NATURAL GAS PRICES MAY BE STUCK IN THE bargain basement, but pipeline companies are rushing to connect to shale gas fields in the southern and eastern United States as if they contained gold. Two Energy Transfer Partners interstate gas pipelines came online on December 1, both ahead of schedule, one serving the Haynesville Shale and Bossier Sands producing regions in Louisiana and East Texas, the other the Fayetteville Shale producing region in Arkansas.

Further north, in the Marcellus play, which laps Ohio, Pennsylvania and New York, shale producers are grabbing up firm transportation on existing pipelines, pushing conventional gas producers that held nonfirm carriage to look for new pipeline service. That is where Dominion Transmission's proposed 110-mile pipeline in West Virginia and Pennsylvania comes in, according to Dominion spokesman Dan Donovan.

But multiple new shale-gas-only pipelines are also on the boards. Tennessee Gas Pipeline (TGP), a subsidiary of El Paso Corp., has three separate projects on the boards in Pennsylvania. The Federal Energy Regulatory Commission held scoping hearings in Pennsylvania the first week of November for TGP's Northeast Upgrade project, which includes 37 miles of pipeline and additional compression. Tennessee has executed binding, 20-year term agreements with two prominent Marcellus Shale producers, Chesapeake Energy Marketing and Statoil Natural Gas, for 100 percent of the project's capacity. Robert Newberry, an El Paso spokesman, says the application process has been going smoothly at FERC. "We haven't experienced any real problems," he said.

Damien Gaul, an economist with the Energy Information Administration, a division of the U.S. Energy Department, says the rapid, sometimes ahead-of-schedule completion of shale pipelines stems from efficient practices at FERC and the proactive approach to infrastructure on the part of the pipeline companies.

Even pipeline companies that may have lost out in recent competition to sign up shale gas producers are tapping their toes impatiently, awaiting the next opportunity. Millennium Pipeline announced a few years back that it would compete with TGP along one of the three routes TGP proposed, the one taking natural gas to New York City. TGP signed up the producers; Millennium lost that competition. Millennium spokesman Mike Armiak said, "We know we will have another opportunity."

The pipeline frenzy in Marcellus was highlighted in an October report from the staff at the FERC. It said, "A geographical shift in natural gas production is changing the utilization of the nation's pipeline infrastructure." Conventional Rockies gas and Marcellus shale have made Canadian gas, once a mainstay for northeastern markets, an afterthought. Referring to Marcellus, the report said: "Much of the new pipeline capacity in the area is targeted at improving the access of shale gas to markets." Marcellus Shale gas production has doubled in the past 12 months to around 700 million cubic feet per day. New pipelines and expansions now being completed should add an additional 725 million cubic feet per day, making a grand total of 1.2 billion cubic feet per day in the past year alone.

The EIA's Gaul predicts Marcellus shale gas production will double again over the next few years. He says the pipeline network there now is sufficient, but won't be in the future. A number of pipeline projects are in the works to meet the shale gas production frenzy. The Spectra Energy's Texas Eastern Appalachia to Market Expansion project is scheduled to be completed in 2012. Texas Eastern has a second, slightly larger Marcellus project on the boards for completion in 2013. An Inergy subsidiary, Central New York Oil And Gas, announced this summer it will build a 43-mile interconnection in Pennsylvania in addition to its previously announced North-South project that adds compression to its existing Stagecoach laterals in the Marcellus area. John Sherman, president and CEO of Inergy, said the projects allow Inergy to "provide the infrastructure necessary to efficiently develop the Marcellus Shale and serve the growing Northeast natural gas markets."

Copyright © 1996-2010 by CyberTech, Inc. All rights reserved.

To subscribe or visit go to:  http://www.energycentral.com

To subscribe or visit go to:  http://www.energybiz.com