The spate of producer-driven pipeline developments taking place today to move gas out of the Rockies and Midcontinent will result in infrastructure that is markedly different from what the gas industry has known during the last decade or two, a consultant told a Houston audience of pipeliners last week.

To begin, today's pipeline projects/expansions -- such as Rockies Express and pipelines targeting shale production in Texas, Oklahoma and Arkansas -- are largely driven by producers drilling for nonconventional resources, said Skip Simmons, Wood Mackenzie principal for North American gas and power.

"The key thing to remember about nonconventional resources is that they're more costly than traditional resources, so what we need to support nonconventional resource development is -- we need a Henry Hub price that is sound -- and I hate to use the word high -- but reasonable. And we need a basis differential to the producing basin that is acceptable and somewhat predictable," Simmons told attendees at Platts second annual Pipeline Development and Expansion conference.

Another point to be made about the current round of pipeline build out is that the infrastructure going in is almost all high-pressure pipe with fuel rates that are very low compared to older, more traditional pipelines, Simmons said. Rockies Express is just one example. While this is a good thing on the front end, the pipelines' initial efficiency could be unattractive when it comes time for an expansion. Simmons said the new generation of pipes are going into the ground already optimized, meaning that later expansions could detract from their efficiency.

Some pipeline assets are going to be stranded by the new development, Simmons said. Additionally, pipeliners will face the challenge of lumpier supplies coming in the form of regasified liquefied natural gas (LNG) for which gas quality and heat content issues have yet to be completely sorted out, he said. "The pipelines will be operationally different."

All of the current projects have negotiated rate structures, Simmons said, making recourse rates merely a tariff sheet formality and making the projects immune to rate cases, at least for the term of their negotiated contracts. "These are what I call a contract model...It keeps FERC out of their business for several years," Simmons said.

Simmons said he and Wood Mackenzie are bullish on most of the current pipeline projects, the ones with filings at FERC and the ones with pipe already in the ground. However, FERC commissioners are beginning to wonder about the abundance and longevity of some of the gas reserves behind the more recent pipe proposals.

"There's a concern though that's starting to crop up as to whether or not the pipe capacity that's being proposed is an overbuild situation," he said. "FERC is now starting to ask some questions when these final applications are coming in about upstream supply. 'Is there sufficient supply to justify this additional infrastructure?' I would also like to say that there's not a lot of sharing going on, that parties [proposing projects] aren't necessarily getting together and talking about building a single project. Each of them is anchoring their own project to the market for various reasons, of course, particularly because of the geography, where their production lies."

It might be ironic that while producers are behind much of the new pipe, all the new pipe and capacity, coupled with increasing imports of LNG, make for a buyer's market, Simmons said. As Rockies and Midcontinent supplies put pressure on gas in the Gulf Coast, heretofore the nation's natural gas breadbasket, buyers and consumers stand to benefit from lower prices, Simmons said. Add LNG to the mix and consumers also get another component of supply diversity that they hadn't enjoyed before even though Wood Mackenzie's expectations for LNG imports have been attenuated, to say the least. "The key words are less, later and more seasonal," Simmons said of LNG.

As for the producers behind the pipeline boom, Simmons predicted that they'll be smart and won't overgrow production beyond what the infrastructure and market can handle.

"It's a different world," Simmons said. "It's going to be a fun time to be in the business."

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