US Pipeline Capacity Growth no Help for LNG

The US increased its pipeline capacity between November and January, though at least one project to facilitate LNG exports was shelved, the US Energy Information Administration (EIA) reported on March 16.

The EIA estimates that around 4.4bn bn ft³/day of pipeline capacity entered into service during the period. That could help accommodate the expected increase in total gas production this year.

Despite a dip in output due to below-freezing temperatures in Texas, the EIA expects overall production to average 91.4bn ft³/day this year, an increase of 0.9bn ft³/day from its February forecast.

Two pipelines in the Midwest (PADD 2) will improve regional transport capacity by around 0.5bn ft³/day. Michigan utility company Consumer Energy invested some US$610mn to overhaul the Saginaw Trail pipeline to lift transport capacity in the state by 0.2bn ft³/day, while Columbia Gas Transmission spent $709mn to replace several sections of its 36-inch Buckeye Xpress project. The latter sees gas capacity increasing by 0.3bn ft³/day from the Appalachia shale basin to interconnections in Kentucky and West Virginia.

In Texas, Kinder Morgan put its 692-km Permian Highway pipeline into service in January to carry as much as 2.1bn ft³/day from the Waha hub to various interconnections along the Gulf Coast, including tie-ins to Mexico.

The Aqua Blanca expansion project, steered by Whitewater and MPLX, went into service in January, connecting various gas processing sites in the Delaware basin straddling the border of Texas and New Mexico. It has a design capacity of 1.8bn ft³/day. In the third quarter, it is scheduled to be connected to the Whistler pipeline that can move Permian gas to the Gulf Coast.

In terms of reaching the foreign market, however, recent developments have not been supportive. In December, Tellurian withdrew an application to build a pipeline from the Permian that would have fed a proposed LNG facility in Louisiana.

LNG offers the US the option of exporting outside the continent. In its short-term energy report for March, the EIA reported that total US LNG exports saw a 23% decline last month from January. While that is largely a result of sub-freezing temperatures in Texas, LNG exports are expected to see a seasonal decline through May.