Pipelines: Fueling Pennsylvania and Beyond
The Keep It In the Ground movement and other fringe activists are using the North Dakota Access Pipeline (#NoDAPL) movement as a basis for fighting everything from pipeline development to leasing in national forests here in the Marcellus and Utica Shales. The Sierra Club even issued a false press release earlier this week claiming the PennEast pipeline was being re-routed through environmentally sensitive areas — even though the company has no such plans at all.
With so much misinformation circulating, it is more important than ever for the public to have accurate information not only on fracking, but the infrastructure necessary to move our natural resources. That includes pipelines — which are the safest way to transport oil and gas to consumers across the country.
According to the Pipeline & Hazardous Materials Safety Administration (PHMSA), a division of the U.S. Department of Transportation,
“The nation’s pipelines are a transportation system. Pipelines enable the safe movement of extraordinary quantities of energy products to industry and consumers, literally fueling our economy and way of life. The arteries of the Nation’s energy infrastructure, as well as one of the safest and least costly ways to transport energy products, our oil and gas pipelines provide the resources needed for national defense, heat and cool our homes, generate power for business and fuel an unparalleled transportation system.
The nation’s more than 2.6 million miles of pipelines safely deliver trillions of cubic feet of natural gas and hundreds of billions of ton/miles of liquid petroleum products each year. They are essential: the volumes of energy products they move are well beyond the capacity of other forms of transportation. It would take a constant line of tanker trucks, about 750 per day, loading up and moving out every two minutes, 24 hours a day, seven days a week, to move the volume of even a modest pipeline. The railroad-equivalent of this single pipeline would be a train of 75 2,000-barrel tank rail cars everyday.
Pipeline systems are the safest means to move these products.” (emphasis added)
- Gathering Pipelines — which transport natural gas from the well head to larger transmission lines
- Transmission Pipelines — which are larger capacity lines that allow natural gas to travel across a state or multiple states to storage or distribution systems
- Distribution Pipelines — which distribute natural gas to end users in homes, businesses and power generation facilities
In fact, Pennsylvania’s pipeline network dates all the way back to the 1800s when “Colonel” Edwin Drake drilled the first commercial oil well in 1859 in Titusville. And while a lot has changed since then — as steel has replaced iron, and improved safety measures and better technology have been introduced — one thing that hasn’t is Pennsylvania’s continued investment in this needed infrastructure, which is not only essential to bringing abundant Marcellus gas to markets outside the Commonwealth, but the very areas where the gas is produced.
Bringing Distribution Networks and Savings To Rural Communities
The development and growth of the Marcellus Shale over the last decade has brought with it a renewed discussion on how to get the gas being produced in rural Pennsylvania to the folks living there. Despite the Commonwealth’s extensive distribution network, the majority of these lines are only available to consumers in cities across the state where there are manufacturing industries and people live in closer proximity. Fortunately, steps are being taken to address this issue.
State Senator Gene Yaw began working on passing legislation in 2012 to bring greater access to his district, which includes some of the top Marcellus producing counties in the state, including rural communities in Bradford, Lycoming, Sullivan, Susquehanna and Union counties. From his December 2012 press release:
“According to the Center for Rural Pennsylvania, only 51 percent of Pennsylvania homes are heated with natural gas,” Senator Yaw said. “Certainly, the lack of natural gas service is a hardship for citizens in Pennsylvania who are required to purchase more expensive heating sources simply because of a lack of natural gas distribution infrastructure. Expanding that infrastructure is critically important to providing consumers with the best energy value, both now and into the future.”
Also in 2012, Leatherstocking Gas Company was granted approval to bring gas to residents in rural Susquehanna County, which previously had no gas utility infrastructure despite being one of the top gas producing counties in the state. Tunkhannock, another rural community in Wyoming County, entered a 10-year plan in 2015 with UGI Utilities to get much-need access to natural gas services.
Also last year, the Pennsylvania Public Utility Commission (PUC) approved a five-year plan with UGI called the UGI Growth Extension Tariff, or GET Gas, a program that makes the conversion process more affordable to provide greater access to consumers.
And just last month, a $24 million grant was approved called the Pipeline Investment Program (PIPE), that could rapidly shift the availability of gas infrastructure for rural residents, manufacturers and others, and in doing so hasten “the development of low-cost energy and creating new jobs.” From Gov. Wolf’s press release:
“Pennsylvania boasts tremendous natural gas resources, and it makes sense that our residents should benefit from the assets right under their feet,” said Governor Wolf. “Doing so will also have a significant impact on the economic well-being of the commonwealth by creating jobs and making low-cost natural gas more readily available.”
A major hurdle to overcome in bringing about a utility services to regions where none previously existed is to have enough interest to make the investment worthwhile. Many times, this requires what’s called an “anchor” to be the primary consumer, allowing residents and businesses along the route the ability to also tap into the new supply. And that’s exactly what the PIPE grant addresses by offering,
“… up to $1 million for pipeline project expenses including construction; acquisition of land, rights of way, and easements; land clearing and preparation; and engineering, design, and inspection costs. Applicants must provide matching funds equal to at least 50 percent of the total project cost.”
PIPE grants specifically seek out the following anchors for gas service:
- Businesses – A corporation, partnership, sole proprietorship, limited liability company, business trust or other CFA-approved commercial entity
- Economic Development Organizations – A nonprofit corporation or association whose purpose is the enhancement of economic conditions in their community
- Hospitals – An entity licensed to provide inpatient care and services under either the Public Welfare Code or the Health Care Facilities Act
- Municipalities – Any city, township, borough, town, county, or home rule municipality
- School Districts
If the grant program is successful, it may soon offer folks like myself who rely on wood, propane or oil an affordable alternative for heat, saving residents millions of dollars and creating jobs in the process.
Ramping Up Pennsylvania’s Status As A Net Exporter
Expanding pipeline infrastructure not only helps distribute natural gas to the rural Pennsylvania communities that produce it, but is also essential to further enhancing the Commonwealth’s status as a net exporter.
Ironically, Pennsylvania’s status as the second largest producer of gas in the U.S. has filled the transmission capacity that exists in the state, impeding distribution at the same time that demand in markets such as New York, New Jersey and New England has continued to increase.
Fortunately, according to the U.S. Energy Information Administration (EIA), several key projects came online in 2015 and early 2016 that have already helped to alleviate the growing need for the abundant supply of Marcellus gas in major out-of-state markets:
- “The Rockies Express Pipline (REX) reversal project had added westbound capacity to flow natural gas to the Midwest in 2014. In late 2015, Texas Eastern Transmission Company’s (Tetco) OPEN project added 550 million cubic feet per day (MMcf/d) of pipeline takeaway capacity out of Ohio.”
- “Columbia Gas Pipeline’s East Side Expansion, a 310 MMcf/d project that flows natural gas produced in Pennsylvania to Mid-Atlantic markets.”
- “Tennessee Gas Pipeline’s Broad Run Flexibility Project, a 590 MMcf/d project originating in West Virginia that moves natural gas to the Gulf Coast states.”
- “Tetco’s Uniontown-to-Gas City project flows up to 425 MMcf/d of natural gas produced in the Marcellus region to Indiana.”
- “Williams Transcontinental Pipeline’s Leidy Southeast project provides additional capacity to take Marcellus natural gas to Transco’s mainline, which extends from Texas to New York. From there, the natural gas serves Mid-Atlantic market areas as well as the Gulf Coast.”
Several transmission projects are also in various stages of the approval process with the Federal Energy Regulatory Commission (FERC), which regulates these types of pipelines. A 2015 Pittsburgh Post Gazette article reported that Pennsylvania can “expect to see about 17 pipeline projects meant to ship about 17.3 billion cubic feet per day of natural gas out of Pennsylvania, West Virginia and Ohio to end-users.” From the article,
“Those destinations are varied, and in addition to New England, some are targeting the Midwest, eastern Canada and the South,” said Matthew Piatek, associate director of North American natural gas for IHS, which tracks energy markets.
“Given the amount of production in the tri-state area currently, it will be able to satisfy the lion’s share of Mid-Atlantic and New England demand and still export a net amount of natural gas,” Mr. Paitek said. (emphasis added)
Some of those projects include:
- Atlantic Sunrise
- Tennessee Gas Pipeline Expansion Projects: Orion and Triad
In addition to increasing pipeline capacity, these projects provide huge impacts for Pennsylvania’s economy. Just to give a snapshot:
Atlantic Sunrise will travel across 10 counties in Pennsylvania and result in:
- A $1.6 billion increase in economic activity across the 10 counties
- An estimated 2,300 direct construction jobs for Pennsylvanians
- An additional 6,000 full-time equivalent (FTE) jobs through support services
- $245 million in income generated from new labor
- Around $50 million in new state and federal tax revenue
- $859 million in total value-added impact to Pennsylvania
- 29 new and permanent full-time equivalent positions
- $1.9 million once operational
- More than $1 billion in total in economic activity
- $890 million in construction costs
- $733 million in construction labor
- $520 million direct to Pennsylvania
- $210 million direct to New Jersey
- 12,160 total jobs
- $740 million in worker wagers
- $1.6 billion total economic impact
In addition to that, it’s estimated that had the PennEast pipeline been operational last winter, it would have saved consumers in Pennsylvania and New Jersey $893 million.
Pennsylvania has an opportunity to be a tremendous supplier of natural gas, not only within its own borders, but to millions of people across the country. As pipeline capacity increases, distribution of gas developed in the Marcellus will result in more affordable, reliable energy, as well as lower emissions in areas where natural gas is utilized for heating and electricity generation.
But that will only happen if infrastructure gets built and groups that partake in the Keep-It-In-the-Ground mentality are unsuccessful in holding Americans hostage to higher energy costs because they do not have access to this resource.