With or without electric generation and transmission expansion plans in the West, a number of new natural gas pipeline and storage projects are unfolding throughout the region, according to a panel of executives from major developers at the “LDC Forum — Rockies & West” conference Tuesday in Los Angeles. The assortment of projects place many of the major industry players in direct head-to-head competition in the Rockies, Pacific Northwest and at the California-Arizona border.
The hope and expectation by many in the industry is that these added pipeline and storage capacities will help mitigate wholesale gas prices, along with the dampening effect expected from liquefied natural gas (LNG) imports.
Craig Coombs, director of western development for El Paso Western Pipeline Group, said his company is tied to every major natural gas production basin in the West and elsewhere around the United States, and has upgrades and new pipeline infrastructure projects underway or planned in all of those regions. Some of the pipeline projects are imminent, but there also will be a new announcement of an Arizona storage project at the end of this year or very early next, Coombs indicated.
Regarding gas storage in the West, most of the so-called “low-hanging fruit” already has been picked, said David Kley, business development manager for ScottishPower’s merchant gas storage business, Enstor.
The ongoing decline of traditional gas producing areas in North America can be made up through increased supplies from the Rocky Mountains, Alaska, the Mackenzie Delta in Canada and liquefied natural gas (LNG) from overseas, Coombs said. El Paso estimates that an added 4 Bcf/d could be pulled out of the Rockies, hitting 10 Bcf/d eventually; Alaska gas could total 5.3 Bcf/d eventually; and LNG imports could hit as high as 14.3 Bcf/d in 10 years, compared to under 2 Bcf/d now.
El Paso’s existing Rockies interstate pipelines, Colorado Interstate Gas (CIG) and Wyoming Interstate Co. (WIC) are slated for substantial upgrades. El Paso also is planning the “Continental Connector,” a new 42-inch-diameter interstate pipeline that will extend from southeastern Wyoming to Perryville, LA, and Pugh, MS. It would have a capacity of 2 Bcf/d and could be in service by 2008, the expected time when new LNG imports and other major infrastructure come to fruition.
“We are choosing a very environmentally favorable route, so we think this is a project that FERC will tend to be very favorable toward,” Coombs said.
In total, El Paso has plans for several hundred million dollars in upgrades, including more than 500 miles of added pipeline in five separate projects involving a half-dozen western states. The breadth of the market areas for these projects covers from the West Coast into Mexico, southeasterly to Louisiana-Mississippi, and northerly into Wyoming. These projects are all contemplated to be in place by 2010, Coombs said.
In the storage area, firms such as Enstor have facilities at all of the major gas market hubs in the West, and Enstor’s Kley said his firm is actively looking to develop new natural gas storage — even in states, such as Arizona and Washington, that have no appreciable storage at this time.
Enstor’s strategy assumes that companies with supply diversity and access to multiple markets through multiple facilities will be the ones that successfully negotiate the volatile market over the next few years.
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