As the world’s largest producer of natural gas, the United States has numerous economic opportunities, but it also faces challenges, particularly when it comes to pipeline infrastructure to transport its abundant gas production to market.
That was the theme of a public meeting held Monday in Carnegie Mellon University’s Hillman Center. The event was part of an ongoing quadrennial energy review, hosted by the U.S. Department of Energy.
The discussion, introduced by Energy Secretary Ernest Moniz and U.S. Rep Tim Murphy, R-Upper St. Clair, focused on the transmission, storage and distribution of natural gas.
Moniz explained that it is a part of a four-year effort requested by President Obama to provide input into developing a national energy policy. Each will include a number of energy-related topics that eventually will include discussions of the U.S. electric grid, renewables and other factors that will be used to create a comprehensive energy policy.
Moniz reiterated that he supports an “all-of-the-above” strategy for U.S. energy production that includes coal, natural gas, nuclear, solar and wind. He said the shale gas revolution of the past decade, which by 2011 placed the United States as the top natural gas producer in the world, has created a large infrastructure challenge.
“The shale gas revolution is impacting so many different sectors in our society,” he said, noting that in New England, natural gas now provides more than 50 percent of electricity production, while terminals are being developed to enable the export of liquid natural gas to other countries.
With the production of “wet gas,” Moniz added, there is the potential for a “huge manufacturing renaissance” related to the processing of ethane into a variety of plastics and petrochemicals.
“There are lots of opportunities, but we still have lots of challenges to meet,” he added, noting the impact of methane emissions from natural gas production.
“With methane emissions, we have to look at (them) from end to end,” he said.
In his opening remarks, Murphy noted that shale gas now accounts for 25 percent of domestic natural gas production, up from 1 percent just a decade ago.
But as the need for more pipeline infrastructure has grown along with the increased production, Murphy said, so has the demand for pipe and tube products.
That situation has created a trade fight over foreign countries illegally dumping cheap pipe products, despite the fact that U.S. domestic producers can supply the same products.
The initial panel of experts provided a historical overview and current status of the country’s natural gas infrastructure.
According to Peter Terranova, vice president of midstream assets and services for UGI Energy Services, the abundance of natural gas production being sent to the current infrastructure has created a bottleneck that has impacted pricing. That was underscored last winter, he said, when the “polar vortex” that created weeks of frigid weather had domestic natural gas producers being paid low prices while natural gas consumers paid historically high prices.
He noted that southeastern Pennsylvania, New Jersey, Virginia, Maryland and several other states could use more natural gas to supplant high usage rates of heating oil, but “the only solution is to build a 130-mile pipeline system from producers in the Marcellus.”
It isn’t as if the natural gas industry isn’t trying to solve the bottleneck problem, said Thomas Murphy, co-director of Penn State Marcellus Center for Outreach and Research. He said “tens of billions of dollars are being spent in the Marcellus to move gas to market,” but added that about one-third of wells drilled are currently not on any pipeline infrastructure.
But all that investment may do little to help the country upgrade existing gas transmission lines, said Piotr Galitzine, chairman of TMK IPSCO, a global provider of pipe and tube products. He said 55 percent of U.S. pipeline infrastructure is more than 45 years old.
The natural gas revolution is particularly felt in Pennsylvania, said Hayley Book, policy director for the state Department of Environmental Protection, who stated that natural gas production in 2013 was six times what it was in 2010.
Some pipeline companies, like Energy Transfer Partners, are reversing the flow of some of their existing pipeline assets to adjust to the amount of gas now coming out of the Marcellus, said Shelley Corman, executive vice president for ETP’s interstate pipelines.
Rory Miller of Williams Co.’s Atlantic-Gulf Assets, said the company currently has $4.8 billion worth of pipeline projects, but said permitting and other regulatory challenges often mean a slow process for building out infrastructure.
“At the end of the day, what we’re really after is regulatory consistency,” he said.
Much of Monday’s discussion centered on the possibility of a manufacturing renaissance in the United States because of its natural gas assets, particularly from the ethane-rich wet gas that can be converted to feedstock for the petrochemical industry.
David Peebles, vice president of Ascent, a project of the Odebrecht Group, which is working with West Virginia on a proposed ethane cracker, said the country has “a superhighway pipeline infrastructure for delivering product to the Gulf of Mexico and Canada, but actually needs “off-ramps” into shale regions.
The branches of pipeline could be used to create a regional system of converting ethane within the Marcellus, then passing it along to manufacturers in the region to create products.
“Without the ability to have deliveries (of ethane) into the region, we’re going to have a missed opportunity for manufacturing,” he said.
Dr. Andrew Gellman, a professor of chemical engineering and co-director of CMU’s Scott Institute for Energy Innovation, said the industry needs to focus on creating the most technologically advanced methods for downstream processing, much in the same way that hydrofracturing technology development created the shale gas revolution.
“The reason we’re here today is that 20 to 30 years ago, a lot of people decided to invest their careers and time into technologies” that made shale gas extraction possible, he said.