Marcellus Shale Play Creates Need For Pipelines

Marcellus creates need for restructured existing & new pipelines

With the recent shale natural gas production success in Pennsylvania, more pipelines and added infrastructure are needed to get the gas from where it is extracted to the customer in a timely manner. Due to this growing need, a new wave of natural gas pipeline projects are set to break ground in the next three years in order to transport this gas to citizens in Pennsylvania, Ohio, West Virginia and beyond.

Marcellus Pipeline

In addition, other destinations for this gas “are varied, and in addition to New England, some are targeting the Midwest, eastern Canada and the South” said Matthew Piatek, Associate Director of North American Natural Gas for IHS, which tracks current energy markets. The needs for these new pipelines are especially great in New England and New York in order to heat homes during their harsh winters.

Rockies Express Pipeline

New Waves of Pipeline

In the past, natural gas pipelines have traditionally flowed from extraction areas in the south and west to the states in the north. But with the development of Marcellus and Utica shales, the expansion and flow reversal of pipeline infrastructure in Pennsylvania and in the north has become a new way to transport gas. Certain regions are seeing alterations in pipeline interconnectivity to connect with these new areas of production. Old pipelines that transported gas from the south to the north now have to be reversed to flow from the north to the southern parts of the country.

Similarly, a project out in the western part of the country was the 1,698-mile, 1.8-Bcf/d Rockies Express Pipeline, which was built to take natural gas from

Colorado and Wyoming to eastern Ohio in 2009. In 2014, the pipeline was reversed to allow gas from the Appalachian Basin to flow Midwest markets.

Mihoko Manabe, Senior Vice President at Moody’s Investor Services, said:

“This is an once-in-a-lifetime construction cycle. Once the infrastructure is built, the activity will die down. That’s why there is so much frenetic activity in pipeline development. The Marcellus is re-plumbing the gas flows of the eastern half of the U.S. in a big way.”

Looking Forward

With a new center of natural gas production, we’re in a period where the infrastructure needs to catch up with the supply so that it can be distributed to new markets where heating fuel and wood are still primary residential heating sources and old markets which pay a premium for natural gas like Boston.

According to a July 2015 report from the United States Energy Information Administration (EIA), the productivity of the natural gas wells in the Marcellus Shale and Utica Shale account for 85% of production growth since 2012. According to the EIA’s Drilling Productivity Report (DPR), the northeast natural gas wells have driven the recent growth in the U.S. natural gas production as a whole.

Natural Gas Production

The Drilling Productivity Report (DPR)

The DPR basically provides a month-ahead estimate of oil and natural gas production for the most significant shale formations in the country. The natural gas production activity in the Marcellus region, including Pennsylvania and West Virginia, makes up not only the Marcellus Shale formation, but also parts of the Utica shale and other natural gas formations that lay beneath other states.

The Specifics

The DPR identifies trends in total production and rig productivity, articulated as new-well gas production per rig. The July publication of the DPR detailed that the average new-well gas production per rig in the Marcellus Shale region was 3.2 million cubic feet of natural gas per day (MMcf/d) back in January 2012. In July 2015, new-well gas production per rig had increased to 8.3 MMcf/d) due to the increase in the amount of natural gas produced in the Marcellus region during the same period. The DPR also indicates that the Marcellus region produced an estimated 6.3 billion cubic feet of natural gas per day (Bcf/d) in January 2012, which increased to 16.5 Bcf/d in July 2015.

The EIA reports that this increase in natural gas production from these northeast regions could be due to many different factors, including:

Greater use of advanced drilling techniques
Increased number of stages used in hydraulic fracturing operations
Increased use of techniques such as zipper fracturing (simultaneous fracturing of individual stages of two parallel horizontal wells)
Use of specific components during well completion that aid in increasing fracture size and porosity of the geologic formation being targeted

Other Data

In addition to this report, the EIA also published additional data saying that the gas produced in the U.S. shale basins also accounts for 56% of the total dry natural gas production in the country. The northeast region, being the Marcellus and Utica Shale, are indeed the driving force behind the total United States’ natural gas production.

Looking Ahead

Of course, as reported, United States’ Shale deposits have had an increase in production over the last few years, which begs the question: what are we doing to help? The problem with this increase in production is that the country doesn’t have the infrastructure to keep up with it. We have to look to the future and figure out ways to build the pipelines in order to transport the natural gas we so desperately need from the producer to the consumer in an efficient manner.