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Northeast Tops EIA List of Potential Pipe Trouble Spots

Northeast Tops EIA List of Potential Pipe Trouble Spots

Natural gas pipeline capacity appears "adequate" to meet most peak-day demands as the nation heads into the 2000-2001 winter heating season, assuming the weather is average. But there are some areas where capacity constraints and bottlenecks could crop up --- most notably in the Northeast region, according to a new report by the Energy Information Administration (EIA).

Overall, gas pipelines in the Northeast last year had the highest utilization rate (77%) compared to pipelines in all other regions of the Lower 48 States, Canada and Mexico, which underscores the region's high vulnerability to capacity constraints. This compares to an average usage rate of 66% for all pipelines in the Lower 48 in 1999, the EIA noted.

Capacity constraint problems continue to persist in the Northeast even though 15 expansion projects totaling 2.3 Bcf/d of additional deliverability were placed into service in 1999-2000 --- more than in any other region in the nation, the report said.

Specifically, the Department of Energy (DOE) agency singled out New York City, Boston and the Leidy hub in Pennsylvania as potential deliverability trouble spots for this winter. In New York City, "several constraint points have developed in recent years," and while new pipe projects --- such as the Cross Bay Pipeline --- have been proposed to relieve the situation, they aren't expected to be in service until 2002 at the earliest.

Other major projects --- the 1 Bcf/d Independence Pipeline, 714 MMcf/d Millennium Pipeline and the proposed 160 MMcf/d Eastchester expansion of Iroquois Gas Transmission System --- should provide added capacity into the New York City market within the same timeframe, but "incremental growth in demand also might be met by less extensive expansions on the existing portions of the Transcontinental Gas Pipe Line and Texas Eastern [Transmission] systems serving the region," said the EIA report, which was released last week.

The Leidy hub "could become a potential constraint point for pipeline gas flowing to the East Coast, particularly the northern New Jersey, New York City area," according to the EIA. "Current pipeline capacity in the area appears sufficient, but growing demand for gas trading and transport capacity probably will require some expansion of existing pipelines in the area." It believes the Independence project and Transco's MarketLink expansion - which have run into a wall of opposition from landowners and the state of New Jersey - would provide "significant development of capacity in the area."

In the Boston market, "where pipeline capacity is already heavily utilized, demand has been growing and is expected to grow rapidly over the next several years, especially from developers of gas-fired power generation plants," the agency noted. Some of this growth already is being met by the Portland Natural Gas Transportation System/Maritimes & Northeast pipeline system, it said. Looking ahead, Tennessee Gas Pipeline anticipates construction of its 288 MMcf/d Eastern Express expansion will be completed by June 1, 2001. Also, Algonquin Gas Transmission has proposed its HubLine project to bring as much as 600 MMcf/d to the Boston area from interconnections with a proposed extension of the Maritimes & Northeast system. The project was targeted to be in operation in 2000-2001, but has been pushed back.

The EIA said it also foresees capacity problems cropping up in the western region, specifically in California. "Utilization levels on the major transmission pipelines serving the state have been well above 90% in recent months and could reach their limit if demand levels continue to increase." Also, the "service needs in the southern Nevada area continue to remain at a very high level, suggesting the need for system expansion in that area as well."

In the 1999-2000 period, however, the western region had the least amount of new pipeline development, completing only five projects totaling 397 MMcf/d of additional capacity. But that could change.

According to the EIA, "there is growing interest in directing some of the expanding Power River Basin production to the California/Nevada marketplace." Although there hasn't been any "significant expansion" of the pipeline systems that ship Rocky Mountain, San Juan and Permian Basin gas to the western states since 1993, "there are signs that during peak-demand periods additional pipeline capacity will soon be needed to handle growing demand swings for natural gas in the region."

The Central Region (Wyoming, Montana, Colorado et al) is faced with the problem of excess gas production and limited receipt or exit pipeline capacity, the EIA said. "Expanding coal-bed methane production in the region has outpaced the development of long-haul capacity to carry the gas to end-use markets. New gathering and header systems [1/15 Bcf/d of capacity] have been built this past year to move the gas from the field to the mainline, but not enough matching interstate pipeline capacity has been installed." But this is about turn around, the EIA noted, as a number of pipelines --- Trailblazer Pipeline, Colorado Interstate Gas and Williams Gas Pipeline-Central --- have proposed projects in the past several months to expand the area's interstate systems. Also, Wyoming Interstate Pipeline, a principal transporter in the Central Region, increased its pipeline capacity by 36% (275 MMcf/d), and plans an additional expansion of 675 MMcf/d to be completed in 2001.

The EIA doesn't anticipate any major capacity problems occurring in the Midwest, Southeast or Southwest regions. Markets in the Midwest "should have little or no problems [receiving] natural gas supplies" this winter. In fact, the DOE agency believes there could be "some short-term excess capacity" in the region this winter coinciding with the startup of the 1.3 Bcf/d Alliance Pipeline. That's because the interconnecting projects that were to take some of the Alliance gas from the Midwest to Canadian and U.S. Northeast markets either have been delayed briefly or simply aren't in place.

The Southeast states of Florida, North Carolina and South Carolina have seen "significant growth in natural gas demand over the past decade, but sufficient additional pipeline capacity has been installed to match the increase in demand." The EIA estimated that about 1.9 Bcf/d of capacity was added in the Southeast in 1999-2000, primarily to improve deliverability within the region.

In the Southwest region, "there are no apparent interstate capacity constraint problems, although some local bottleneck problems on gathering or intrastate systems in the region could limit service to the interstate systems" during severe weather, the DOE agency said. "The growing market for natural gas in the region's electric generation sector may bring about some localized service limitations in the near term, but the growth in natural gas pipeline capacity in the region is keeping pace with this growing demand."

By the close of this year, the EIA estimates that $4.6 billion will have been spent on new pipeline and system expansions since January 1999. About 70% of the expenditures will have gone for new pipeline development and major extensions/laterals to existing systems, while the remainder will have been earmarked for expansions (looping, added compression), it said. While in 1999 the biggest expenditure ($1.1 billion) was on projects that terminated in the Northeast region, this year it will be on projects that terminate in the Midwest ($1.9 billion), the EIA noted.

Susan Parker

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