North American pipeline flows changing dramatically: Kinder
http://www.platts.com/latest-news/natural-gas/houston/cera-2015-north-american-pipeline-flows-changing-21334707
22 Apr 2015
The North American gas pipeline system is undergoing a historic reconfiguration likely to lead to the creation of a “null point” somewhere in Pennsylvania from which natural gas will flow to markets in opposite directions, the chairman and CEO of infrastructure giant Kinder Morgan said Wednesday.
Richard Kinder, giving a keynote address at IHS CERAWeek in Houston, said the growth of gas production in the Marcellus and Utica shales in the last several years has had a profound effect on the flow of gas, which historically has flowed from the producing regions of Louisiana and Texas to markets in the Northeast.
“Then all of a sudden, like manna from heaven, we get a tremendous amount of production in the Northeast, just 200 miles from the major metropolitan areas,” he said.
“You’re going to have a null point somewhere in Pennsylvania, which means that on a given day all the gas that’s upstream of that will flow toward Texas and the gas that is downstream of that is going to move toward New England,” he said.
or its part, Kinder Morgan, which owns four major interstate gas pipelines that stretch from the Gulf Coast region of Texas and Louisiana to market areas in the Northeast, has already reacted to the changing market dynamics, Kinder said.
“We turned three of them around to move gas back down here. The fourth one we have not turned it around and we are now seeking approval to turn it into an NGL line,” he said.
Kinder said much of the gas from the Marcellus and Utica plays is selling at a discount to other regions of the country because of the shortage of infrastructure to bring it to market.
“All this natural gas is tremendous asset, but many [producers] are getting paid poorly because there’s so much of it,” he said. “There are places where it’s less than $1.50[/MMBtu] at some of those points and you have a tremendous market just a couple of hundred miles away.”
Kinder said Kinder Morgan and other interstate pipeline companies are in a race to build out the pipeline infrastructure in the region.
“That’s why we are trying to build more capacity to New England, which has the highest natural gas prices and highest electricity prices in the nation and yet they’re sitting almost on top of this tremendous asset,” he said.
In addition, Kinder said he sees a need for significant growth in gas infrastructure projects in the Southeast to service the expected growth in industrial demand along the Gulf Coast.
He predicted there would be $100 billion worth of industrial projects built along a 40-mile swath that reaches across Texas eastward to Baton Rouge, Louisiana. An expected jump in the number of petrochemical projects along the Gulf Coast will lead to “a tremendous growth in the use of natural gas,” Kinder said.
This demand will soak up the available supply in the region and then some, he said.
“We need everything we can produce down here and the smart people in this room want as many sources of supply as possible,” he said.
Many investors in petchem projects have moved to lock in their gas supplies by contracting to buy Marcellus production, Kinder comment.
“They have firm rights to go upstream to a liquid point someplace in the Utica/Marcellus to pick up that gas and they can buy at a discount,” he said.
Maybe NYS should life the fracking ban.