Shale gas supplies prompt pipeline building frenzy
Gas delivery services race to keep up to new supplies
Across the United States, natural gas pipeline builders have been racing as fast as producers, hooking up the rapidly developing new shale supply areas, liquefied natural gas import terminals and storage facilities. In 2008, the industry set a 10-year American high for pipeline construction. More service goes online this year.
The 2008 scramble was led by system additions described as massive in the U.S. southwest and Gulf of Mexico. Eighty-four natural gas pipeline projects were completed in 2008 in the lower 48 states, Washington’s Energy Information Administration (EIA) said in a report issued late September. Construction was robust everywhere but in the West. The US$11.4 billion worth of projects added capacity of 44.6 billion cubic feet per day.
In 2008, pipeline construction was nearly triple the activity in 2007, when US$4.3 billion was spent to complete 50 projects that added 14.9 billion cubic feet of daily delivery capacity. Projects completed in 2008 by more than 15 companies included both long-haul pipeline additions and shorter extensions to access three new LNG terminals and several underground storage fields.
A total of 6,230 kilometers of new pipeline were constructed in 2008, more than double the 2,660 kilometers of pipeline added in 2007.
“The push for access to new supply sources has led to rapid infrastructure growth in relatively undeveloped production regions such as the Rocky Mountains, as well as additions to well-established natural gas transportation corridors,” EIA said. The agency expects the strong pace of pipeline construction to continue over the next several years.
“The 78 proposed projects scheduled for completion in 2009 indicate that the second-highest level of capacity additions in the last decade could be completed during the year,” the EIA said. “However, the on-schedule completion of all currently anticipated projects as designed is very unlikely. The current economic downturn has limited financial options for projects and contributed to a significant decline in natural gas spot prices. Nonetheless, the fundamental conditions for the build-out of the pipeline system remain intact, given the need to access and exploit unconventional resources.”
Many projects that were completed in 2008 had “industry-wide implications” because of their size and scope, EIA said. The most significant pipeline additions included:
- the 2.6 billion cubic feet daily Sabine Pass LNG Line, which connects an import terminal to six interstate pipelines in southwestern Louisiana;
- the western leg of the Rockies Express Pipeline (REX-West), which links expanding gas production from Wyoming and western Colorado to Midwest markets;
- the Southwest Supply Header System (SESH), which transports supplies between Louisiana and Florida.
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