How Do New Pipelines Move from Concept to Construction?
by Bob Shively, Enerdynamics President and Lead Facilitator
A significant wave of new natural gas transmission pipeline capacity is currently on its way in the U.S. Pipeline companies plan to bring online approximately 44.9 billion cubic feet per day (Bcf/d) of new pipeline capacity in 2026 and
2027, according to the U.S. Energy Information Administration (EIA)[1]. Much of this capacity is planned to move stranded gas production in the Permian Basin and to reduce constraints in moving gas from the Waha Hub. Others plan to bring gas supplies to growing industrial and power plant demand. As more projects are considered, it helps to understand how new projects move from concept to construction.
Pipelines depend on market demand
Transmission planning and design is based on market demand for transmission pipeline capacity between specific supply and demand regions. Construction of transmission projects usually only begins after the pipeline signs long-term agreements with shippers that assure the pipeline will generate sufficient revenue to pay its costs and generate a return on investment.
Reaching final contracts is a multi-step process. Pipelines first hold preliminary discussions with potential shippers, followed by initial design work and cost estimates. Further discussions then lead to preliminary commitments. Often pipelines hold open seasons to gauge interest and obtain precedent agreements that demonstrate need for new capacity. Before contracts can be finalized, pipelines must secure regulatory approval (from FERC for interstate projects or state regulators for intrastate projects). Once approved, binding transport contracts are signed, final design is completed, and construction can begin.
Project design
Detailed project design takes an initial design and turns it into a final design document used to construct the facilities. Engineers use transmission modeling to predict pipeline behavior under various demand conditions and pipeline configurations. The desired capacity is achieved through modeling combinations of pipeline hydraulics, compressor capacity, compressor availability, and line pack.
- Pipeline hydraulics determines the amount of gas that can flow through the pipe under given pressure conditions.
- Compressor capacity determines the pressure that can be created in the pipeline under given temperature and flow conditions.
- Compressor availability estimates how often compressors will be available given planned or unplanned maintenance needs.
- Line pack is the amount of gas that will be stored within the pipe to average out flows and meet peak hourly demand.
The model allows engineers to develop the optimal combination of these factors. Once the optimal pipe and compressor configuration is laid out, engineers use statistical analysis to define the firm capacity of a pipeline. Any additional capacity is marketed as interruptible capacity provided to shippers on an as-available basis. The firm capacity is what is used to determine how much capacity can be committed in signed firm contracts with shippers.
Final project design and construction
After determining the optimal design, pipeline engineers lay out a detailed configuration and specify the equipment required. This results in a design document that is sent to construction. Then construction begins.
Finally, gas flows
Depending on the length and complexity of the pipeline construction may take less than a year or may take multiple years before the pipe is ready to flow gas. Planning and regulatory approval began multiple years before that. None of this happens without market demand from producers, marketers, or utilities who become the shippers of the gas.
