2012 Worldwide Pipeline Construction Report

By Rita Tubb, Managing Editor | January 2012, Vol. 239 No. 1

P&GJ’s worldwide survey figures indicate that 118,623 miles of pipelines are planned and under construction. Of these, 88,976 represent projects in the planning and design phase; 29,647 miles reflect pipelines in various stages of construction.

Natural gas pipelines again account for the majority of projects under construction and planned.

Supporting this is a GlobalData report that indicates approximately 75% of the total global planned pipeline additions during 2011-15 will be gas. The report says the Asia Pacific region should be responsible for 41.8% of total planned pipeline additions with China and India being the frontrunners.

Construction Overview
Following is a look at new and planned pipeline miles in the seven basic country groups, (see area map): North America – 31,951; South/Central America and Caribbean – 11,571; Africa – 7,617; Asia Pacific 34,295; Former Soviet Union and Eastern Europe – 19,537; Middle East – 11,480; and Western Europe and European Union – 2,172. For information on these and other pipeline projects, see P&GJ’s sister publication, Pipeline News.

North America
Nothing has changed the outlook for the North American energy industry quite like the discoveries in the shale regions in the U.S. and Canada. North America - which accounts for 26,300 miles in the planning stages and 5,651 miles under construction - should remain strong.

Those building pipelines in shale regions can expect higher costs. Ziff Energy Group reports pipeline owners are seeing higher construction costs in the shale regions of Marcellus, Eagle Ford, Haynesville, Barnett, Woodford, Fayetteville, and Horn River.
After analyzing costs of 120 pipelines from the past decade, Ziff Energy Group’s results show the average estimated shale gas pipeline rose in 2011 to almost $200,000/inch-mile, three times higher than 2004.

“All North America geographical regions appear to experience consistently higher pipeline costs than prior years,” commented Julia Sagidova, gas analyst and lead
author of the report. “The Marcellus shale gas region (Pennsylvania) is the most expensive with an average cost of under $300,000/inch-mile. These large-diameter (24-36 inches) projects are typically 120 miles in length and cost $500 million.”

The report noted that the 30% rise in steel costs over the past year along with new industry regulations and practices to reduce right-of-way and minimize environmental effects are driving up construction costs.

In North America, work is progressing on DCP Midstream’s 700-mile Sandhills Pipeline. DCP is using new construction and existing pipeline to build a 100,000-120,000-bpd NGL pipeline that will run from West Texas to Mont Belvieu in East Texas. The pipeline will be phased into service, with the first completed in the third quarter to accommodate DCP’s growing Eagle Ford liquids volumes. Service to the Permian Basin will be available as soon as the Q2 2013.

Greencore Pipeline Company LLC, a fully owned subsidiary of Denbury Resources Inc., is building the 231-mile, 20-inch Greencore CO-2 Pipeline from the ConocoPhillips Lost Cabin Gas Plant in Fremont County, WY, to a point in the Bell Creek oil field in Powder River County, MT. The CO-2 transported by the Greencore Pipeline will be used for enhanced oil recovery at the existing Bell Creek oil field. Completion is scheduled in late 2012.