# Presentation: 657506

## Natural Gas Infrastructure

**Bangladesh Ministry of Energy and Mineral Resources**
**June 2001**

**James M.Todaro**
**EIA**

**jtodaro@eia.doe.gov**

## Presentation Objectives

**Factors to consider in planning and developing a key segment of a natural gas infrastructure...a pipeline**
**Options for financing the project**
**A case study of a recent pipeline project   **

## Pipelines

**Principles of Project Evaluation**
**Issues**
**Options **
**Costs**

## Options for Development of a Natural Gas Pipeline

**Convert an Oil or Product Pipeline**
**Expand an Existing Pipeline System**
**Build an Entirely New Pipeline**** **

## Convert Oil or Product Pipeline to Natural Gas	

**Acquire pipeline and assess requirements**
**Upgrade some pipe segments**
**Install compressor stations (50-150 mile sects.)**
**Build laterals to customers w/meters**
**Build connections to other pipelines**** **

## Expand Existing Pipeline System

**Add new laterals and metering points**
**Install pipeline parallels to existing pipeline (aka: looping)**
**Install new compressors**
**Build interconnects to other pipelines systems**

## New Pipeline Construction Steps

**Survey Potential Routes**
**Acquire Rights of Way**
**Build Access Roads**
**Dig Pipe Ditches**

**Lay Pipe**
**Build Compressor Stations and Metering Points**
**Pad/Backfill/Testing**
**Restore Site **

## Proportion of Costs by Category for Projects Completed in U.S. 1991-98

-  **[For land based pipelines]**

## Designing a Natural Gas Pipeline

**Issues**
**Where will the natural gas come from**
**Where it needs to go**
**How it will get from one point to the other**
**How much natural gas to move**

## Move Gas from Producing Areas to Consuming Areas  

-  **Major Prod. Areas**

**Major Prod. Areas**

**Consuming Areas**

## Major Natural Gas Producing Basins and Associated Transportation Corridors 

## How Much Gas to Move: Pipeline Capacity Design 

**Factors to consider**
**Size of market**
**Pipe diameter (12, 18, 24, 36 inches...) **
**Compression**
**Quality of the Gas**
**Flexibility (manage intrups.reversible,etc.)**
**Expandability  **

## Major North American Natural Gas Pipeline Systems 

## Average Cost for New Pipelines in USCompleted or Proposed 1996 to 2000

**Average Cost for New Pipelines in US****Completed or Proposed 1996 to 2000**

## Financing a Project

**Some Options**
**Solicit Joint Venture Sponsors**
**Seek Partners (equity investors)**
**Institutional Investors **
**Public Sale of Stocks or Bonds**
**Borrow Funds**

## Alliance Pipeline

**A Case Study in US - Canadian**
**Pipeline Infrastructure Development**

## Background

**Steady growth in US natural gas demand**
**Western Canada has surplus production**
**Need to move gas from Northwest part of the Americas to lower 48 US states**
**Two earlier efforts were not successful (ANGTS and Altamont Pipeline) in the 1970’s and 1980’s**

## Slide 18

## Factors Contributing to Earlier Unsuccessful Attempts 

**ANGTS (Alaskan Natural Gas Transp.System)**** **
**U.S. Congress unable to finalize political details**
**Without Fed. Gov’t support, financial resources were lacking**** **

**Altamont Pipeline**
**Canadian producers not in full agreement**
**Some U.S. pipelines took action to protect West Coast markets   **

## Proposed Pipeline Routes

**ANGTS**

**Altamont**

## Alliance: A New Development Approach 

**Pooled resources:**  In June 1996,17 Canadian companies joined together to finance, design, and build the longest NG pipeline in North America..1,875 miles from Western Canada to Chicago.
**Incorporated entities:**** **formed the Alliance Pipeline Limited Partnership (L.P.) in Canada and the Alliance L.P. in the U.S.

## Alliance Pipeline Finance Plan 

**Initial 17 partners put 30% of the estimated $2.5 Billion cost of the project**
**Secured the remaining 70% from Canadian banks and investors and U.S. investors**

## The Pipeline Route

**Alliance**

## Factors Used to Determine Route for the Alliance PL

**Minimize pipeline length**
**To parallel existing pipeline or other    rights-of-way (ROW)**
**To avoid established parks or protected areas**
**To minimize interference with agricultural operations and other land uses **

## ...more Route Factors

**To comply with setback requirements from urban areas, public facilities and residences**
**To avoid, whenever possible, terrain where construction and reclamation are difficult **

## Acquiring the Right-of-Way

**Most of the Canadian portion was acquired from Enbridge Energy-one of the partners**
**In the U.S., the existing Northern Border Pipeline ROW was utilized**
**Alliance LP negotiated ROW agreements with numerous landowners**
**As last resort, the project had eminent domain power  **

## Slide 27

## Securing Government  Certificates

**Canada**
**National Energy Board (NEB)**
**Application July 1997**
**Environ’tl file Dec 1997**
**NEB hearings Jan. 1998**
**NEB Certf. Nov. 1998 **

**United States**
**FERC(****Fed. Energ. Reg. COM) **
**Application Dec. 1996**
**Environ’tl file Dec 1997**
**FERC hearings Aug.1997 & Dec.1997**
**FERC Certf.**** Sept.1998**

## Factors Government Regulators Consider in Review Process

**Are there sufficient gas supplies to fill the pipe**
**Is there sufficient demand for the gas**
**Do suppliers and purchasers want to move gas on the proposed pipeline  **

## ...more Factors

**Are the proposed facilities adequate to provide the planned level of service**
**Is there adequate financing for the project**
**can the proposed pipeline be constructed, and service provided at reasonable rates**

## Environmental Factors

**What will the environmental and socioeconomic impact of the project be relative to other alternatives**
**Will the project developer take reasonable steps to mitigate any adverse and socioeconomic impacts  **

## Marketing Pipeline Services

**Build on initial partners participation**
**Set minimum of 1 Bcf per day, w/goal of 500 Bcf/d**
**Hold open season (Sept. to Nov.1996)**
**Results: 40 contracts for 1.23 Bcf/d or 93% of design day capacity for a term 15 years **

## Construction Phase

**United States**
**Seven phases began May 1999**
**Compressor stations work begun June 1999**
**Work completed December 1999**
**Test/inspection complete Sept. 2000****   **

**Canada**
**Four phases begun June 1999**
**Compressor stations work begun June1999**
**Work completed December 1999**
**Test/inspec. Compl. Aug. 1999,**** ****Service begins Dec. 2000  **

## Alliance Pipeline System Facts

**Alliance Pipeline System Facts**

## Current Alliance Partnership Structure

**Current Alliance Partnership Structure**

## Market Impact

**Imports from Canada increase 15% in Dec. 2000 vs. Dec 1999**
**Prices also move up more than $4.50 per Mcf**
**Canadians increase gas exploration by 20% in the last 6 months of 2000**

## Other Infrastructure Projects

**Natural Gas processing plant**
**Underground storage**
**Increased Compressor levels**
**Bypass pipelines**

## Recap

**Issues and steps in developing natural gas infrastructure (pipeline)**
**Options for financing the project**
**A case study of Alliance Pipeline project (Website:alliance-pipeline.com)**