From Drake To The Marcellus Shale Gas Play-- Midstream Developments

Part 3 of 3
By Derek Weber | May 2010 Vol. 237 No. 5

FloSystems Station.

Editor's note: This is part 3 of a series on the Marcellus Shale Play by Derek Weber. See part 1 on Marcellus transmission and part 2 on distribution.

The major drivers of midstream infrastructure buildout in the region are learning to read the Marcellus. Just what makes the Marcellus play different aside from its scale? Recognizing the indigenous challenges that are unique to this play and developing the solutions to overcome them are going to be paramount.

Existing gas pipelines in the region currently include those built and operated by NiSource/Columbia Gas Transmission, Spectra/Texas Eastern Transmission, Tennessee Gas Pipeline 300 Line, Dominion Transmission pipelines and Transcontinental Gas Pipeline’s assets. It is widely understood that this existing network of pipelines will prove inadequate to the challenge of bringing Marcellus gas to market as production levels continue to increase. In recognition of this fact a broad array of new pipelines, as well as expansion projects are currently in the planning phases or are already under way with at least 6+ Bcf/d of new pipeline capacity planned.

The challenges of building pipeline systems are varied. Each location comes with its own distinctive set of challenges; differences in costs boil down to mixed-bag equations of geography, weather, regulations and manpower to name just a few. Across North America, a quick tale of the tape reveals some the challenges and struggles associated with completing these complex buildouts: in the Rockies - weather, environmental issues, terrain and seasonal disruptions; in the Haynesville - a powerful rainy season, hurricane season and Louisiana Law (not in order of calamity); in the Barnett - highly populated areas, rights-of-way, city councils, homeowner associations, noise abatement and light pollution. Beyond all else one thing is clear, unconventional resource plays across North America have one important factor in common--they all are associated with the use of massive amounts of water. Operators in the Marcellus Shale play are faced with a gamut of restrictions on the availability of water for use in hydraulic fracturing (hydro-fracing) and the lack of treatment and disposal facilities to deal with flow-back water. The issues involving the disposition of water and natural gas liquids (NGLs) are going to be at the front and center of this buildout.

Midstream Gathering
Natural gas industry experts recognize that critical midstream gathering buildouts, forecast at $10B in spending through 2013; with the construction of complex systems and processing facilities will be essential to success in the aggregate. Finding cost effective solutions to challenges such as frac water use and disposal, facility access and regional manpower shortages are going to be of huge import as the region connects key producer wells to major transmission points and LDC networks.

In terms of a comparison with the Barnett, or better yet a lesson from Barnett to be considered by those entering the Marcellus, according to many insiders, is that in the end there was not enough capacity built in Texas, that in the final assessment not many facilities were too big, but many were too small and that planning will prove critical in the Marcellus.