Spectra Sees Shale Gas Strength Despite Pipeline Opponents

By P&GJ Special Report | May 2012, Vol. 239 No. 5

The U.S. gas shale boom comes with the challenge of bringing that supply to market when new pipelines face safety questions, but Spectra Energy President and CEO Greg Ebel said the industry should be able to make the case for how gas is beneficial.

A main selling point for gas in the U.S. is to present it as way to replace coal as fuel in the power generation sector because it burns relatively more cleanly, Ebel said on Platts Energy Week, all-energy news and talk show program.

"Just along our pipeline, Texas Eastern, which goes from the Gulf Coast ... up into through Ohio, Pennsylvania and ultimately to New York, there are approximately 100 coal-fired plants that were built between 1899, if you can believe it, and 1982," said Ebel, who is also the 2012 Chairman of the Interstate Natural Gas Association of America (see P&GJ April 2012).

"Over time, those are going to be replaced with cleaner burning and cheaper natural gas, and that's really driving the biggest growth in the demand of natural gas in North America,” he said.

Asked about spills and explosions in the oil and gas sectors in recent years in the U.S., including the Pacific Gas & Electric San Bruno gas pipeline disaster, the BP Gulf of Mexico oil spill and some oil pipeline spills, and how those raise concerns in the general public, Ebel said a lot of the incidents were in the oil sector, not the gas sector. Still, he added that people tend to conflate the two as simply problems with all pipelines.

So, gas pipeline companies need to demonstrate that their projects can be handled with safety as a primary concern, Ebel said. For instance, Spectra's proposed New Jersey-New York expansion project on its Texas Eastern Transmission and Algonquin Gas Transmission pipeline systems will be buried deeper than most and exceed current safety standards in the U.S., he said.

The 20-mile pipeline would deliver up to 800,000 Dekathems per day (Dt/d) to New Jersey and New York markets, including a direct connection to Manhattan. Construction and design changes incorporated into the project to address local concerns in these heavily populated urban areas include using 30-inch pipe with thicker walls that required under federal regulations, 42-inch pipe in other segments, and using horizontal direction drilling for its major water crossings and some inland portions.
"The benefits of that pipeline, for example, have come through loud and clear. It's actually a relatively small pipeline, some 15 to 20 miles, but the cost is significant – over a billion dollars. But, the benefits are far in advance of that," Ebel said.

A Rutgers University study for Spectra found $400 million in annual benefits for businesses and citizens in New Jersey and New York from the project, if it is built, "because you've got bottlenecks that don't allow cheap natural gas to get to those areas," Ebel said.

“In a place like New Jersey, with high unemployment, you're talking about some 5,000 jobs to build this and real energy savings for people," he added.

Spectra hopes the safety measures and economic benefits presented will win approval for the pipeline project.

"It's never easy to build anything. But I think we're done a good job of really working with the communities to make some adjustments to that project and get to the point where... the federal government is about to – we hope – approve its building here shortly," Ebel said.