New Pipelines Changing Natural Gas Industry

A recent report by the Energy Information Administration (EIA) shows that 84 pipeline projects were completed in 2008.  According to the report, these completions or expansions represent the greatest amount of pipeline construction activity in more than 10 years.

“Several projects were completed in natural gas shale regions as growth in supplies try to reach new markets,” says Valerie Wood, President of Energy Solutions, Inc. “There was additional emphasis in improving or building pipeline infrastructure near liquefied natural gas (LNG) terminals too.  Plus, the massive Rockies Express Pipeline project now allows Rocky Mountain gas delivery capabilities as far east as Ohio.  These projects are changing price differences between the east and west coasts.”

Historically, delivered natural gas prices to western states may be as much as $.50-$1 per MMBtu lower than the cost of natural gas in Louisiana.  Conversely, delivered natural gas prices to Northeast states were at times $.50-$2 per MMBtu higher than the cost of natural gas in Louisiana.  “That’s all changing,” says Wood.  “Yesterday, the delivered price of natural gas in Louisiana is around $2.30 per MMBtu while the delivered price to California was just slightly more $2.40 and prices to New York were only around $2.50 per MMBtu.  Overall, the large price discrepancies of years ago between the eastern and western states may be disappearing because of the improved deliverability created by new pipeline construction and expansions.”

Regional pricing is changing as natural gas can now make its way to new areas.  The addition of new pipeline capacity is changing the pipeline transportation network in the lower-48.  “While the largest regional price differences have occurred between western and eastern states, the Midwest may also see some changes in pipeline transportation costs when the Rockies Express is fully operational on November 1, 2009,” says Wood.  Changes in pipeline transportation costs will be discussed at greater length in Energy Solutions’ October edition of The Advisor, to be issued this week.  Request a complimentary copy of The Advisor by sending your request to request-pr6@energysolutionsinc.com or call (608) 848-9589.

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About Energy Solutions, Inc.

Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 25 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.