FORT WORTH, Texas—Building a 42-in. pipeline across Louisiana’s Lake Calcasieu or 30-in. transition lines in the Permian Basin, are two of many examples that exemplify the industry’s ability to get product to where it needs to be, according to Craig Meier, president and CEO of Eunice, La.-based Sunland Construction Inc.
“Our industry is very resourceful on how to get the necessary infrastructure built to get the oil and gas out,” he told attendees of the midstream program at Hart Energy’s recent DUG Permian Basin conference.
However, that resourcefulness is being tested as the impact of lower oil and gas prices has created economic uncertainty moving forward, Meir noted in his presentation.
The primary focus of the presentation was on the results of the “North American Midstream Infrastructure Through 2035: Leaning into the Headwinds” study released in April 2016 by The Interstate Natural Gas Association of America Foundation (INGAA).
“We do our infrastructure study every two to three years,” said Meier, former INGAA chairman in 2013 and 2014. “We started it in 1993 to look at natural gas and expanded it over the years to look at oil, NGL and other products, and not just the Lower 48, but all of North America.”
The study he explained is, “basically a model of the market and supply, showing where assets need to go and at what quantities based on assumptions.”
The lower commodity prices currently facing the industry prompted INGAA to take an approach different from the one it utilized in earlier versions of the study.
“Typically, we do the most probable case when we do the study,” he said, “but this year with the commodity prices in flux, we decided that it would be best to bookend the study with an optimistic case and less optimistic case—a high and a low case.”
General conclusions from the study are promising.
“Future infrastructure development is significant, but down from the last five years,” he said. “Key uncertainties are economic activity and commodity prices.”
Projected total capex for midstream infrastructure over the 20-year period will be approximately $450 billion in the low case to $600 billion in the high case, according to the study report.
The largest share of gas-related capex of the projected $353 billion for new infrastructure over the next 21 years in the high case will occur in the Southwest region (New Mexico, Texas, Oklahoma, Louisiana and Arkansas). It is expected to total $112 billion throughout the projection period, with $54 billion being spent for LNG export projects, according to the report.
The Southwest region also is expected to see the largest share of the crude oil related capex of the projected $190 billion for new infrastructure in the high case to total $96 billion, with $82 billion being spent for lease equipment, according to the report.
“New gas transportation capabilities, the miles of natural gas interstate pipeline, are somewhere over one thousand miles a year,” Meier said. “You add in midstream, NGL, oil, and gathering, you get 11,000 miles to 14,000 miles of pipe to be installed. As for horsepower, the study projects 650,000 hp/yr to 930,000 hp/yr needs to be installed.
“Doing some quick math, assuming somewhere around 8,000 horsepower a station—some are going to be less, some are going to be more—we've got to install an excess of 100 compressor stations annually across the United States. It’s a little easier when they are 1,000 hp units but a lot more challenging in expertise when you are building 20,000 hp or 40,000 hp compressors.”
The 100+ page study report is available for free at http://www.ingaa.org/Foundation/Foundation-Reports/27958.aspx.
Jennifer Presley can be reached at firstname.lastname@example.org.
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