Ohio’s natural gas boom brings flurry of pipeline construction

Source: Toledo Blade

A huge supply of natural gas in the shale of northern Appalachia is igniting a mega-boom in gas pipeline construction in Ohio, the likes of which haven’t been seen since the 1940s.

“You have interstate, intrastate, local utility service lines upgrades, collection lines for oil and gas utilities, and lines for gas-fired electric utilities. Altogether, there will be 38,000 miles of pipeline development in Ohio over the next decade,” said Dale Arnold, director of energy services for the Ohio Farm Bureau Foundation.

“I tell people you might not see shale and oil drilling development in your area like in the eastern part of the state, but with pipelines and development, it’s coming your way.”

Three proposed pipelines are winding their way through the Federal Energy Regulatory Commission approval process now. A major pipeline company has hinted it may build a fourth large pipeline.

The largest project is Energy Transfer Partner L.P.’s $4.3 billion Rover Pipeline, an 823-mile conduit running from southeast Ohio west to Defiance County and then north to Michigan and Canada. The 409-mile main line will have nine new lateral pipelines ranging from 4 to 206 miles to connect it to southeast Ohio, Michigan, and Canada.

E.T. Rover will begin moving 3.25 billion cubic feet of gas daily from Appalachia to southern Ontario in 2016.

Also aimed at the Canadian market is Spectra Energy/​DTE Energy’s $1.5 billion Nexus, a 250-mile pipeline that will begin in northeast Ohio’s Columbiana County, cut across to Maumee, and turn north through Fulton County to reach Michigan and Canada. It will move 2 billion cubic feet of gas daily starting in 2017.

In southeast Ohio, NiSource subsidiary Columbia Pipeline Group is proposing Leach XPress, a $1.75 billion, 160-mile pipeline to send 1.5 billion cubic feet of gas daily from West Virginia and southeast Ohio to central Ohio, where it will connect to lines running to Leach, Ky. Set to be ready 2017, the line is needed to ship gas to the Gulf of Mexico — where Ohio got most of its natural gas in the past.

Two other major pipelines went into service the last two years.

Enterprise Products Partners’ 1,230-mile Atex pipeline runs from southwest Pennsylvania through a sliver of West Virginia and across 13 Ohio counties, ending in southern Indiana. It began operating in 2013. It can move up to 190,000 barrels a day of ethane (a natural gas liquid) that winds up in Texas and the Gulf Coast, where it is refined into the petrochemical ethylene.

Sunoco Logistics/​MarkWest Liberty Midstream’s 230-mile Mariner West pipeline, which moves ethane from the Youngstown area to Sarnia, Ont., via Toledo and southern Michigan, began operating last spring. It can transport 50,000 barrels of ethane per day.

Recently, ANR Pipeline Co., one of North America’s largest pipeline operators, has started discussions about building a major pipeline that would follow the ET Rover route. ANR has yet to submit a proposal to FERC.

However, it is not just major pipelines that are cutting across Ohio’s farm fields.

Smaller lateral lines that feed off the new pipelines to provide gas for homes or for new electric generation plants are in the works as well.

“Gas exploration and production has grown in Ohio in the last few years. We have seen a general increase in the construction of pipelines in the state. Most of it is routine,” said Matt Butler, a spokesman for the Ohio Power Siting Board.

But, “We have definitely seen an increase in natural gas-fired plant proposals, and that has a lot to do with the trend in utilities to retire coal-fired generation,” he said.

The new Oregon Clean Energy Center, an $800 million electric plant with natural gas-fired turbines, will be fed from a new pipeline — the 22-mile Oregon Lateral line proposed by North Coast Gas Transmission LLC of Columbus.

The pipeline would tie into a gas gateway in Maumee, make its way across the river and up to the plant that is under construction on North Lallendorf Road.

Mr. Butler said two more plants, one south of Dayton and the other in Carroll County in northeast Ohio, have been proposed.

A third plant is being discussed for suburban Cleveland. All would need lateral pipelines.

Huge upgrade

New pipeline also is being laid statewide to replace pipes laid almost 70 years ago when a post-World War II economic boom led to high demand for natural gas.

This year Columbia Gas of Ohio is replacing a million feet (189 miles) of old pipe at a cost of $181 million statewide. In the Toledo area, it is replacing 40 miles at a cost of $22 million and spent $7.5 million this year on a replacement gas line running under the Maumee River between Maumee and Perrysburg.

Driving the pipeline boom are rich natural gas deposits in the Utica Shale bed in West Virginia, western Pennsylvania, eastern Ohio, and southern New York, and the Marcellus Shale in West Virginia, eastern Ohio, and western Pennsylvania. Utica Shale sits a few thousand feet below Marcellus Shale.

“What you’re seeing with the increased development in the Marcellus and the Utica regions is historical levels of natural gas and natural gas liquids being developed,” said Shawn Bennett, senior vice president of the Ohio Oil & Gas Association.

“Traditionally a lot of our natural gas came from down in the Gulf region … but now we’re producing a lot of this natural gas here,” he said.

U.S. geological surveys estimate Utica Shale contains at least 38 trillion cubic feet of natural gas, and the Marcellus Shale at least 84 trillion cubic feet. The latter also contains plentiful supplies of the natural gas liquids ethane, butane, pentane, isobutane, and propane.

Together, the two shale regions are uprooting geographically the historical natural gas markets.

“You’re creating a newer infrastructure for these pipelines in the northern United States because traditionally these products come out of the other regions,” Mr. Bennett said.

Reverse flow

Petrochemical plants, which break down or “crack” natural gas liquids into more usable products, historically were built in the south or southern Canada because it put them closer to the pipelines. Now with plentiful, cheaper natural gas liquids available in Appalachia, the Atex and Mariner pipelines were needed to get those liquids to the plants, Mr. Bennett said.

“Our traditional conventional pipeline system is just for natural gas. But now we’re having to build pipelines to take these natural gas liquids out of here to get them to the markets,” he said.

Mike Anderson, director of supply planning for Columbia Gas of Ohio, said it’s the same with natural gas supplies. New lines are needed to move cheap gas from Appalachia to the major markets.

In 2009, Kinder Morgan Energy’s 1,679-mile Rockies Express pipeline came east to Ohio to bring cheap Rocky Mountain and West Texas natural gas east. Earlier this year, however, the Rockies Express reversed its flow to head west because gas from Utica shale was much cheaper than gas coming from the western areas of the United States.

Demand for cheap Utica and Marcellus gas now is coming from Canada, the Gulf region, Texas, and further west but the infrastructure can’t move large volumes to supply Ontario, Louisiana, Chicago, St. Louis, and elsewhere, Mr. Anderson said.

That is why E.T. Rover, Nexus, Leach XPress, and other projects all are happening simultaneously, he added.

“I don’t recall anything of this kind of magnitude having occurred in my historical recollection,” Mr. Anderson said. “The driver is the success basically of the Marcellus and Utica shales. The level of production there is trying to find a market, trying to find a home.”

New markets

Once Marcellus and Utica gas flows south and west, it will stifle gas production in those regions. What’s likely to happen is gas in those regions will be converted to liquefied natural gas and shipped worldwide, Mr. Anderson said.

Mr. Arnold said abundant Marcellus and Utica gas could have two other effects. Utilities likely will retire more coal plants to build gas-fired generation, and more vehicles will use natural gas as fuel. “It’s going to be huge,” he said of natural gas for vehicles.

But for those benefits to occur, landowners must accept that the old intrastate and interstate gas lines are inefficient and new larger pipelines are necessary, Mr. Arnold said. “It is both a benefit and a necessity,” he said.

“Depending on how you look at Ohio, compared to other states we are in the top 10 in consumption of natural gas. But in production we have been around 20th,” Mr. Arnold said. “Now with the advent of shale gas development the ability to use locally sourced gas has become huge and we need ways of getting it to Cleveland, to Columbus, to Toledo to power the factories, the crop production, and the animal food operations.”

Mr. Arnold said he has been attending public meetings on the E.T. Rover project, and most people do understand the necessity of new pipelines.

“The question is basically creating the balance. It’s not one side against the other. Rather, I see farmers being right smack dab in the middle of all of this,” Mr. Arnold said.

“They understand the need for the community, they understand it will go across their property, and what they want is help negotiating their easements to ensure that they are made whole when this is all done,” he said.