Engineering Inc. - March/April 2013 - (Page 4)
MarketWatch
By g e r ry d o n o h u e
U.S. Pipeline Industry: From Bust to Boom
F
ive years ago, the U.S.
pipeline industry
couldn’t see any light at
the end of the tunnel.
Domestic natural gas
and oil reserves were dwindling and high drilling costs
were making U.S. suppliers
uncompetitive with growing
foreign imports. The pipeline
network was established and
there was little demand for
new infrastructure.
That was before the combined technologies of horizontal drilling and hydraulic
fracturing made the production of huge reserves of
natural gas and oil trapped in
shale formations plentiful and
economical.
Domestic natural gas production has increased fivefold
in the past five years.
“It’s nothing short of
phenomenal,” says Greg
Hopper, managing director for the natural gas and
power fuels group at Black &
Veatch Management Consulting. “We are actually set to
become an exporter on a significant scale.”
The 760,000 barrels-perday jump in U.S. oil production in 2012 marked the
largest ever year-over-year
increase. And, according to
the International Energy
Agency, the United States
will be the world’s largest oil
producer within the next five
years.
production infrastructure and
are far from refining hubs,
such as the Bakken shale
oil fields in North Dakota.
Rather than merely needing
to add to the pipeline grid,
these resource finds require
building an entirely new grid,
experts say.
According to North American Midstream Infrastructure,
a report by global energy,
environment and infrastructure consultant ICF International, through 2035, 16,400
miles of mainline gas pipeline
and 165,000 miles of gathering gas line will be built
between 2011 and 2020.
From 2021 to 2035, an additional 19,200 miles of mainline and 249,000 miles of
gathering line will be added.
Through 2035, the oil and
NGL industries will require
30,000 miles of new pipeline.
4
ENGINEERING INC.
Slowing Growth
Two challenges to this growth
scenario are low natural gas
prices and/or regulation.
The current price of less
than $4 per million British
thermal units (MMBTUs),
says Paul Ziff, CEO of Ziff
Energy Group, “is far below
the full cycle cost to replace
gas that is produced and sold.”
For many wells, he says, the
cash costs “exceed the gas price
received, resulting in negative
cash flow.”
ICF International says gas
prices between $6 and $7 per
MMBTUs would sufficiently
encourage gas production
without curtailing demand.
A distorted supply-demand
curve is keeping natural gas
prices down. Production is
increasing at a rate of 15
percent to 20 percent annually as suppliers tap new wells
and improve technologies for
recovering gas from existing
ones.
Concurrently, says Black &
Veatch’s Hopper, “we’ve had
three years of a tough economy, with curbed consump-
Cost of Infrastructure Added (Billions)
2011–2020
2021–2035ail
annual average
expenditures
Gas Transmission Mainline
$46.2
$51.5
$3.9
Laterals to/from Power Plants Gas
Storage and Processing Plants
$14.0
$15.8
$1.2
Gathering Line
$16.3
$25.4
$1.7
Gas Pipeline
$5.6
$3.5
$0.3
Oil Transmission
$19.6
$11.8
$1.3
NGL Transmission
$12.3
$2.2
$0.6
Source: ICF International
Summary of Incremental Infrastructure Costs
2011–2020
2021–2035ail
annual average
expenditures (billions)
Inter-regional Pipeline (Bcfd)
29
14
$1.7
Miles of Transmission Mainline (1000s)
16.4
19.2
$1.4
Miles of Laterals to/from Power Plants
Storage Fields and Procession Plants (1000s)
6.6
7.3
$0.6
Miles of Gathering Line (1000s)
165
349
$16.5
Compression for Pipelines (1000 HP)
Building Capacity
Bust has turned to boom for
the pipeline industry because
most of these newly productive natural gas, oil and natural gas liquid (NGL) reserves
are in remote regions that
have no or limited resource
ICF International estimates
that total expenditures for
natural gas mainlines, laterals,
gathering lines and compression will total $82.1 billion
through 2020 and another
$96.2 billion between 2021
and 2035. Oil and NGL
pipeline transmission expenditures will be $31.9 billion
through 2020 and $14 billion
between 2021 and 2035.
In addition, the natural gas
industry will need to add 240
new processing plants—at a
cost of $20 billion—and 600
billion cubic feet of new storage capacity.
3,039
1,907
$197
Source: ICF International
maRCh / apRIl 2013
Table of Contents for the Digital Edition of Engineering Inc. - March/April 2013
Engineering Inc. - March/April 2013
Table of Contents
From ACEC to You
Market Watch
Legislative Action
A Fresh Look at U.S. Energy Policy
Record-Setting Year for ACEC/PAC
Protecting Your Interests
Sky’s the Limit
6 Ways to Keep Cash Flowing
2013 Annual Convention Preview
Guest Column
Decision Makers
Business Insights
Members in the News
Mergers and Acquisitions
Engineering Inc. - March/April 2013
https://www.nxtbook.com/nxtbooks/acec/engineeringinc_spring2020
https://www.nxtbook.com/nxtbooks/acec/engineeringinc_winter2020
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1119
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0919
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0719
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0519
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0319
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0119
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1118
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0918
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0718
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0518
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0318
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0118
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1117
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0917
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0717
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0517
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0317
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0117
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1116
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0916
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0716
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0516
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0316
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0116
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1115
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0915
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0715
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0515
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0315
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0115
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1114
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0914
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0714
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0514
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0314
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0114
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1113
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0913
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0713
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0513
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0313
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0113
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1112
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0912
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0712
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0512
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0312
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0112
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1111
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0911
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0711
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0511
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0311
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0111
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1110
https://www.nxtbook.com/nxtbooks/acec/engineeringincSeptOct
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0910
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0710
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0510
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0310
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0110
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1109
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0909
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0709
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0309
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0109_v2
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0109
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1108
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0908
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0708
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0508
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0308
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0108
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1107
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0907
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0707
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0507
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0307
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0107
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0505
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0305
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1105
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0306
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0105
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1103
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0906
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0903
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0703
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0106
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0506
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0503
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0303
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0904
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1104
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0704
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0504
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0304
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0905
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0705
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0104
https://www.nxtbook.com/nxtbooks/acec/engineeringinc1106
https://www.nxtbook.com/nxtbooks/acec/engineeringinc0706
https://www.nxtbookmedia.com