By Brendan Gibbons (Staff writer)
Published: October 24, 2013
As Marcellus Shale production surges, the business of getting gas from the wellhead to consumers is drawing more attention.
In 2013 alone, the industry is estimated to more than quadruple what it spent in the prior year.
At a conference in downtown Philadelphia, James Balaschak, a principal in financial services corporation Deloitte Services, cited Oil and Gas Journal numbers showing spending on pipelines in the U.S. is expected to increase from $8.6 billion in 2012 to $38 billion in 2013.
"In the past five years, the industry has invested nearly twice of what it invested during 1992-2006," according to Mr. Balaschak.
Midstream companies used to be "on the sidelines," compared to exploration and production companies, he said.
"One thing that has emerged is actually the midstream business as a business," he said.
Midstream is the process of the gathering, processing, transporting and wholesale marketing of oil and gas. Downstream refers to refineries, petrochemical plants, distributors and retail outlets.
Blank Rome, a multidisciplinary law firm, and Hull and Associates, a project development and engineering consulting firm, jointly hosted the conference Wednesday explaining trends and challenges in the midstream and downstream natural gas industry. About 50 people attended.
Mr. Balaschak said he never would have expected the Marcellus Shale formation to produce 12 billion cubic feet of gas per day.
In 2010, the U.S. imported 22 percent of its energy. By 2025, this number is projected to decline to 11 percent.
"The U.S. is really the envy of the world, in terms of its recent energy abundance," Mr. Balaschak said.
The rapid expansion of pipeline infrastructure was clearly visible in a map of Pennsylvania that Public Utility Commission Chairman Robert Powelson showed the crowd. Mr. Powelson was the keynote speaker at the conference.
The map came from the federal Pipeline and Hazardous Materials Safety Administration's National Pipeline Mapping System. It showed a nest of natural gas transmission and hazardous liquids pipelines crossing the commonwealth.
Pennsylvania has more than 68,000 total pipeline miles, made up of 46,000 miles of natural gas distribution lines, 10,004 miles of lines that gather gas from wellheads, 9,485 transmission lines and 2,777 miles of hazardous liquids pipelines.
In 2012, the passage of Act 127, or the Pipeline Act, added thousands of miles of pipelines to the PUC's regulatory responsibilities.
In an interview before his speech, Mr. Powelson and Jennifer Kocher, the PUC's press secretary, explained how the act has changed the commission's role in regulating pipelines.
"Our predominantly gas safety operation was really focused on gas distribution companies," Mr. Powelson said. The act expanded the commission's authority to register all pipeline operators.
The commission employs nine inspectors, Mr. Powelson said. He thinks they need more, and finding qualified people is difficult.
"We're competing against the industry, and we're competing against other agencies, i.e. (the Department of Environmental Protection), to get these kind of trained individuals," Mr. Powelson said.
Mr. Powelson said the act has given the commission adequate tools to enforce pipeline safety regulations, but "it's still a work in progress."
He would like the industry to use real-time monitoring on its compressor stations and put more employees near compressor station sites to deal with potential incidents.
"There should be an on-site person that's able to collaborate with and coordinate with us," Mr. Powelson said. "People want peace of mind that within a couple-hour period, there's going to be people out there deployed."