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SHALE GAS PIPELINE POTENTIAL
T
his week I read a Bloomberg article
on Energy Transfer Chairman and
CEO Kelcy Warren, who credits the
recent oil price crash with boosting
his business. On the tail of the fracking boom,
the oil bust made a lot of onshore gas
pipeline companies meeker and dampened
the mood somewhat. Standard & Poor’s
pipeline industry index fell 18% from July 2014,
and has only recently seen improvement. But
Warren’s happy perspective is: “All of our
competition vapourised”.
1
With Energy Transfer
cleaning up in North Dakota and Enterprise
Products announcing long-term agreements
for its Permian and
Eagle Ford shale
pipeline network, let’s
look at other countries
that could stand to
offer similar shale
successes.
China has opened
new shale gas pipelines
this month, with both
CNPC and Sinopec
working to meet
government targets.
Sinopec’s Fuling-
Wangchang pipeline
now connects the
Fuling shale operations
to the company’s
existing Sichuan-East
China pipeline network, which sends gas east.
The Fuling-Wangchang pipeline is China’s first
high capacity shale gas pipeline and will
transport 6 billion m
3
/yr, ramping up to
10 billion m
3
/yr by 2017. For it’s part, CNPC has
brought three shale gas pipelines online since
April 2014, the most recent being a pipeline
from its Wei 202 well in Sichuan province.
The first two pipelines have already
transported 250 million m
3
of gas and all three
together will move some 7 million m
3
/d by
the end of 2015. But China’s Ministry of
Finance announced in April that it will be
stepping down shale gas subsidies over the
next five years, to reflect expectations that
new technologies will bring down costs in
this sector. It’s a kick to those who would like
every investment possible in order to develop
a shale gas system to rival the US. Sinopec has
said it cannot break even on shale production
without subsidies and CNOOC has recently
shelved a shale development project. CNPC is
reported to have scaled back shale ventures
with Shell in China.
In Mexico, big plans are afoot for
pipelines, as the country unlocks its natural
gas supplies, which include shale formations.
Since last year’s legislative reform of energy
policies under new President Enrique Pena
Nieto, which will break Pemex’s monopoly
and open up the country to outside
investment, pipelines have been high on the
agenda. Director of Mexico’s Comision
Federal de Electricidad (CFE) Enrique Ochoa
Reza has told press that the CFE is promoting
the construction of new gas pipelines, in an
effort to substitute the use of fuel oil. He has
promised a 75% increase in the number of
miles of natural gas pipelines in Mexico by
the end of President Nieto’s administration.
There isn’t a timeline
for shale contracts
yet, but things are
moving. Mexico is set
to steadily develop its
pipeline infrastructure
for import from US
shale reserves, at the
same time as working
on its own network of
shale production and
pipelines. Its shale
reserves will of course
be more effectively
mined if it borrows US
technologies such as
horizontal drilling,
fracking, geosteering
and new sensors
placed directly onto drilling columns.
Over to Australia and the vast shale
resources in the Northern Territory: here, the
McArthur basin (which covers 40% of the NT)
is expected to hold over 200 billion ft
3
of gas.
International interest is high, with Statoil, Hess
Corporation, Chevron, American Energy
Partners and many others vying for
exploration permits. Exploration interest is
being further fuelled by a proposed gas
pipeline that would link the NT with the
eastern Australian gas grid. Final proposals are
due for the North East Gas Interconnector
pipeline by the end of the year, when the
preferred pipeline builder will be chosen from
four potential parties (APA Group, Duet
Group, Jemena and Pipeline Consortium
Partners Australia). The LNG industry will also
benefit from increased natural gas production.
Be sure to pick up next month’s issue of
World Pipelines
for a North American shale
pipeline report.
1.
/
features/2015-05-19/pipeline-billionaire-kelcy-warren-is-
having-fun-in-the-oil-bust
SINOPEC HAS
SAID IT
CANNOT
BREAK EVEN
ON SHALE
PRODUCTION
WITHOUT
SUBSIDIES
