Released January 14, 2019 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The nation's largest natural gas pipeline system is attempting to expand its footprint in the Marcellus and Utica shales, leapfrogging other proposed pipeline projects in the area that have been delayed. The Transcontinental Gas Pipe Line Company (Transco) (Houston, Texas), a unit of Williams Companies Incorporated (NYSE:WMB) (Tulsa, Oklahoma), is developing the Leidy South Expansion project in Pennsylvania, a $500 million project that will add about 582 million cubic feet per day (MMcf/d) of new throughput. If the project receives all its required permits according to schedule, construction can begin in early 2021, and gas can begin flowing by early 2022.
In an interview, Transco spokesperson Chris Stockton said pipeline projects that expand upon existing infrastructure tend to draw less opposition than greenfield projects. That's largely because owners of existing projects retain rights of way and the community is familiar with those companies. Last month, Transco held two open houses in the Pennsylvania counties in which the expansion project would take place. The company plans to hold two more open houses in the area, possibly next month. Stockton characterized the tenor of the December open houses as respectful and constructive, though he acknowledged "not everyone was turning cartwheels about the project. That wouldn't be real life."
"The area where we plan to expand our infrastructure is pretty economically challenged, and several people who came to our open houses asked about the economic impacts of the project," he continued.
The Leidy South Expansion project will add two compressors, expand the horsepower of two existing compressors, replace six miles of 24-inch diameter pipe with 36-inch diameter pipe and add about six miles of new 36-inch and 42-inch diameter pipes to relieve bottlenecks on its system.
"What we're trying to do is similar to adding another lane to a highway," Stockton told Industrial Info. "It's all about debottlenecking an area where supply growth has been substantial." He said producers in the Marcellus and Utica have had to shut in production because there was insufficient infrastructure to process the gas and transport it to markets.
Transco operates the nation's largest pipeline system in the U.S. For more on its expansion of its footprint in markets across the U.S., see November 2, 2018, article - Williams Builds Out Transco, Natural Gas Processing Capabilities. For more on Transco's Atlantic Sunrise Pipeline and the delays affecting another company's pipeline proposal, the Mountain Valley Pipeline, see October 5, 2018, article - A Tale of Two Pipelines: Atlantic Sunrise Cleared for Takeoff, Mountain Valley Hit with New Court Action. For more on the troubles surrounding the Mountain Valley Pipeline, see September 28, 2018, article - Mountain Valley Natural Gas Pipeline Project Endures Interruptions, Litigation, Storms.
Despite the bottlenecks, gas production has soared in the Marcellus and Utica shales, now collectively referred to as the Appalachian region by the U.S. Energy Information Administration (EIA), the statistical and analytic branch of the U.S. Energy Department (DoE). That area now accounts for nearly 40% of total U.S. gas production, and most analysts expect the region will continue to experience dramatic production growth. The productivity of new wells also is notable: Newly drilled gas wells are producing an average of about 17.5 Mcf/d, roughly double the level from 2015, the EIA reported in its most recent Drilling Productivity Report.
Click on the images at right to see overall gas production growth, and new well production growth, for the Appalachian region.
"Pennsylvania now is the second-largest gas producing state," Stockton commented. "Other projects, typically greenfield projects, have been slowed by adverse court decisions or permitting delays."
Click on the image at right to see Pennsylvania's dramatic gas production growth compared to other states.
He pointed to the fast binding commitments from producers that were received as soon as the Leidy South pipeline expansion project was announced in October 2018. "As soon as we started shipping gas on the Atlantic Sunrise pipeline, which can move up to 1.7 billion cubic feet per day (Bcf/d), we received binding commitments for 100% of the capacity of the Leidy South project. That's how badly starved the area is for new outbound pipeline capacity."
"Adding infrastructure along existing rights of way to move more gas out of the Marcellus and Utica shales is a good idea, and it's desperately needed, but anytime you go into the regulatory arena, and potentially the legal arena, there are no guarantees," commented Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Pipelines and Terminals. "When it comes to challenging, and even litigating, pipeline projects, I've seen a few things in the last year or two that surprised me."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
In an interview, Transco spokesperson Chris Stockton said pipeline projects that expand upon existing infrastructure tend to draw less opposition than greenfield projects. That's largely because owners of existing projects retain rights of way and the community is familiar with those companies. Last month, Transco held two open houses in the Pennsylvania counties in which the expansion project would take place. The company plans to hold two more open houses in the area, possibly next month. Stockton characterized the tenor of the December open houses as respectful and constructive, though he acknowledged "not everyone was turning cartwheels about the project. That wouldn't be real life."
"The area where we plan to expand our infrastructure is pretty economically challenged, and several people who came to our open houses asked about the economic impacts of the project," he continued.
The Leidy South Expansion project will add two compressors, expand the horsepower of two existing compressors, replace six miles of 24-inch diameter pipe with 36-inch diameter pipe and add about six miles of new 36-inch and 42-inch diameter pipes to relieve bottlenecks on its system.
"What we're trying to do is similar to adding another lane to a highway," Stockton told Industrial Info. "It's all about debottlenecking an area where supply growth has been substantial." He said producers in the Marcellus and Utica have had to shut in production because there was insufficient infrastructure to process the gas and transport it to markets.
Transco operates the nation's largest pipeline system in the U.S. For more on its expansion of its footprint in markets across the U.S., see November 2, 2018, article - Williams Builds Out Transco, Natural Gas Processing Capabilities. For more on Transco's Atlantic Sunrise Pipeline and the delays affecting another company's pipeline proposal, the Mountain Valley Pipeline, see October 5, 2018, article - A Tale of Two Pipelines: Atlantic Sunrise Cleared for Takeoff, Mountain Valley Hit with New Court Action. For more on the troubles surrounding the Mountain Valley Pipeline, see September 28, 2018, article - Mountain Valley Natural Gas Pipeline Project Endures Interruptions, Litigation, Storms.
Despite the bottlenecks, gas production has soared in the Marcellus and Utica shales, now collectively referred to as the Appalachian region by the U.S. Energy Information Administration (EIA), the statistical and analytic branch of the U.S. Energy Department (DoE). That area now accounts for nearly 40% of total U.S. gas production, and most analysts expect the region will continue to experience dramatic production growth. The productivity of new wells also is notable: Newly drilled gas wells are producing an average of about 17.5 Mcf/d, roughly double the level from 2015, the EIA reported in its most recent Drilling Productivity Report.
"Pennsylvania now is the second-largest gas producing state," Stockton commented. "Other projects, typically greenfield projects, have been slowed by adverse court decisions or permitting delays."
He pointed to the fast binding commitments from producers that were received as soon as the Leidy South pipeline expansion project was announced in October 2018. "As soon as we started shipping gas on the Atlantic Sunrise pipeline, which can move up to 1.7 billion cubic feet per day (Bcf/d), we received binding commitments for 100% of the capacity of the Leidy South project. That's how badly starved the area is for new outbound pipeline capacity."
"Adding infrastructure along existing rights of way to move more gas out of the Marcellus and Utica shales is a good idea, and it's desperately needed, but anytime you go into the regulatory arena, and potentially the legal arena, there are no guarantees," commented Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Pipelines and Terminals. "When it comes to challenging, and even litigating, pipeline projects, I've seen a few things in the last year or two that surprised me."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
