INGAA study takes midstream look at long-term gas supply

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Oct. 23 -- Projected growth in North American natural gas supplies and markets will require billions of dollars of additional investments in pipelines, storage, and other midstream infrastructure through 2030, a recent INGAA Foundation Inc. study concluded.

The study, which the Interstate Natural Gas Association of America’s research division released on Oct. 20, projected that investments of $133-210 billion—or $6-10 billion/year—would be needed in the next 20 years under various market scenarios.

The outlays would be needed primarily to join increased gas production from unconventional shale basins and tight sands to the existing pipeline network, it said. Anticipated electric power generation and industrial demand growth as well as the potential to connect massive Arctic gas resources and LNG imports to the grid also will be key drivers, it indicated.

Insufficient midstream gas infrastructure investment could lead to volatile prices, reduced economic growth, and diminished deliveries to consumers who need the gas most, the study warned.

“The domestic supply picture for natural gas has been redrawn and experts agree we now have more than 100 years of technically recoverable gas in the US and Canada,” said INGAA Foundation Chairman Gary Sypolt. “This study spotlights what this sea change in domestic supplies will mean for investment in additional pipeline, storage, and midstream infrastructure.”

Other experts agree that hydraulic fracturing and other technologies are opening up significant gas resources that would have been ignored 20 years ago. “We have an unconventional gas revolution in the US. I expect it to be the default fuel in electric power,” Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, said during an Oct. 21 forum cosponsored by the US Chamber of Commerce and Foreign Policy magazine.

Anticipated needs
The study projected that the US and Canada would need 29,000-62,000 miles of gas pipelines and 370-600 bcf of additional storage capacity to meet anticipated market requirements. Most of the new storage would be in high-deliverability salt caverns, which would essentially double current storage capacity, it said.

Other estimated midstream gas infrastructure needs through 2030 include 6.6-11.6 million hp of transmission pipeline compression, 15,000-26,000 miles of gathering pipelines, 20-38 bcfd of processing capacity, and 3.5 bcfd of LNG import terminal capacity, the study said.

Under its base case scenario, it projected that US and Canadian gas consumption will grow to 31.8 tcf in 2030 from 26.8 tcf in 2008, or about 0.8%/year.

The study anticipates that 75% of the market growth will come from electric power generation. Areas of uncertainty include electric load growth; timing and development of wind, solar, and other renewable technologies; clean coal technology development with carbon capture and sequestration; and expansion of nuclear generation, it added.

Interregional transmission pipeline capacity between major US and Canadian areas is currently about 130 bcfd, the study said, with another 21-37 bcfd potentially needed in the next 20 years. More interregional gas transportation capacity would be needed even without a growing North American gas market due to shifts in production location, it noted. Laterals to reach new production and deliver gas to gas-fired power plants and other new customers also will be needed, it said.

The study is available online at www.ingaa.org/cms/31/7306/7828/aps.

Contact Nick Snow at nicks@pennwell.com.

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