Based on the proposed storage and pipeline infrastructure projects pending at FERC, the natural gas storage business is alive and well and is likely to grow in the short and long term, according to a federal energy official speaking as part of a panel discussion Tuesday at GasMart 2010 in Chicago. Storage was called the perfect partner for new supply projects.
As the prospects for liquefied natural gas (LNG) have done in the past, the vast potential now emerging for shale gas presents a great opportunity for new gas infrastructure — pipelines and storage, said Berne Mosley, deputy director for the office of energy projects at the Federal Energy Regulatory Commission. “You have to look at what FERC has done; I think we have done a very good job of responding to the market. When the market has indicated it needed more infrastructure, we have responded.”
As a forerunner to the future need for additional storage, Mosley cited the cumulative pipeline projects approved from 2000 through April of this year as representing 110.3 Bcf/d capacity and 16,000 miles of transmission pipe, totaling $44.6 billion in investment. “That is a lot of private capital that is going into the industry, so the market is speaking and people are responding,” he said.
“This response is key because if you’re going to have new supply coming into the market, then you have to have people willing to spend the money to do just that. I think [this] also shows that FERC is going to work with the market when it speaks.”
Mosley said there are more projects coming, too, as currently there are more than a half-dozen new pipeline projects totaling 8 Bcf/d capacity and 776 miles pending at FERC as of April. And in addition there are projects in the prefiling mode worth 16.4 Bcf/d capacity and another 3,500 miles of large-diameter transmission pipe.
Even though it has “gone away” somewhat in the recent years, LNG has been looked at as a “good partner” for natural gas storage projects, Mosley said. Depending on the global market, large producers of LNG in times of low prices worldwide could “dump” a lot of their supplies on the U.S. market, he said, and in these cases, particularly in the summer months, extra storage will be an asset.
In looking at the LNG terminals built and approved around the Gulf of Mexico, a clear pattern of new storage facilities has followed, said Mosley, using a map to show the relative positioning of the projects with 763 Bcf of storage projects approved by FERC since January 2005. “Once the storage projects are authorized by the Commission, we do everything to make sure they get built,” he said. “Once the FERC makes that determination a project is needed by the public, we’re going to be the last ones to stand in the way.”
Mosley said maps of gas shale development show the same pattern with more storage being developed over the last 10 years as the shale plays grow around the country. Mosley cited 268.5 Bcf and 16 storage projects either pending at FERC or in the prefiling phase.
“Underground storage perfectly partners with natural gas production and LNG supply sources,” Mosley said.
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