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Friday, February 7, 2014

Pipeline problems

There's a tsunami of natural gas production coming from the Marcellus play, and another wave is racing to catch up – the development of pipelines to get all that gas to markets.

The lag in pipeline development is wreaking havoc with local gas pricing for producers as the glut of gas that can’t connect to more distant demand pushes prices down. That situation is likely to continue for some time, as this article points out: 
The gas industry has made progress on this persistent problem in the last two years. In June 2011, 38 percent of the state's unconventional wells were producing, many because they lacked pipeline connections... By 2013, two-thirds of all the wells in the state were connected and producing…
There are currently close to 4,400 shale gas wells reporting production in Pennsylvania, over 7,900 shale gas wells drilled or under development, and about 14,000 wells permitted. So, the percentage of wells that are yet to be connected to pipelines shows no sign of going down soon. Indeed,  
...with gas production growing so fast, the pipeline investment will have to go on into the next decade and maybe longer to keep pace.
That attractive, distant demand that could help producers avoid price crashes is explained here:  
The cold weather has pushed demand for energy very high. In our energy markets, demand rising faster than supply translates into higher prices. Electricity prices in the Mid-Atlantic and natural gas in the Northeast are showing this today, and this isn’t new or unique.  Supplies to meet demand are limited by the capacity of the delivery systems...
There is a boom in U.S. natural gas production, but that does not get the gas to markets. Natural gas delivery is limited by the capacity of the pipelines that move gas from production areas to consumers. The supply and demand for natural gas has outstripped the infrastructure to deliver.  
It all adds up to a push for more natgas pipeline development. That will be accompanied by gathering lines to connect the wells to the pipelines, hundreds more compressor stations, and other infrastructure. Landscape industrialization will accelerate. Cumulative impacts will grow. As will local conflicts and siting controversies

Smart planning can reduce some of these impacts. Those reductions will be critically important, given the scale of development needed to get all that Marcellus gas – and gas from other shale basins - to market. How these pipeline problems are solved will greatly affect the natural world and our  our fundamental rights as Pennsylvanians

Will Pennsylvania - and the gas industry - get pipelines right?


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