Daily GPI / NGI The Weekly Gas Market Report / Infrastructure / NGI All News Access

Appalachian Infrastructure Projects Face Growing List of Challenges, Panelists Say

Industrial and residential customers that are relying more heavily on natural gas-fired power continue to drive demand for new pipelines to serve the Mid-Atlantic, New England and Southeast states, a group of panelists said on Tuesday.

But getting the infrastructure built is becoming more of a challenge as federal and state regulations, along with soaring costs and challenging construction are combining to slow the projects.

"We've seen a significant increase in the amount of gas used by industry and power generators," said Anthony Cox, director of midstream development at UGI Energy Services LLC. "Emission controls have put a lot of old power plants out of business and as a result its created a lot of demand for natural-gas fired power."

That’s just one reason Pennsylvania-based UGI paired-up with two other companies to launch the PennEast Pipeline.The 100-mile line will begin in northeastern Pennsylvania and end at Transco's Trenton-Woodbury interconnection in New Jersey (see Daily GPI, Aug. 12).

Industry and power generation demand, coupled with the roughly 12,000 homes in UGI's service territory that are converting annually from oil, electricity and propane to heat with natural gas helped get the utility-backed project off the ground, Cox said. An existing power plant and several delivery points in Pennsylvania and New Jersey are being considered.

Cox said similar pipelines aren't coming fast enough, though, and pointed to last winter's natural gas price spikes at a time when power generators were scrambling to secure gas as an example (see Daily GPI, May 14; March 20). He added that the Henry Hub benchmark price is becoming increasingly irrelevant in the Northeast as a result of rising production and slowly increasing demand.

"All these things mean only one thing, and that is, in order to build a project, it has to be big," he said. "These projects aren't 200,000 Dth/d, they're 1 Bcf or 2 Bcf a day."

Dante Bonaquist, chief scientist at Praxair, said it costs roughly $200,000 per diameter inch to construct large pipelines. He suggested that virtual pipelines, or alternatives like truck and railroad, that can deliver liquefied natural gas to industrial end-users could help loosen the region's bottleneck and free-up more natural gas for power generators and residential customers.

Cox said pipeline construction is looking more and more daunting as demand for infrastructure continues to increase. Along with the factors driving projects in the basin, where dozens of major pipeline projects are in the works, a number of challenges continue aligning to slow their progress, he said (see Shale Daily, July 17).

The time it takes to make major projects a reality is considered extremely long by many, Cox said, with anywhere from one to two years or more anticipated to construct a pipeline and get it operating. A large part of that reality, he said, are federal and state regulations. For example, last week UGI submitted its preliminary application for FERC approval, but a formal application won't be submitted until next summer and the company doesn't expect to get final approval from the Federal Energy Regulatory Commission until late 2016.

"And that's just the permitting process," he said. "The actual construction process, by comparison, is the easy, or short part. The regulatory process is extremely long. Then if the project requires an environmental impact assessment, which ours does, that only adds to the amount of time it takes."

Jeremy Zeman, manager of commercial development in Pennsylvania and New York for Williams, said his company pays particular attention when plotting a pipeline's course in the state. The steep terrain, rivers and streams that dot the countryside have Williams grading each plot of land on a scale of one to 10 to determine its best course, which is time-consuming, but necessary. A growing list of endangered species in Pennsylvania also has pipeline companies taking extra caution during construction operations, panelists said. 

"The reality is that there are very few people that understand the connection between when they flip on a light switch,or when they plug something into a wall, and what it takes to get that electricity there. It's not just the pipeline, it goes all the way back to the wellhead,” Cox said. “This all part of a bigger picture, but people are part of the picture too when it comes to siting wells and obtaining the right-of-ways for these projects, which are becoming more important."

ISSN © 2577-9877 | ISSN © 1532-1231 | ISSN © 1532-1266

Recent Articles by Jamison Cocklin

Comments powered by Disqus