Journal
Geographic Code:1USA
Date:Jan 1, 2009
Words:2060
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