Even as the United States has more natural gas than it knows what to do with, some areas are relying on more costly solutions to meet their demand needs as regulatory setbacks have resulted in a lack of adequate pipeline infrastructure and storage.
Sam Thigpen, founder and CEO of oil and gas end-use solutions provider Thigpen Solutions, said that while much of the company’s business over the last nearly 15 years has been in the South, many new contracts are coming from the Northeast, where a harsh regulatory environment has prevented infrastructure from getting built.
“We’re flaring 0.5 Bcf/d of gas in the Permian and yet New York can’t get enough gas to heat their homes,” Thigpen said Tuesday on Day 2 of the inaugural Gulf Coast Energy Forum in New Orleans. “Yes, we have a lot of gas, but we need to get it to where it’s needed.”
Under legislation passed earlier this year, New York is required to generate 70% of its electricity from renewable sources such as wind and solar by 2030 and obtain 100% of its electricity from renewables by 2040. The state has denied key permits for several proposed gas pipeline projects, including the Northeast Supply Enhancement Project (NESE), an expansion of the Transcontinental Gas Pipe Line system, Constitution Pipeline and the Northern Access expansion project. All remain in limbo.
New York utility National Grid has taken matters into its own hands, signing a five-year contract with Thigpen to truck in natural gas in order to serve its customers on Long Island during periods of peak demand. Long Island is one of three cities under a moratorium for new gas service.
Last winter, Thigpen provided the utility with 204,000 gallons of LNG to supplement its supply on 95 days of the 144-day season. The company can also store 7 Bcf on site, providing National Grid with 10-11 days of gas to meet demand.
Ironically, the trucks used to transport the gas operate on diesel, but regulators touting green energy don’t appear to connect those dots, Thigpen told NGI on the sidelines of the conference.
“Misinformation is a big part” of why regulators do not understand the need for more infrastructure and “unfortunately, not a lot of progress has been made” in changing their view, he said.
Thigpen said while his business has capitalized on the opportunities presented by regulatory setbacks for new infrastructure, his end-use solutions are not intended to be a permanent solution to the increasing problem of meeting growing demand. “That’s not a sustainable business model for us. We know we’re expensive. We don’t do this because we’re cheap.”
Thigpen currently has more than 200 winter integrity projects in 20 states, with opportunities along the Gulf Coast and even in California, another state with aggressive climate protection targets. Pacific Gas & Electric is building an LNG peaking facility in the northern part of the state that will require a significant amount of virtual pipeline.
On the Gulf Coast, the explosive growth of LNG exports and gas production provides more opportunities to utilize virtual pipelines to meet demand as bottlenecks out of the Permian Basin and northern Louisiana have emerged. Already, Thigpen has carried out small-scale projects where it has trucked Permian supplies to San Antonio due to low gas prices.
That’s not to say virtual pipelines are without challenges. Logistics is one of the major limiting factors Thigpen encounters, especially as much of his equipment is used during the winter. “We can haul as many trucks as we can, but weather is a factor during harsh winter conditions. We don’t have the ability to put large-scale storage on certain sites. That’s why they called us to begin with.”