James Yardley, president of El Paso Pipeline Group, told a Houston audience Monday "it's an absolutely terrific time to be in our business." But while times may be good for natural gas pipeliners, they are not without their challenges, which Yardley enumerated.
Gas demand is growing and the need for new infrastructure is huge. Growing production from unconventional plays and expected liquefied natural gas (LNG) importation are driving many pipeline and storage projects. And much of the pipe that's already in the ground has been there for years. The oldest segments of the El Paso system, for instance, are pushing 80 years old, Yardley said. According to a recent Interstate Natural Gas Association of America study cited by Yardley, the industry will need $20 billion of infrastructure investment over the next 15 years, and that does not include a pipeline to tap Alaska's abundant gas reserves.
While pipeline infrastructure is aging, the industry's workforce is growing older, too, Yardley said, noting that 40% of El Paso Pipeline Group employees are 50 or older.
Despite all the talk of new coal-fired power generating capacity and nuclear plants, Yardley said gas demand growth, and plenty of it, will continue to be driven by power generation demand. This is particularly true now that greenhouse gas (GHG) emissions have taken center stage in Washington and in the minds of the public. And that's good for gas.
"Gas is not the problem here," Yardley said. He noted that natural gas-fired combined-cycle generation puts out less than half of the GHG emissions of integrated gasification combined-cycle coal generation or traditional pulverized coal generation. Given its environmental profile, natural gas can and should be a "bridge fuel" to cleaner coal and alternative energy technologies, Yardley told attendees at Pipeline & Gas Journal magazine's Pipeline Opportunities Conference in Houston Monday.
It's impossible to talk about environmental policy without talking about energy policy, Yardley said. On the combined topic, he enumerated several points that he said are critical to the industry:
A good place to look for a model for GHG reduction would be the 1990 Clean Air Act, Yardley said. He pointed out that the act resulted in sulfur dioxide (SO2) emissions reductions of about 35% from 1990 levels, that virtually all power generators are compliant and that a robust market exists for trading SO2 credits.
Finally, Yardley said the pipeline industry cannot afford to overlook safety. Because much of the country's farmland has been developed in recent decades, many pipeline rights-of-way now lie in the backyards of homes and businesses. Yardley said El Paso Pipeline Group now gets close to 1,000 "one-calls" a day from people calling before they dig near where El Paso pipes lie. While it works, the One Call program needs to be standardized across the states, Yardley said. He added that El Paso has been increasing surveillance on its system and is in the process of spending $100 million to make as many of its pipelines "piggable" as possible.
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