US oil and gas in 2015: a whole new ballgame (part one)

Thanks largely to two major technological advances – horizontal drilling and hydraulic fracturing – new plays are reshaping the oil and gas sector in the US. Everything from gas plays in the northeast states to oil shale in Texas and North Dakota is unleashing a tidal wave of energy. The Energy Information Administration (EIA) recently noted that gas production in the Lower 48 is now just shy of 80 billion ft3/d, almost doubling production since 2007. And, according to the EIA, crude output had risen to over 9 million bpd by late 2014, and could reach 9.4 million bpd by this year.

Midstream companies are scrambling to meet infrastructure demands. According to the Interstate Natural Gas Association of America (INGAA), North America will need to spend almost US$641 billion over the next two decades (approximately US$30 billion/yr), to handle all the midstream gas, crude oil and natural gas liquids (NGLs) coming onstream.


Much of the gas pipeline action is centred in northeast US, where the Marcellus and Utica shales are producing at record rates. Output from the Marcellus, which stood at 2 billion ft3/d in 2010, has now surpassed 15 billion ft3/d. According to the American Natural Gas Alliance (ANGA), almost US$11 billion in new pipeline projects came onstream in 2014 in the US Northeast. Among them:

  • DTE Energy, Enbridge and Spectra are building the NEXUS projects that would move up to 1 billion ft3/d of Utica shale gas to the US Midwest. The 400 km new-build would connect to the existing Vector pipeline system.
  • EQT and NextEra US Gas have formed a JV to build a 330 mile Mountain Valley line. The system will move 2 billion ft3/d of Marcellus and Utica gas from West Virginia to mid-and-south eastern Seaboard markets. It is expected to enter service by late 2018.
  • Dominion Resources and Duke Energy are promoting the Atlantic Coast Pipeline that would run from West Virginia to South Carolina. The 550 mile pipeline would cost up to US$5 billion, and move 1.5 billion ft3/d.
  • PennEast Pipeline has announced plans to build a 100 mile line from Pennsylvania to New Jersey. The US$1 billion project would have a 1 billion ft3/d capacity. Construction is expected to commence in 2017.
  • Columbia Gas Transmission is building the Leach Xpress, a 160 mile, 1.5 billion ft3/d line that will run from Ohio to a tie-in point in Kentucky. Leach Express is being built in conjunction with Rayne Express project, which will boost compression on existing facilities. The two projects will cost US$1.75 billion, and enter service in mid 2017.

The US is also building and expanding pipelines in order to export large amounts of gas to Mexico. Tennessee Gas Pipeline is the latest company to announce plans for South System, a US$187 million project that will start delivering gas to the border in 2015. US producers already export several billion ft3/d south of the border, with much more on the way. Recently, Mexico’s Federal Electricity Commission estimated that new and existing lines will have the capacity to deliver almost 6 billion ft3/d within a few years.

Written by World Pipelines' correspondent Gordon Cope and edited from published article by Elizabeth Corner

To read the full version of this article, please download a copy of the February 2015 issue of World Pipelines.

Published on 12/03/2015

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