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Gas pipeline issues challenge for producers, users

David Conti | Pittsburgh Tribune-Review

Ten years ago, developers were building terminals to import liquefied natural gas, experts predicted production increases of less than 1 percent annually, and insufficient pipelines into New England during the cold winter sent prices soaring.

A decade into the “shale gas revolution,” the pipeline issues remain as surging production makes distribution a challenge.

“We have a huge infrastructure problem,” U.S. Energy Secretary Ernest Moniz told a few dozen people at Carnegie Mellon University on Monday. His department is taking comments for an energy review addressing gas transportation, storage and distribution.

Moniz and other speakers spoke about how quickly natural gas production has grown, especially in the Marcellus shale play that accounts for 20 percent of the national product.

But developers and regulators can’t satisfy the need for pipelines and other infrastructure to move all that gas to markets, many said. Some pipelines, more than half of which are more than 45 years old, must be reversed to move gas and by-products out of areas that only imported it.

“We are seeing booming production in areas that weren’t, at least recently, major centers of production,” Moniz said, citing North Dakota and Pennsylvania.

The so-called “polar vortex” that brought record cold temperatures to the Northeast in January and February “provided a snapshot of where the bottlenecks are” and highlighted the implications, said Rory Miller, a senior vice president at the Tulsa-based Williams Cos.

Moniz noted that New England relies on natural gas for 50 percent of its electricity generation, but inadequate pipelines and other issues led to a gas shortage that sent spot prices for that region to more than $120 per unit, compared to about $5 elsewhere.

Related: More LNG export pipelines in the pipeline

“We’re trying to deliver gas to New England through a garden hose,” said Jim Sullivan, a leader of the American Public Gas Association and chair of the Board of Public Utilities Commissioners in Norwich, Conn.

Roadblocks to catching up include the speed of growth in the gas fields, changes in the market and, most importantly, permitting delays, industry leaders said.

Shelly Corman, an executive vice president at Texas-based Energy Transfer Partners, said low gas prices in recent years shifted developers toward more liquid-rich gas areas before the dry gas fields were connected, and companies have to remake import facilities as export terminals.

Most speakers said they need a smoother, faster process to win regulatory approval for projects.

Williams, which has nearly $5 billion worth of projects awaiting government OK, spent seven years getting approval for four miles of pipeline to supply Brooklyn with natural gas.

“We don’t have a practical process in place,” he said.

Pipeline builders run into a patchwork of rules even within a single county or state, said Kris Evanto, a development manager at Oklahoma City-based Access Midstream Partners.

“It would be good to see some consistency,” he said, noting developers must plan years in advance, but government rules can change quickly.

Pennsylvania tried to streamline some permitting by merging state processes with federal ones, said Hayley Brook, policy director for the Department of Environmental Protection. Some permits remain bogged down in delays, so the department is working with the Army Corps of Engineers to speed that up, she said.

 

David Conti is a Trib Total Media staff writer. Reach him at 412-388-5802 or dconti@tribweb.com.