US gas pipeline buildout plans face delays
OREANDA-NEWS. April 13, 2016. Some US natural gas infrastructure projects scheduled for completion this year may be delayed until 2017, industry officials said today, as volatile prices add unprecedented uncertainty to construction plans.
The concentration of gas supply regions, along with reversals in original pipeline design, may prompt developers to reduce the mileage of some projects while only adding compression and looping facilities, ICF vice president Kevin Petak said, speaking at an event hosted by the Ingaa Foundation.
Completion of numerous gas pipeline projects has been delayed from this year to 2017-18, said Sheehan Pipe Line Construction chief executive Robert Riess. "It begs the question of what will happen to those scheduled for completion in 2017-18. Those projects are viable and have end-users," he said.
For example, the proposed Constitution pipeline from the Marcellus to upstate New York has been delayed for nearly a year until the second half of 2017 to comply with environmental conditions set by the Federal Energy Regulatory Commission.
Energy Transfer's Rover project from the Appalachian region into Ohio is now expected in service in late 2017, a year later than planned. And the 1 Bcf/d PennEast pipeline from Pennsylvania to New Jersey has been delayed for year until late 2018.
Midstream energy infrastructure capital spending has declined from levels of recent years, according to the Ingaa Foundation, the study arm of the Interstate Natural Gas Pipeline Association of America. The group commissioned the study by consultants ICF International. Overall spending on natural gas, oil and natural gas liquids facilities are estimated at \\$546bn for the next two decades, with natural gas spending comprising 60pc.
The group's prior study two years ago suggested total spending would be \\$313bn over roughly the same period.
North American gas consumption will expand 22pc by 2035 in the low case scenario developed by ICF, and 44pc in the high case scenario. Growth in power generation, LNG exports and Mexican consumption will continue to be fed by shale and unconventional resources.
North America needs 51 Bcf/d of new gas takeaway capacity to meet the demand, nearly half of which will come from the Marcellus and Utica shales.
"There is a lot of momentum now due to supply growth," Petak said. "But growth in the market slows down after 10 years."
The high case in the ICF study is for \\$621bn in total energy midstream expenditures and is driven by more gas-fired power generation. The low case of \\$471bn foresees a greater penetration of nuclear and renewable power. Power load growth rises by 0.3pc/yr in the low case and almost 1pc/yr in the high case.
Northeast US production is expected to nearly double in two decades from 17 Bcf/d of 2015. Most gas-related investment will occur in the traditional southwestern production areas where LNG export facilities will be added to continued shale gas development. LNG export facilities and transmission mainlines are the largest categories of natural gas expenditures, at around \\$3.7bn/yr over the two decades in the high case.
West Texas Intermediate crude prices rise to \\$75/bl in the study period of 2015-2035. Oil and natural gas liquids infrastructure spending in North America through 2035 is expected at \\$123bn in the low case and \\$208bn in the high case scenario.