Low Amount of U.S. Natural Gas Pipelines Added in 2021; Will Things Pick Up?

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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. natural gas pipeline developers took a bit of breather last year in regard to project completions. According to the U.S. Energy Information Administration, 7.44 billion cubic feet per day (Bcf/d) of natural gas pipelines were added in the U.S. in 2021, the lowest amount since 2016. However, all being well, 2022 may bring new, larger projects, although some of these may not be brought online until 2023 or beyond.

According the EIA, more than 5 Bcf/d of pipeline capacity was added in 2021 to transport gas to and within Texas and the Gulf Coast markets, with much development driven by demand from U.S. liquefied natural gas (LNG) production and export plants. For example, Venture Global LNG LLC's (Arlington, Virginia) TransCameron pipeline was constructed to support the company's Calcasieu Pass LNG plant in Louisiana. Subscribers to Industrial Info's Global Market Intelligence (GMI) Pipelines Project Database can click here for related reports.

Other major 2021 pipeline completions in the southwestern U.S. include Summit Midstream Partners LP's (Houston, Texas) Double E Pipeline, a 135-mile line that provides natural gas transportation for up to 1.4 Bcf/d from the Permian Basin in southeastern New Mexico to the Waha Hub in West Texas. Subscribers can click here for the project report.

While the Permian area may not bring a lot of pipeline completions this year, pipeline projects are expected to pick up. "High oil and gas prices are driving increased production in the Permian," said Jesus Davis, Industrial Info's North American research specialist for the oil and gas production, pipelines and terminals industries. "Although gas prices have come down, we're seeing oil prices really pick up, which is driving the production of associated natural gas in the Permian Basin. While pipeline developers cut spending in 2020 as the COVID-19 pandemic gained steam, we're definitely seeing some movement in the area for additional takeaway capacity."

Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) is developing the Permian Pass pipeline in Texas, a project that took a back seat in 2020 as oil and gas demand plummeted but that potentially could kick off early next year. Subscribers can click here for the project report.

Energy Transfer LP (NYSE:ET) (Dallas, Texas) also has expressed interest in developing another Permian gas pipeline. In a company conference call with analysts earlier this month, Co-Chief Executive Officer Thomas Long said, "Given the proposed route and our ability to utilize existing assets, we believe we could complete construction of (the Permian) project in two years or less once we have reached FID (final investment decision)."

One of the U.S.' largest natural gas pipeline projects at the moment is outside of the Permian, in Appalachia. But the project, the Mountain Valley Pipeline (MVP), has been plagued with legal and environmental challenges that have seen the planned completion date pushed out and project costs rise. The 303-mile pipeline will carry up to 2 Bcf/d of gas from West Virginia to Virginia. Most recently, the Fourth Circuit U.S. Court of Appeals vacated the record of decisions of the U.S. Forest Service and the Bureau of Land Management allowing the pipe to cross about 3.5 miles through the Jefferson National Forest, and sent the case back to the agencies. While MVP developers say they're on track for completion this year, time will tell, and if the past is to be any guide, other delays seem likely. Subscribers can click here for related project reports.

The Rocky Mountains region also can expect some gas pipeline completions this year. Tallgrass Energy Partners (NYSE:TGE) (Leawood, Kansas) is expected to complete a 140-mile pipeline from Wyoming to Colorado toward the end of this year to transport up to 250 million cubic feet of gas per day. Subscribers can click here for related reports.

Davis said, "As LNG projects come online, we'll probably see increased pipeline development in the Gulf Coast region to link the plants up to existing gas infrastructure. LNG companies put off making final investment decisions for new plants when the pandemic started, but we're definitely seeing some movement on this front now. Cheniere (Houston, Texas) is expecting to make an FID on Corpus Christi Stage 3 this year; Venture Global is ramping up production at its Calcasieu Pass plant and also getting going on its Plaquemine plant in Louisiana. Sempra (NYSE:SRE) (San Diego, California) is mulling a fourth train at its Cameron facility in Louisiana. These and other plants are going to drive regional development to supply them with gas. In addition, demand from the power sector and industrial plants is expected to add another 0.6 Bcf/d of demand by the end of this year."

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.