U.S. Pipeline Construction Boom

As demand for natural gas in the United States continues to soar, pipeline companies are experiencing their highest all-time profits. Trying to keep up with natural gas needs, many pipeline companies have been starting and completing new projects at breakneck speed, helping to pipe the much needed natural gas from the prolific basins of the southeastern United States to various areas across the continent. As the price of oil soars, many locales are hoping that the United States’ mammoth natural gas supplies will rise to the challenge, providing the energy needs of the many, taking up the slack and decreasing the United States’ dependence on foreign oil reserves.

The largest project, the Mid-Continent Crossing, a collaboration between CenterPoint Energy and Duke Energy Gas Transmission, was agreed upon in 2006, and the two companies seemed determined that the construction of this large pipeline would be supported by the higher natural gas prices nationwide and increased demand, especially in the United States’ energy hungry and highly populated Northeast. The proposed route included a 1600 mile pipeline that would run from the Waha Hub near Plains, Texas, crossing several states along the way including Louisiana, Alabama, Tennessee, Kentucky and others, all the way to Pennsylvania. This pipeline proposal was encouraged by claims of each state along the route, assuring the two companies of needy customers that would more than support the great costs incurred by the enormous build. Along the way, Duke Energy bowed out and was replaced by Spectra Energy, assuring CenterPoint that they would be an advantageous partner. In the end however, initial numbers that drove the two companies in their proposal and ongoing talks proved to be inflated, and construction was discontinued even before it began. Demand proved to be a fickle mistress in this case, though the two companies are leaving communication lines open should the market support their joint venture in the future.

Perhaps such a large endeavor was too ambitious. The construction boom continued throughout 2007, motivated by a nearly 4% increase in demand, but on smaller scales. Around 69 new projects were proposed in 2007 across the United States amounting to around 3200 miles of expansion. Most of these proposals included lateral construction of new tributaries from pre-existing routes. This might have been the downfall of the Mid-Continent Crossing project; its proposed route was too ambitious because it involved primarily all new construction without an existing network in place. American companies like Triple Diamond Energy Corp and others continue to employ market analysis, assessing need for new pipeline ventures to help better serve the nation’s consumers.

About the Author: Robert Jent is the president of Triple Diamond Energy Corp. Triple Diamond Energy specializes in acquiring the highest quality prime oil and gas properties. For more information, visit www.triplediamondenergycorp.blogspot.com.