Tight financial markets, a lack of new gas demand, the power generation supply glut and state regulatory concerns have delayed or halted many of the proposed natural gas pipeline expansions announced in the past few years, but even with some high profile cutbacks, U.S. pipeline expansion overall has done “rather well,” according to a new report.

Energy and Environmental Analysis Inc. (EEA) last detailed construction in July 2002, when it noted that 7 Bcf/d of new pipeline was planned for 2003 completion (see Daily GPI, July 25, 2002). “In reality, only 3.9 Bcf/d of new capacity entered service in 2003,” EEA said in the latest Monthly Gas Update.

“This, however, followed a 5.6 Bcf/d of capacity added in 2002. Many of the big projects like Independence, Millennium, Western Frontier and Ruby pipelines have been delayed or left on the drawing board. Only Gulfstream, Guardian and Kern River have added significant new capacity in the last two years. These new pipelines, along with a host of expansions…have added 9.5 Bcf/d over the last two years, and that is no small feat.”

By region, only the Northeast’s pipe capacity situation remains tight, with less than 2 Bcf/d of planned construction expected to be added in the next three years. Only one third of the original capacity planned for the Northeast actually entered service between 2002 and this year, but analysts believe New England should see some improvement once Tennessee’s Dracut Expansion, Transco’s Market Link and Algonquin’s Hubline begin service.

New York City, however, “remains very tight” with only Iroquois’ Eastchester Extension done. And over the next three years, EEA is forecasting only three new pipelines for the Northeast corridor: the delayed Millennium and Islander East projects, along with Maritimes & Northeast Pipeline Phase IV.

The South Atlantic region, meanwhile, “looks fine,” with the “battle on who will supply the Virginia-North Carolina Tidewater area.” The East Tennessee Pipeline is ready with its Patriot extension, which “will provide some added flexibility to Virginia and North Carolina LDCs (local distribution companies)…” However, Columbia’s Homestead expansion “appears tabled,” and Dominion’s Greenbrier “is on hold while they shift funds to expanding the Cove Point LNG facility…” which will leave “expansion plans for the…region sparse for the next several years.”

Florida “is another area that should be flush with natural gas for some time,” according to EEA. Except for laterals and power plant connection pipe, “there is not likely to be much new pipe built into Florida in the next several years.” Analysts noted that Florida Gas Transmission and Gulfstream “together provide more than enough capacity to supply the gas needed by new power projects planned for south Florida,” with only El Paso’s Cypress pipe considered possible to move forward.

In the Southwest region, EEA noted that the strong response to the 2001 California energy crisis added 1.6 Bcf/d of pipe capacity in the past two years. Still, some projects previously announced have been dropped, including El Paso’s Ruby Pipeline. Three other projects — Transwestern’s proposed San Juan and Sun Devil laterals, Kinder Morgan’s Silver Canyon and Pacific Texas Pipeline’s Picacho — also are proposed, but they remain iffy, EEA consultants said.

“Of the three projects, Silver Canyon seems the most likely to be built, but none of the projects appears to be past the planning stage.” Also, noted EEA, “projects like Silver Canyon going to Phoenix and Ehrenberg are not likely to be needed in the next few years, especially with [liquefied natural gas] facilities being added in Baha, Mexico.”

Meanwhile, the constricted Rocky Mountain pipe outlook appears strong, EEA reported, with a “continuously growing supply” that stimulated pipeline construction. Even though some projects’ sponsors — such as Williams’ proposed Western Frontier — faltered because of credit problems, others continue to move forward. EEA predicted the revamped Cheyenne Plains pipe would be completed in 2005, while Kinder Morgan Energy Partner’s proposed Advantage pipe expansion also may be built if gas supply is sufficiently developed.

For more information on the EEA report, visit www.eea-inc.com.

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