The Rockies Express Pipeline (REX) may be the super highway for natural gas when it is completely ramped up, but pipeline competitors already are forecasting a gap between the ever-growing production in the Rocky Mountains and takeaway demand, which together will require another major pipe system within three or four years.
“When they are done with REX, they won’t be done. We don’t believe that’s the case,” said Tom Price, vice president of El Paso Western Pipelines. Price shared a panel last week with other midstream executives at the Colorado Oil & Gas Association’s Rocky Mountain Natural Gas Strategy Conference & Investment Forum.
“We will fill up REX in three years,” Price said. “By 2011, we’ll be right back in the situation where we are today. All of the capacity will be running full, and we’ll need another major expansion.” And, “so goes the success of the producers, so goes our success.”
El Paso is forecasting 2.72 Bcf/d in growth from the Rocky Mountains between 2006 and 2016. According to El Paso, Rocky Mountain gas output could be as high as 12,795 MMcf/d by 2016. Its middle-case scenario puts gas output at 11,264 MMcf/d; the low is 9,732 MMcf/d.
“We’re taking a middle-of-the-road approach,” said Price. “We expect to see some moderation, but also some growth. We’ve been talking to producers about where the new pipe should be built. If we can figure out where that’s most likely to go, we’d like to be a part of that.”
John T. Dushinske, vice president of marketing and regulatory affairs for Kern River Gas Transmission Co., agreed that the “signals are very strong” for another Rocky Mountain pipe expansion in a short period of time.
“Given the projections that we have, even with the completion of the REX projects, we see a gap between production and takeaway demand that support the need for facility expansion,” Dushinske said. “Our system utilization is up significantly…We are squeezing everything we can out of the pipe.”
Kern River expects to announce an open season “in the next couple of months” to provide 200-500 MMcf/d through a looping system close to Las Vegas and North Salt Lake. The expansion, which could be in service by the fall of 2010, would provide incremental compression and require long-term commitments. If its preliminary estimates hold, Dushinske said Kern River plans to roll the cost of the project into existing rates.
“We all agree that we will need another big pipeline by 2011-2012,” said Shelley Wright, director of business development for Questar Pipeline Co. “We have a need for additional long-haul pipeline, and we do and will need additional pipeline capacity.” Questar Pipeline is beginning to talk with its customers, and is “interested in working with potential shippers to design and build that capacity.”
Questar Pipeline’s “capacity has grown considerably,” she said, and it expects to have about 3.5 Bcf/d of capacity on more than 2,500 miles of pipe by the end of the year. The company is focusing on “eliminating bottlenecks in the area, but there’s a lot more work to do.” Two major expansion projects are currently under construction — the Overthrust Pipeline and the Wamsutter project — but she said other projects also are on the drawing board. “Many of the pipeline companies are looking for ways to get Rockies gas to markets at premium pricing.”
Williams’ McMillan Hummel, vice president of the company’s western region, said his company’s projections “may be different” from some of the other companies. “But the conclusions are no different. They are all up and to the right,” he said, referring to a chart that showed the growth in Rockies gas production in the coming years.
“Rockies production is ramping up across the region, from the Greater Green River in the Piceance/Uinta direction…,” said Hummel. “There is a problem looming.” But he said, Williams will be “very surprised and extremely disappointed if that 3.5 Bcf/d isn’t significantly more” for expected growth in Rockies gas output over the next few years.
Meanwhile, Kinder Morgan Energy Partners LP (KMP), which is spearheading the REX project along with partners ConocoPhillips and Sempra Pipeline, sees nothing delaying its plans to have the entire REX system on time and within budget.
For the REX West portion of the pipe, “all approvals have been received and we are moving along in fine fashion,” John Eagleton, KMP vice president of business development, said. The REX East scheduling order is expected this month. All told, KMP has $6.15 billion in new infrastructure investment that is “all slated to come online between now and 2010.”
©Copyright 2007Intelligence 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.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |