As of April, about 200 U.S. gas pipeline projects have been proposed for development between this year and 2010, accounting for more than 10,000 miles of potential pipe additions. Put another way, “Pipeline infrastructure expansion activity again appears to be on an upswing,” the Energy Information Administration (EIA) said in a pipeline capacity report released last Thursday.

The agency said increased production was the main driver between last year’s pipeline additions as well as the ones expected in the next two years.

“To date, 41 projects have begun, or are permitted to begin, construction, with four of the projects scheduled for early 2008 already completed,” EIA said. “While 13 projects are still only in the planning, or post-open season stage, 46 have been submitted to various regulatory authorities for review.”

EIA noted that pipeline construction is occurring in concert with development of gas resources in North and East Texas, particularly the Barnett Shale and Bossier Sands. It also noted increased drilling in the Rocky Mountain region and additional pipe to serve production there. “Forty percent of the 50 pipeline projects completed in 2007 were associated with new production in Texas and the Rocky Mountain states of Utah, Colorado and Wyoming…Projects in the Rocky Mountain area accounted for 26% of all new natural gas pipeline capacity (3.9 Bcf/d) installed during the year, while those completed in Texas accounted for another 27% (4 Bcf/d).”

The current escalation in pipeline investment follows a period of decline earlier in the decade. EIA said a number of underlying trends has led to the uptick in activity. One of them is the degree of exploitation of conventional gas resources in areas such as the Gulf of Mexico region. Increased demand for gas in the power generation sector is another factor. “These fundamental market features, along with other factors, such as a series of devastating hurricanes in 2004 and 2005, resulted in higher prices this decade relative to the 1980s and 1990s, leading to increased investment in infrastructure to access new supply sources and provide expanded flows to end-use customers,” EIA said.

Among recent projects that EIA said have industry-wide implications are:

EIA is not the only entity to note burgeoning production growth in the Texas-Louisiana region. Bentek Energy LLC recently published the third installment of a report examining pipeline and storage development in the region. The latest installment predicts gas-on-gas competition resulting from takeaway capacity constraints in the region (see related story).

The 14-page report from EIA — titled “Additions to Capacity on the U.S. Natural Gas Pipeline Network: 2007” — includes tables and maps of pipeline projects and provides activity overviews by region and nationally. It is available at in the “Natural Gas” section under the “Analyses” heading.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.