Natural Gas Pipelines and Regulation (The Oil Drum)

Tech Talk - natural gas pipelines and regulation

Posted by Heading Out on July 17, 2011 - 6:10am
Topic: Supply/Production
Tags: colorado, ferc, japan, lng, maine, natural gas prices, natural gas production, ohio, regulatory process, texas railroad commission [list all tags]

In the last post on this topic I covered some of the earlier developments in the use of natural gas (NG) as a lighting source, and began to discuss its evolution into a widely used fuel. That use, and the international marketing of NG has largely come about as the increasing use of pipelines has made it easier to move NG from places where it is overly abundant, to those where it is not. A recent example of this has been the Rockies Express Pipeline (REX) which carries NG from Colorado to Ohio, and thence to points East. Out in the West NG is still abundant and so well head prices are low – in 2009 for example it averaged $3.21 per kcf in Colorado. That same year in Maine the residential price was $16.43 per kcf. (against $8.80 in Colorado). The well head price in Ohio fell from $7.88 per kcf, in 2008, the year before the pipeline was completed, to $4.36 in 2009.


The Rockies Express pipeline (Kinder Morgan)
As new fields, such as those in the various shale layers that are now becoming popular, are opened they only become significant as the gas that is produced from the well is connected into a distribution network. Pipeline costs have been estimated as around $1 to $1.5 million per mile. After the pipe is in place it is often hard to see where it runs, in the USA at least.

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