Pipelines: Much Needed Infrastructure to Connect Natural Gas Supplies to End Users
Think about this statement for a moment: “Pipelines connect natural gas supplies to end users.” Why would I focus on something seemingly so obvious?
Because this simple reality seems to have been lost on many as the focus in the Marcellus Shale region moves toward building much needed infrastructure. Low natural gas prices, coupled with a growing demand for cleaner energy sources, are driving up the demand for natural gas in established markets and creating new ones across the country. Yet, it’s in these established markets where the most opposition to building infrastructure and developing this resource is seen. It’s an interesting phenomena we’ve covered in our, “There ought to be a law series…” (Part 2, Part 3).
Why so much opposition when they bring so many benefits?
As someone sitting on top of the resource, yet unable to tap into it to heat my own home, I have a difficult time understanding this mentality. Like my neighbors, I support the building of infrastructure, even if it means exporting natural gas across the state line, and hope to one day have a nearby distribution network to tap into enabling us to say goodbye to the days of wood with oil back-ups. Given the transmission pipeline projects on the horizon, that day may be closer than we think.
A number of pipeline projects are designed to deliver Marcellus Shale gas to nearby markets, rather than competing for the space currently taken by other natural gas plays, such as the Gulf of Mexico. This is really important because these “bullet” pipelines should save utility customers a lot of money. For example, when our local utility pays less to get gas from upstate Pennsylvania (rather than the Gulf of Mexico or Canada), utilities pass the cost savings to customers. We’ve covered this before as well.
Let’s look at a few of the transmission projects under development.
MARC I Pipeline (Central New York Oil And Gas Company)
We covered the approval process of the Marc-1 transmission pipeline quite extensively last year because of the positive impacts it will have on our region. It’s a project I watched closely because the line ends about 2 miles from my house in Lycoming County with the south end compressor station about 5 miles away.
The Marc-1 is a 39-mile transmission line through Bradford, Sullivan, and Lycoming Counties. Once completed, it will connect Inergy Midstream’s Stagecoach South Lateral pipeline and Tennessee’s 300 line to Transco’s Leidy Line to transport natural gas to markets in my home state and across the northeast and Mid-Atlantic. Construction began this year and has helped to hire nearly 600 people, most of whom are local, and generated revenue for hundreds of local businesses. Plus, it will generate 8-10 good-paying jobs at the two compressor stations. The local economic impact potential is huge, likely north of $200 million.
The pipeline is scheduled to begin transporting gas within the next two months.
Constitution Pipeline (Williams, Cabot Oil and Gas)
We’ve also been talking quite a bit about the Constitution Pipeline, including an update this week, as it moves through the application process and Williams holds educational meetings to inform local communities of its progress.
The Constitution, which is regulated by FERC, will run from Susquehanna County, Pennsylvania to Schoharie County, New York, about 121 miles total. It will connect to the existing Iroquois and Tennessee pipelines and transport Marcellus Shale natural gas to markets in Boston and New York City.
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The project, which began its pre-filing process in April of this year, will go through several public hearings over the next few weeks, culminating in a construction start-date of April 2014, and an in-service date of March 2015 if all goes as planned.
We’ll continue to update you on the Constitution pipeline as the approval process moves forward.
Commonwealth Pipeline (Inergy Midstream, UGI Energy Services, Capitol Energy Ventures)
The Commonwealth pipeline is another line in beginning stages of obtaining survey permission, permits and approvals. It’s really in its infancy at this point, but if approved will bring Marcellus Shale natural gas to markets like Philadelphia and others on the eastern side of Pennsylvania. The project sponsors announced today the binding precedents agreement of two anchor shippers, a major step in beginning this project.
The current outlook is to build a roughly 120-mile pipeline from Lycoming County’s Marc-1 and end somewhere on the eastern side of the state, likely Chester County. This would be a unique scenario from other planned projects because a large part of this pipeline will deliver Marcellus gas to end-users in Pennsylvania, keeping much of the economic and other consumer benefits of cheap local production within the state. Pennsylvania is currently a net exporter of our natural gas, and more projects like these partnered with local distribution are imperative to helping us use the natural gas we’re developing here. It will also be a huge plus for our efforts toward American energy independence, supplying new U.S markets with new sources of U.S. natural gas.
Like the Marc-1 and Constitution lines, this project will be regulated by FERC. The tentative timeline for the project is as follows:
- Begin survey work (Fall 2012)
- Request use of NEPA pre-filing procedure (late 2012)
- File FERC 7(c) application (Spring 2013)
- Receive FERC approval (2014)
- Place pipeline into service (2015)
The project sponsors haven’t provided much detail yet on the anticipated economic benefits of the project, but if you look at the benefits generated by Marc-1 and the expected benefits of Constitution, it’s not hard to imagine 800-1,000 temporary jobs, 20+ permanent jobs, and several hundred million of economic benefits for local communities and the region. And that ignores the millions that local residents might save because their utilities are paying less for gas.
I’ll be watching this project closely to see if it runs by my own property and for the potential it will bring to my local community and the state as a whole. Watch out for updates from us as plans are solidified.