Investment in the U.S. natural gas pipeline infrastructure plunged in 2005 over the year-earlier period, according to a new report released by the Energy Information Administration (EIA). In fact, the agency said fewer gas pipeline miles were built last year than in any year during the past decade.

“Expenditures for natural gas pipeline development amounted to less than $1.3 billion in 2005, a 40% drop from 2004 levels and well below the $4.4 billion spent in the peak development year of 2002,” the Department of Energy (DOE) agency said in a 17-page report that was issued last Tuesday. But the good news is that 2004 and 2005 may be the “bottom of a temporary trough” in gas pipeline development.

“The current inventory of announced or approved natural gas pipeline projects indicates that natural gas pipeline capacity additions could increase significantly between 2006 and 2008. Several factors are driving this anticipated growth, particularly the expanding development of natural gas production in the Fort Worth Basin of East Texas and the Piceance/Uinta Basins of western Colorado and eastern Utah, and the need for natural gas pipeline expansions and new laterals to link potential liquefied natural gas (LNG) import facilities that may be developed along the U.S. coastline over the next decade,” the EIA said.

While fewer miles of gas pipelines were built in 2005, the DOE agency noted that the addition of gas pipeline capacity in 2005 exceeded that of 2004. The miles of new gas pipeline built (1,152) were 21% less than in 2005, but pipeline capacity grew by 8.2 Bcf/d, for a 7% hike in capacity additions, according to the EIA.

In 2005, the EIA said at least 31 gas pipeline projects of varying profiles were completed in the Lower 48 states and the Gulf of Mexico. Of these, 15 were expansions of existing gas pipelines while the other 16 included nine extensions or laterals associated with existing gas pipelines, five new greenfield pipeline projects and two oil pipeline conversions.

Gas production demands appear to have been the driving force behind most of the gas pipe capacity additions last year, according to the EIA. Of the 31 gas pipeline projects built in 2005, approximately 18 projects, which accounted for 57% of the 4.7 Bcf/d of capacity added last year, were production-area oriented, while only 10 projects, accounting for 16% of the new capacity, were geared toward market areas, the EIA said. The remaining three projects, which comprised 27% of the new pipe capacity, were tied to LNG import support.

It estimated that 10 fewer natural gas pipeline projects were completed in 2005 than in 2004. But the EIA noted the average capacity addition per project last year rose to 264 MMcf/d from 187 MMcf/d.

The EIA reported that five new intrastate gas pipelines, comprising almost 1.6 Bcf/d of capacity, were installed in East Texas alone in 2005 to “facilitate the transportation of expanding natural gas production from the East Texas and Fort Worth basins, particularly the Barnett Shale formation.” The largest project, Energy Transfer Co.’s 650 MMcf/d Forth Worth Basin Pipeline, improved transportation services between the Fort Worth Basin and interconnections with other area gas pipelines, the agency said.

In the Gulf of Mexico, the first new U.S. LNG import terminal in more than 20 years was completed in 2005, as well as an eight-mile gas pipeline lateral linking it to existing offshore-to-onshore systems. The Excelerate Bridge LNG facility, located 116 miles south of Louisiana in the Gulf, has the capacity to deliver up to 690 MMcf/d of vaporized LNG onshore via either the Sea Robin or Bluewater offshore-to-onshore gas pipeline systems.

The capacity of the Cheyenne Plains Pipeline, first placed in operation in 2004, was bolstered by 30% last year. Initially designed to provide 560 MMcf/d, the capacity of Cheyenne Plains was increased by 170 MMcf/d through an upgrade of its only compressor station located at its terminus in northeastern Colorado. The pipeline caters to producers in the expanding Wyoming/Colorado production areas by providing access to Midwest markets.

In California, the El Paso Natural Gas system was upgraded to include a north-to-south flow capability with the conversion of a portion of a former oil pipeline to natural gas use. The 502 MMcf/d Line 1903 conversion project gives shippers on El Paso’s north system and Kern River Gas Transmission the option (via the Mojave Pipeline) to transport their product from Cadiz, CA, southward to Ehrenberg, AZ. The 1903 crossover provides shippers of Rocky Mountain gas supplies with the capability to extend their potential market beyond California to Arizona or Mexico.

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