Natural Gas Pipelines Races to Meet Booming Demand
America's oil and gas fields are crying out for more pipelines. The Permian Basin--and, to a lesser extent, the Marcellus and Utica shale plays--have developed so rapidly that producers could be forced to trim output, since they lack the takeaway capacity to ship their product. Kinder Morgan, Enbridge, Enable, Williams and other midstream companies are jockeying for the resulting business opportunities.
Kinder Morgan's Gulf Coast Express Pipeline is among those set to transport product from the Permian Basin to the Texas Gulf Coast. The multi-phase project is expected to carry up to 1.98 billion cubic feet per day of natural gas from Midland to Agua Dulce, which is near Brownsville. For more information, see Industrial Info's project report.
The company made a final investment decision this past quarter to construct the estimated $2 billion Permian Highway Natural Gas Pipeline project in Texas with partner EagleClaw Midstream Ventures. The 430-mile, 42-inch line would carry up to 2 billion cubic feet per day of natural gas from Waha Hub near Fort Stockton to Katy, Texas, then to the Gulf Coast. Some of the product will then be shipped to markets in Mexico.
In September, Kinder Morgan announced it had secured sufficient firm transportation agreements with shippers and that all available capacity subscribed and committed under long-term contracts. For more information, see Industrial Info's project reports on the mainline.
"You're going to continue to need additional types [of pipeline] out of the Permian over time," said Steve Kean, the chief executive officer of Kinder Morgan, in the conference call. "We may be at a point where, as people are waiting for the takeaway to come on, they're doing more docks and they're doing more diversion of rigs at other places, et cetera. They're taking a brief break in the breakneck growth they were having. But we think there's a third pipeline--maybe it's two or three years out as opposed to right now, but we think there'll be a third pipeline, if not more after that."
Kinder Morgan also made a final investment decision earlier this year to construct the Permian Highway Natural Gas Pipeline project in Texas with partner EagleClaw Midstream Ventures. The 430-mile line would carry up to 2 billion cubic feet per day of natural gas from near Fort Stockton to Katy, Texas, then to the Gulf Coast. Some of the product will then be shipped to markets in Mexico. For more information, see Industrial Info's project report.
Williams Companies is working with Kinder Morgan on a section of the Bluebonnet Express Pipeline, which also will run from the Permian to Katy. Capacity is expected to be up to 2 billion cubic feet per day of natural gas. For more information, see Industrial Info's project report.
Among the company's major endeavors is the buildout of its Transcontinental natural gas pipeline system, the largest natural gas pipeline system in the U.S. In October, Williams put into service its Atlantic Sunrise expansion project, which increased Transco's capacity by 1.7 billion cubic feet per day (Bcf/d) to 15.8 Bcf/d.
Construction on the project began in summer 2017, with the majority of work in Pennsylvania. For more information, see Industrial Info's project reports on the Central Penn North, Central Penn South and Grugan Loop portions of the pipeline.
Williams isn't content to stop there with its Transco expansions. Armstrong said, "Very recently, the [U.S. Federal Energy Regulatory Commission] approved the start of construction for our Rivervale South to Market project that will take place primarily in New Jersey. We're targeting the 2019-2020 winter season for completion of this project, which will help meet the growing heating and power generation demand for the Northeastern customers, primarily in New Jersey and New York."
The pipeline expansion will transport 190 million cubic feet per day. For more information, see Industrial Info's project report on the pipeline's main section and the Bergen Loop.
Armstrong continued, "We have another Transco expansion that will soon enhance our customers' LNG [liquefied natural gas] export needs. We are closing in on placing the Gulf Connector into service much earlier than originally planned. This project is designed to deliver about 400,000 dekatherms per day to Cheniere Energy's (NYSE:LNG) Corpus Christi liquefaction terminal and an additional 75,000 dekatherms per day of natural gas to Freeport LNG's liquefaction project, and we're going to be able to deliver those about three months ahead of what our original plans were for that project." The Gulf Connector project includes grassroot construction and expansions of compressor stations in Texas. For more information, see Industrial Info's project reports on projects near Wharton, Victoria, Sinton, Sour Lake and El Campo.
Williams reported third-quarter 2018 net income of $200 million, compared with $125 million in third-quarter 2017.
Earlier this year, the U.S. Energy Information Administration (EIA) estimated that more than 23 billion cubic feet per day of natural gas pipeline capacity would be online in the U.S. Northeast (including Ohio, West Virginia and Virginia) by the end of 2018, up from an estimated 16.7 billion cubic feet per day at the end of 2017 and more than three times the capacity at the end of 2014. Like the Permian Basin in Texas, the Marcellus and Utica shale plays are dealing with a lack of takeaway capacity that threatens to constrain producers.
Among the natural gas pipeline projects in the Marcellus and Utica areas are two compressor stations in southwestern Pennsylvania: EQT Corporation's $70 million Redhook station in Waynesburg, which is designed to support EQT's seven-mile pipeline to transport 600 million standard cubic feet per day within Greene County, and Williams Partners LP's $55 million Station 206 in Somerset, which will support the Transcontinental Gas Pipeline's 35-mile segment to transport 400 million standard cubic feet per day from York County to an interconnection in New York State.
Williams also is at work on the Northeast Supply Enhancement Project in New York, New Jersey and Pennsylvania, which includes a $65 million segment from Middlesex County, New Jersey, to the Rockaway Transfer Point offshore New York. The 23.5-mile line also is called the Raritan Bay Loop. The Berkshire Gas Company, a subsidiary of Avangrid (NYSE:AGR) (Orange, Connecticut), is expanding access with a $58 million pipeline from Southwick to Northampton, Connecticut, running 19 miles into areas where natural gas is currently unavailable. For more information, see Industrial Info's reports on the Williams and Berkshire projects.
The entire WB Xpress project entails construction of a section of greenfield pipeline, the replacement of 26 miles of existing pipeline, the construction of two grassroot compressor stations, and modifications and additions to several other compressor stations. TransCanada hopes to have the entire pipeline in operation before the end of the year. For more information, see Industrial Info's project reports on the grassroot pipeline in Virginia and West Virginia, the pipeline replacement in West Virginia, and the grassroot compressor stations in Chantilly, Virginia, and Charleston, West Virginia.
The $3 billion Mountaineer Xpress project will move up to 2.7 Bcf/d of natural gas in West Virginia. The project entails construction of 170 miles of grassroot pipeline, three new compressor stations and modifications to existing compressor stations. FERC gave permission for the Elk River compressor station in Kanawha County to begin operation. The entire pipeline is set for completion by the end of the year. For more information, see Industrial Info's project reports on Spread 1, Spread 2, spreads 3 and 4, spreads 5 and 6, and spreads 7 and 8 of the pipeline and the Elk River compressor station.
Among TransCanada's other U.S. natural gas pipeline projects planned to go into service before the end of the year is the Gulf Xpress project, which includes new compressor stations in Kentucky, Tennessee and Mississippi. The project will add 860 million cubic feet per day of pipeline capacity to TransCanada's network.
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