Midstream article - April 2018
Permian production is expected to increase by approximately 70 percent in 2022, and the Katy, Texas, and Houston Ship Channel markets are a natural destination for these volumes, according to Shelley Corman-Frisby, vice president of business development for Boardwalk Pipeline Partners.
"There is a growing production profile in the Permian -- perhaps not what the producers are wanting, but that's part of the solution that they need to tend to," Corman- Frisby said. "So, as we go from 6 Bcf a day today up to 12 Bcf, there's quite a need for infrastructure. What Boardwalk is about is helping all of this supply meet up with growing Gulf Coast demand."
The company's infrastructure strategies aim to develop new pipelines to connect growing supply with demand markets, including the proposed Permian- Katy (P2K) pipeline, a joint venture project with Sempra.
"Katy and the Houston Ship Channel provide access to Gulf Coast markets, including LNG export, power generation and petrochemical industry demand projects," Corman-Frisby said. "As Mexico and Texas Gulf Coast LNG markets develop, our system will be well positioned to serve their growing needs."
Speaking on a panel addressing midstream and gas processing at the 2018 ADI Natural Gas and NGL Forum held recently in Houston, Corman-Frisby added the largest demand in the years ahead is going to come from LNG and exports. LNG exports should reach about 11 Bcf a day by 2026, with further growth expected in the second wave of the LNG build-out, she said.
Power plants have also been a big part of Boardwalk's growth story, Corman- Frisby said.
"We've signed about 2.5 Bcf a day of power projects over the last few years. In fact, on a cold winter's day (at the beginning of 2018), we had power peaks on our system of 2 Bcf a day," she said. "We're connected to 47 power plants across our system, and we have two projects that we're working on in Louisiana that will come into service in 2018 and 2019, and a newly announced project in Texas that will come into service in 2021."
Infrastructure demands
"If you look at the Permian and the Marcellus over the next several years, you can see the pace expanding considerably, and that's not a bad thing," said ADI Analytics consultant Justin Rencurel, who moderated the panel.
"If you're a producer in those basins, it means you're facing some near-term challenges to make sure you're meeting your economics," he added. "In the longer term, this means the industry is beginning to solve a problem.
"As that basin expands, you're going to see the impetus and the economics align to build new infrastructure to get to where the demand growth is going to be. That means new pipeline capacity, and that's a great story if you're in midstream."
David McKellips, manager of commercial development for Williams, observed there is much interest in the industry regarding new tax legislation signed in December 2017 by U.S. President Donald Trump.
"National and state regulators are asking, 'Hey, how is the new tax code going to impact rates, and what is that going to do?' " McKellips said. "Ultimately, I think the consumers and the end-users are going to benefit in some manner. I don't think necessarily it's going to make rates go down, but they might not go up as quickly as they have. At the end of the day, on the surface, obviously lower tax rates are great, but I think everyone's still trying to figure out what that looks like, including regulators."
Rencurel added older pipelines are subject to more requirements in terms of compliance.
"A lot of these pipelines are aging infrastructure, and they require more maintenance as they get older that will impose a cost," he concluded.
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