North American pipeline and gathering companies are building, planning and studying an astonishing 23,000 miles of natural gas, crude oil and petroleum pipelines in the U.S. and Canada, the overwhelming majority for gas. This huge pipeline build-out is necessary to handle growing production from the Rockies, the Barnett and other shale plays in the Midcontinent, and from the deepwater Gulf of Mexico, not to mention anticipated new liquefied natural gas (LNG) imports.

From 2000 through 2005, the midstream master limited partnerships hiked their capital spending by an average annual compounded rate of 39%, reaching some $4 billion in 2005 alone, according to Merrill Lynch & Co.

That will be surpassed in one fell swoop, however, by the largest interstate gas pipeline project in the U.S. in two decades: Rex, or Rockies Express. It carries an estimated price tag of $4.4 billion and will carry 2 billion cubic feet (Bcf) a day. It's to be operated by a joint venture of Kinder Morgan Energy Partners LP, Sempra Energy and ConocoPhillips, and will move Wyoming gas east to Ohio.

To no one's surprise, the busiest area of construction activity is in a broad arc from North and East Texas into northern Louisiana, as operators seek to process and move Barnett, Fayetteville and Woodford shale, and Cotton Valley and Bossier sand gas production to new markets.



Barnett shale area

Gas production in North Texas continues to ramp up significantly, now averaging about 2 Bcf per day in the Barnett shale. Citigroup reports that production could be as much as 5 billion a day by 2010.

Barnett leader Devon Energy Corp. says its production is now 730 million cubic feet a day from the play, up 28% from last year's first quarter. That growth should continue, as it plans another 385 Barnett wells this year, some 90% horizontal.

Smaller companies also are enjoying their day in the sun. For example, Quicksilver Resources Inc. reports its Barnett production has tripled since January 2006, and is now some 55 million cubic feet a day. Its year-end 2006 Barnett proved reserves were 704 Bcf equivalent (Bcfe)-an increase of 312% over 2005.

No wonder take-away capacity is being added on a routine basis.

Energy Transfer Partners LP, which already owns the largest intrastate gas system in the U.S. (12,000 miles of line in Texas), recently completed an $895-million, 500-mile project to move Barnett shale and Bossier sand gas to new markets. Throughput is 1 Bcf a day on the 265-mile, 42-inch pipeline.

Two loops will be added by this fall for a total construction outlay of $1.3 billion. The new line connects its North Texas and Barnett systems to a storage facility and travels from Johnson County to central Freestone County and on to the Carthage, Texas, pipeline hub where production can connect to a number of interstate lines. The company has firm 10-year shipping commitments from Barnett producers XTO Energy Inc., EOG Resources Inc. and Quicksilver.

Enterprise Products Partners LP plans to build the Sherman extension, a 178-mile, $400-million pipeline that also will provide Barnett take-away capacity. It will originate at Enterprise's Texas intrastate pipeline system southwest of Fort Worth and extend through the center of the Barnett area to Sherman, Texas.

From there, it will connect to Boardwalk Pipeline Partners LP's proposed $1.1-billion Gulf Crossing Pipeline Co. LLC. This 355-mile, 42-inch line would move gas from Sherman to Perryville, a gas hub in northern Louisiana. Designed to move 1.65 Bcf a day, it is to be in service by fourth-quarter 2008.

Gulf Crossing will connect with Crosstex Energy's North Texas pipeline system in Lamar County, providing an outlet for burgeoning Barnett gas. Crosstex has agreed to be a foundation shipper on Gulf Crossing.

"Continued drilling success in the Barnett shale has created the need for new pipeline capacity," says Crosstex president and chief executive Barry Davis. "We've been working with Barnett producers for some time to develop access to premium Midwest and East Coast markets. Our agreement...is the result of these efforts."

Falcon Gas Storage Co. is building a 63-mile pipeline to serve its Worsham-Steed gas-storage facility in North Texas. It will run south from there through Jack, Parker and Hood counties-all key Barnett production areas-where it will connect with a number of existing gas pipelines, including the North Texas pipeline jointly owned by Enterprise Products Partners and Energy Transfer Partners, and the Atmos Energy Line "X." A September 2007 completion date is expected.

Farther south, Kinder Morgan plans a $69-million expansion on Natural Gas Pipeline Co. of America's (NGPL) Gulf Coast and Louisiana mainlines, boosting compression and adding 36-inch line looping. This project provides take-away capacity for Barnett and Arkansas' Fayetteville shale production, taking the gas to the East Coast. The new capacity may be brought online in January 2008.



East Texas to Louisiana

More than $2 billion of pipeline and gathering construction is under way to move the growing amount of gas produced in East Texas and northern Louisiana. Most of the lines converge at either the Carthage gas hub in East Texas or the Perryville hub in northern Louisiana, where they can connect to pipelines moving gas to markets in the Northeast, Gulf Coast and Southeast.

In April, Crosstex Energy LP placed in service its $90-million, North Louisiana expansion. It moves gas from the Vernon, Elm Grove and Sligo field areas, operated by Petrohawk Energy Corp., Chesapeake Energy Corp., Exco Resources Inc. and others, east of Shreveport to markets accessible off its existing Louisiana Intrastate Gas (LIG) system. LIG is the largest intrastate system in the state. The new project's 74 miles run through three parishes before reaching Crosstex systems near Natchitoches. Capacity is 200 million cubic feet a day.

"As a result of the region's dramatically higher production, the take-away capacity had become insufficient," says Crosstex's Davis.

One of the larger projects under way in East Texas is a $530-million gas pipeline expansion by Enbridge Energy Partners. This involves a 192-mile, 36-inch line from Bethel, Texas, to Orange County, and a 60-mile, 24-inch line from Crockett, Texas, to Franklin County. Fourth-quarter 2007 completion is planned. This project includes gathering lines to tie existing facilities into the new intrastate pipeline, as well as a new gas-processing plant in Franklin County.

This summer in East Texas, Energy Transfer begins construction on a 42-incher, the Southeast Bossier Expansion, a $360-million, 157-mile line to be in service in first-quarter 2008.

CenterPoint Energy Inc. has just finished Phase I of a $550-million, 172-mile, 42-inch pipeline. It will move gas from Carthage to the company's Perryville hub. The pipeline will provide market access for growing production through interconnects with interstate and intrastate lines serving the East Coast, Midwest and Southeastern U.S. The first phase went in service in first-quarter 2007 and the second is set for completion this summer.

CenterPoint is contemplating a third phase that may be complete by the end of 2007.

Work on the $842-million Southeast Supply Header project is also expected to start this year. A joint venture of CenterPoint, Spectra Energy (formerly known as Duke Energy Gas Transmission) and Southern Natural Gas, it will link East Texas and North Louisiana basins to the U.S. Southeast and Northeast.

The 270-mile, 36- and 42-inch line runs from the Perryville hub to the Gulfstream Natural Gas System in Mobile County, Alabama. A summer 2008 completion date is planned.



Midcontinent, Fayetteville

Kinder Morgan Energy Partners and Energy Transfer Partners have announced their intent to jointly develop the $1.25-billion Midcontinent Express Pipeline (MEP), designed to move gas from Oklahoma and Texas easterly. Plans call for an approximately 500-mile line that will originate near Bennington, Oklahoma, and run with 42-, 36- and 30-inch pipe through Perryville, Louisiana, before terminating at an interconnect with Transco Pipeline Co. in Butler, Alabama. It's expected to be in service by February 2009.

In light of this project and CenterPoint's Southeast Supply Header, both of which go to Alabama, CenterPoint and Spectra expect to drop development of their proposed Midcontinent Crossing pipeline. The companies report the market does not support the line at this time.

Boardwalk Pipeline Partners announced in December it has committed to build two extensions from its existing system to transport gas from the Fayetteville shale in Arkansas. The $360-million Fayetteville Lateral, consisting of approximately 167 miles of 36-inch pipe, has an initial design capacity of 800 million cubic feet per day and a maximum capacity of 1.1 Bcf per day. It will originate in Conway County, Arkansas, and proceed east to an interconnect with Boardwalk's Texas Gas pipeline in Coahoma County, Mississippi.

The $230-million Greenville Lateral, consisting of approximately 98 miles of line with an initial design capacity of 750 million cubic feet per day, will originate near Greenville, Mississippi, and go east to Kosciusko, Mississippi.

Construction of both laterals is supported by an agreement with Fayetteville production leader Southwestern Energy Co. for firm transportation agreements, with an initial term of 10 years for 900 million cubic feet per day on the two laterals, with an option for more later. Both laterals are expected to be in service in early 2009.

Oneok Partners LP has announced plans to build a $260-million, 440-mile gas-liquids line from Stephens County in southern Oklahoma through the Barnett shale in Texas, and on to the Mont Belvieu, Texas, market center and connect to Oneok's existing fractionation facility there. Construction is expected to get under way in time to meet an early 2009 completion.



Rockies

Kinder Morgan reports that the second segment of the first leg of the Rockies Express (Rex) pipeline-a 192-mile, 42-inch line from the Wamsutter hub in southwestern Wyoming to the Cheyenne hub in Colorado-has been completed.

Meanwhile, Kinder Morgan continues to move the remaining 1,663 miles of Rex through the regulatory process. The company received a green light for the Rex-West segment in April, and construction has begun. Rex-West will consist of 713 miles of 42-inch pipe from Weld County in the Denver-Julesburg Basin of Colorado, to Audrain County, Missouri, with an in-service date of December.

Rex-East, a 622-mile segment from eastern Missouri to the Clarington hub in Ohio, is expected to be completed by June 2009.

Work is expected to begin this summer on the $500-million Overland Pass Pipeline Co. being developed by Oneok Partners LP (incorporating the old Northern Border Partners) and Williams Cos. The 750-mile, 14- and 16-inch system will carry 110,000 barrels per day of gas liquids from Opal, in southwestern Wyoming, to Conway, Kansas. Construction is expected to move toward an early 2008 completion. Acquisition of rights of way is already under way.

Oneok also plans to build a $120-million gas-liquids pipeline lateral in northwestern Colorado's Piceance Basin. This 150-mile lateral will connect gas production with Overland Pass Pipeline. Construction is to begin in 2008, and start-up is expected in early 2009.

Questar Corp.'s Overthrust Pipeline has filed for approval of its Wamsutter expansion, a 77-mile, 36-inch line that would become the westernmost end of Rockies Express. It would extend from a compressor complex near Rock Springs, Wyoming, to a proposed interconnect with Rex near the Wamsutter gas hub in south-central Wyoming.

Some 45,000 horsepower of new compression is also involved. The company estimates an in-service date of January 2008.



Proposed New Shale-Gas Take-Away Capacity*

Capacity Expected In-Shipper

SponsorProject Name(MMcf/d)LocationService DateCommitment

Energy TransferCleburne to Carthage2,300Cleburne to Carthage2Q 2007 High

CenterPointCarthage to Perryville1,200 Carthage to Perryville2Q 2007High

CenterPoint, SpectraSoutheast Supply Header1,000 Perryville to Coden/Mobay Storage3Q 2008High

Boardwalk Partners East Texas Expansion1,500 Carthage to Perryville2Q 2007High

Boardwalk PartnersSoutheast Expansion700 Perryville to Sta. 851Q 2008High(+500)

Transco Sta. 85 to Mobile Bay Expansion700 Sta. 85 to Sta. 822Q 2008High

EnterpriseSherman Ext. to Gulf Crossing1,100 Morgan Mill to Sherman, TX1Q 2009Medium

Boardwalk, EnterpriseGulf Crossing1,650 Sherman, Texas, to Perryville1Q 2009Medium

Energy Transfer North Texas to Midcon Express1,200 Springtown to Paris, Texas1Q 2009Medium

Energy Transfer,Midcontinent Express Pipeline1,400 Paris, Texas, to Sta. 851Q 2009Medium

Kinder Morgan

EnbridgeEast Texas Expansion1,000 Bethel to Beaumont, TX1Q 2009Unknown* As of early March 2007. Source: Falcon Gas Storage



Bruce Beaubouef is editor of Hart's PipeLine and Gas Technology magazine in Houston.