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Big, New Pipelines on Tap for Marcellus Shale

Wed August 31, 2011 - Northeast Edition

HARRISBURG, Pa. (AP) Pennsylvania and the Marcellus Shale natural gas reservoir are emerging as a key focus of natural gas pipeline operators, as the increasing gas flow spurs projects to bring it to customers in the northeastern United States and possibly Canada.

More than half of the interstate natural-gas pipeline projects proposed to federal energy regulators since the beginning of 2010 involve Pennsylvania — at a cost estimated at more than $2 billion.

That means hundreds of new miles of pipeline as part of a larger, traditional cross-country network that already extends through Pennsylvania and its neighboring states, as well as dozens of new or upgraded compression stations to force more gas through the buried pipes.

The projects are already employing thousands of contract workers and bringing work to steel mills, welders, gravel quarries and landscapers. At the same time, they are generating concerns about air and water pollution and eminent domain issues.

Combined, more than a dozen projects proposed or already under construction would have the capacity to move an additional 4 billion cubic feet of natural gas a day — one-third of what analysts for Colorado-based Bentek Energy say is the average daily demand in the northeastern United States.

“A lot of those projects are really designed to move the new volumes out of the Marcellus to your more traditional, historic pipelines that have served the Northeast markets for the last 30 or 40 years,” said Bentek’s manager of energy analysis, Anthony Scott.

For now, Bentek said about 3 billion cubic feet (bcf) per day of gas is flowing from the Marcellus Shale, the nation’s largest-known natural gas reservoir. Production is rising quickly as crews busily drill more wells, and the flow should easily reach 7 bcf or 8 bcf per day in the next five years, Scott said.

But the exploration companies need to find takers for the gas, and Bentek analysts say more pipeline capacity is needed if the Marcellus Shale gas is going to ease price spikes at important New York City and Boston-area hubs during the coldest winter stretches.

Where the gas is already flowing into interstate pipelines, largely in southwestern and northeastern Pennsylvania, it is displacing pricier gas from more distant sources including Canada, the Gulf Coast, Rocky Mountains or terminals that accept liquid natural gas shipments from overseas, Bentek analysts said.

Similar pipeline construction followed earlier growth in shale gas production in Texas, Louisiana and Arkansas, said Jeffrey Wright, director of the Office of Energy Projects at the Federal Energy Regulatory Commission.

“You test it, you produce it and you develop it, and when things look promising, you have to have a way to get the gas to market, and that’s when the pipeline proposals start coming in,” Wright said.

The expansions come amid scrutiny after several high-profile pipeline accidents around the country and the need for Congress to re-authorize the last significant pipeline safety rules, adopted in 2006.

Armed with billions of dollars and a new technique for tapping gas from thick rock — hydraulic fracturing, or fracking, combined with horizontal drilling deep underground — major drilling companies began descending on Pennsylvania in earnest in 2008 to exploit the Marcellus Shale.

The formation lies primarily beneath Pennsylvania, New York, West Virginia and Ohio. Pennsylvania is the center of activity, with more than 3,000 wells drilled in the past three years and thousands more planned in coming years.

Cathy Landry, spokeswoman of the Interstate Natural Gas Association of America, said pipeline construction historically has been driven by demand from gas utilities or power plant owners. With the growth in gas production, partly from the Marcellus Shale and other shale regions now being explored, it’s the exploration companies that are pressing for pipelines.

“It’s the producers who want to get their gas to market,” she said.

One of the largest projects, a $700 million expansion of Tennessee Gas Pipeline Co.’s 300 pipeline, is already under construction, employing 2,100 surveyors, inspectors and construction workers, according to the company. It received federal approval last year to lay approximately 127 miles of 30-inch pipeline — along the existing 300 pipeline where possible — through northern Pennsylvania and northern New Jersey, as well as the installation of two new compressor stations and upgrades of seven others.

To connect to the larger, interstate pipelines, other companies are moving forward in Pennsylvania on what is expected to be thousands of miles of smaller pipelines to ferry gas from producing well sites. Those gathering pipelines require various federal, state or local permits to cross wetlands, streams and roads, but not federal energy regulators’ approval.

The region is already crisscrossed by major interstate pipelines, but it isn’t accustomed to such heavy drilling or drilling-related activity. And while the industry is credited with bringing new life to local contractors, the pipeline construction at times is generating worries over how it will affect air, waterways and land.

Jan Jarrett of the Harrisburg-based environmental group PennFuture, said she is concerned about the impact of the pipeline construction on forests, wetlands and the countless high-quality cold water trout streams that spider-web northern Pennsylvania.

Joe Osborne of the Pittsburgh-based Group Against Smog and Pollution, or GASP, said there are concerns about air pollution from the growing number of compressor stations that pump gas through pipelines. He said the stations are sources of carbon monoxide and two other pollutants — nitrogen oxides and volatile organic compounds — that contribute to the formation of ground-level ozone. The U.S. Environmental Protection Agency said that can trigger or worsen breathing problems.

“In the Northeast, we already struggle to meet the federal health-based ozone standards,” Osborne said.

In many cases, new pipeline would be buried along existing pipelines in the national network.

At least one new interstate project, the MARC I line proposed by a subsidiary of Kansas City, Mo.-based Inergy LP, is getting pushback from some residents and environmental groups in northern Pennsylvania’s rural Endless Mountains region.

The EPA even weighed in, writing the Federal Energy Regulatory Commission to express concerns about the potential environmental impact of the line and question whether it is even necessary.

The line, which would travel into New York, would pose the threat of pollution to 111 sensitive streams and water bodies and split 39 mi. of undeveloped forest and farm land in an area that supports a robust ecosystem, high quality of life and recreation, the EPA said.

But federal regulators have found the pipeline would have “no significant impact” on the environment and recommended that it be allowed to go forward. Bill Moler, president of Inergy’s midstream division, said in a statement in July the company is confident that any environmental impact has been identified and either avoided or remedied in its plans.

Certification by the Federal Energy Regulatory Commission gives a company the right to seek court approval to take property by eminent domain — a worry for some property owners in the proposed path of the MARC I whose families have owned the land for generations, said state Rep. Rick Mirabito, D-Lycoming. Before that happens, Mirabito said those property owners should get the satisfaction of a stronger environmental analysis of the project.

“It’s one thing if we do it for the greater public good,” Mirabito said. “But when it’s a private company that’s basically making money, getting that power, you have to make sure you do the environmental footwork first.”

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