EIA says U.S. pipeline capacity adequate for winter

Oct. 26, 2000—U.S. natural gas pipeline capacity constraints and bottlenecks could arise during severe weather this winter, but for the most part, capacity appears adequate to serve the needs of the upcoming heating season, say government analysts in an annual assessment of the industry.

By the end of the year, interregional natural gas pipeline capacity will have grown 27% or 20 bcf/day since 1990, with 5% of the additions installed since 1998. At least half the additions were built to accommodate shifts in supply, report U.S. Energy Information Administration analysts. By year-end, the agency estimates the industry will have invested $4.6 billion on expanding and upgrading the system since January 1999.

But new bottlenecks are cropping up. In California, where utilization levels on the major transmission pipelines have been well above 90%, government analysts say the system could reach its limit if demand continues to increase. Service needs in southern Nevada continue to remain at a very high level, suggesting the need for expansion in that area as well, says the EIA.

Capacity constraints exiting production areas in the central region have resulted in the area having the lowest spot gas prices in the U.S. Expanding coalbed methane production in the region has outpaced the development of long haul pipeline transmission to carry gas to end users.

The agency says new gathering systems have been built to move gas from the fields to mainlines, but not enough matching interstate pipeline capacity has been installed.

This winter constraints could occur in the Northeast, especially New York City, Boston, Mass., and in the Leidy area of Pennsylvania, where demand is growing rapidly from new natural gas-fired power plants, the EIA warns.

In the Midwest, completion of the Alliance pipeline could lead to some short-term excess capacity during the upcoming heating season, according to EIA. But not all the transmission capacity scheduled to transport gas to the Northeast will be in place when Alliance is completed. As a result, local Midwest markets should not encounter natural gas supply problems this winter.

EIA says sufficient pipeline capacity is available to serve the growing needs of the Southeast market. New pipeline capacity and LNG peaking facilities in North Carolina have reduced the potential for capacity constraints in Florida and the Carolinas.

The growing market for gas-fired electric generation and extreme cold could produce some localized service limitations in the Southwest U.S., but by and large, the agency says, there are no apparent constraint problems in the region.

And “because of competition from Canadian supplies in the Midwest in particular has lessened the growth in demand for Southwest supplies, and hence, pipeline capacity serving that region, there has not been a need for any major expansion over the past decade,” EIA notes.

Looking ahead, analysts say, while there have been no sustained pipeline outages since the mid-1970s, additional pipeline capacity will be needed, especially in the Northeast, to avoid disruptions during peak demand.

Proposals are pending to relieve these problems, but it will be several years before they will be put in service, the agency says.

The agency is projecting new pipeline development will be needed to serve deepwater production in the Gulf of Mexico and coalbed methane production in the West. In addition, EIA says, more capacity will be needed to serve planned new gas-fired electric generation.