Natural Gas Industry Admits New Pipelines Aren’t Needed
Published by the Natural Resources Defense Fund
Some proponents of new pipelines point to the recent cold snap and claim that more fracked gas pipeline capacity is needed to meet winter spikes in natural gas demand. However, the facts don’t back this up.
Even in 2014, when the infamous “Polar Vortex” occurred, additional pipelines were not needed. On January 22, 2014, gas prices in the mid-Atlantic region exceeded $100/dekatherm when the 2014 average was only $4/dekatherm. Power prices reached $1000/MWh, when the 2014 average was $40/MWh. But the increased fracked gas prices weren’t due to too few pipelines. There was unused capacity on several pipelines supplying the region from production areas in the Marcellus and Utica basins. Rather, the price spike was the result of pipeline owners being allowed to restrict gas flow on their pipelines. They are not required to accept frequent changes in the amount or timing of gas scheduled to be delivered. This reduces the flexibility in the system needed to adjust to high demand.
Skip to 2018, when we had another severe cold wave in the same region. This time, despite the so-called “bomb cyclone” leading to some increasing demands on fracked gas, a natural gas price index lost more than 4.6 percent of its value. This calls into question any claims that more natural gas supply is needed in times of deep cold.
My colleague Montina Cole has blogged about the over-capacity in the U.S. pipeline system: the United States now has enough pipeline capacity to carry 180 billion cubic feet of natural gas every day, but last year, average daily U.S. consumption was just 75 billion cubic feet. According to a spokesman for Dominion Energy, the developer of the proposed Atlantic Coast Pipeline, the cold spell proved there is “severely limited capacity” on existing pipelines serving Virginia and North Carolina, and a “real and urgent need for the Atlantic Coast Pipeline.”
However, a spokesman for Williams, owner of the Transco pipeline, a would-be competitor of ACP, indicated “the infrastructure is in place right now to meet the current demand.”
In October, 2017, a spokesman for a natural gas production company, Range Resources, shared this sentiment: “we don’t think there’s going to be enough near-term supply to fill all the capacity” from new pipelines. Industry research firm Platts Analytics estimates that pipeline projects in the Appalachian region of the Marcellus and Utica shales will add 12.8 billion cubic feet per day (Bcf/d) of capacity to the region over the course of 2018, and that production will grow by about 2.6 Bcf/d in 2018. However, even at this rate of production growth, Platts Analytics forecasts the pipeline capacity coming online will be underutilized.
I’ll give the final word to the Range Resources spokesman: “Historically, every play gets overbuilt.”
Read the full article at: https://www.nrdc.org/experts/amy-mall/natural-gas-industry-admits-new-pipelines-arent-needed
