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Marcellus Shale Gas — Pipeline and Storage

Existing pipelines are focused on transporting large amounts of fuel across state lines and to end consumers. As such, midstream infrastructure development will be a significant obstacle to overcome in order to deliver production to the consumer. Midstream infrastructure constitutes pipelines from the wellhead to the major transport pipelines and building this infrastructure at low cost and with the appropriate capacity is key.

A key issue for producers developing in this arena is building this infrastructure to both minimize expenses and at the right scale. Pennsylvania has one of the most challenging topographies in the lower 48 States. This is further complicated by the number of townships with regulations specifying where and when pipelines can be constructed. Collaboration, planning and proper sizing will be critical to minimize the number of pipelines needed to be constructed. The further along the Marcellus Field is developed, the faster larger pipelines will be developed.

Storage is another important issue. With supplies in storage at record levels, the need for additional storage capacity is important to the future development of the Marcellus Field. Currently, there are 4.0STCF of storage capacity, with 2.3TCF of that being in the eastern portion of Pennsylvania. Additional storage capacity is growing at record pace, with 135BCF added last year alone. Abundant salt caverns and empty mines are providing cheap storage options in the eastern portion of the state.

Wet-Gas in the southwestern Marcellus region requires processing and produces Natural Gas Liquids (NGL) such as ethane and propane, both of which have relatively small markets. Developing these markets will also be imperative and pipelines will be necessary to transport these liquids to chemical plants in markets like Chicago and Sarnia, Ontario.