The natural gas pipelines that sent gas southbound from Canada are about to start to flowing in reverse – adding to American gas exports.
The human body is amazing. Life could not exist with out the ability for our hearts to circulate oxygen to every centimeter of our body. Every artery, vein, and capillary is integrated into the complex network of distribution. The Franklin Institute says that if you took the blood vessels out of an average child and laid them out in one line, the line would stretch over 60,000 miles.
Every time I think about distribution and logistics, I am reminded of the human body. Things of infrastructure fascinate me and natural gas infrastructure has some very impressive networks as well. With over 300,000 miles of interstate and intrastate transmission pipelines in the U.S., the distribution network stretches beyond the moon. It is way more when you consider the smaller delivery lines to residential neighborhoods.
Even with that much infrastructure already in place, there is a solid need for additional pipelines – when they can get approvals. There is, however, an interesting shift happening in this arena, thanks to our northern Canadian friends.
Canada was able to maintain a strong foothold in natural gas for a long time, but now with the U.S. producing so much gas, these companies are struggling. Encana, one of Canada’s largest gas producers, is slashing their spending 55% and is cutting another 20% of its workforce bringing down to half of their peak in 2013.
It is almost a view into the future for American companies. I wrote about the LNG exports recently and I mentioned that exporting gas is great for maintaining price points while keeping the companies profitable. Without these exports, the low prices are going to cut away at production.
Canada’s production has slowed, but the demand for natural gas is still strong and the infrastructure that used to supply U.S. cities is now reversing flow. A Bloomberg article mentioned several companies are looking at doubling the northbound flow by 2027.
“The push begins next year, with plans to open or expand at least three major pipelines and reverse the flow northward on a fourth. Meanwhile, TransCanada may be going a step further, engaging in acquisition talks with Columbia Pipeline Group Inc., a company with a direct route into the U.S.’s prolific Marcellus shale play. The efforts come as gas stockpiles have reached historic highs, prices have fallen almost 40 percent since the end of 2011 and the fuel has established itself as the Bloomberg Commodity Index’s worst performer. All of that has spurred a desperate drive by drillers to expand their markets.”
There is several “veins” in the northeast U.S. and Canada already, and Spectra’s Nexus and Atlantic Bridge projects are seeking to flip the flow and connect several existing pipelines to help send Marcellus Shale gas to the canucks. These pipelines would carry about 1.6 billion cubic feet of gas, or enough to heat 22,000 homes for a year northbound. This is a great sign for American natural gas and where there is a demand and a supply, it is a win for our country.
The article continues:
“Meanwhile, TransCanada, the company that was stymied in its attempt to build the Keystone XL oil pipeline, is considering reversing its Iroquois gas line, which has been sending western Canadian supplies to the U.S. for more than two decades. The move would allow TransCanada to boost volumes on the pipeline by delivering cheap Marcellus gas to the eastern provinces.”
I do not think there has been this much focus on Canada since John Candy was staring in Canadian Bacon – well since the Keystone pipeline at least.
Canada still has a sizable source of gas in the west of the country, but to expand the lines across the entire country from Vancouver to Toronto is a major hurdle. Tweaking the existing infrastructure to export Marcellus Shale northbound – not so much. We’d like to see our friends in New Brunswick get a piece of the action though. They desperately need it and have only been prevented from developing their natural resources by one of our other exports; all those fractivist expatriates who have led spineless politically correct politicians into never-never land.