According to a comprehensive report prepared by
Virginia-based management, technology and policy consulting firm ICF
International and issued late last year by the INGAA (Interstate Natural Gas
Association of America), which facilitates the construction and reliably safe
operation of the North American natural gas pipeline system, some $641 billion
will need to be spent by 2035 on midstream infrastructure like pipelines and
pumps to keep up with burgeoning gas, crude oil, and natural gas liquids
production from U.S. fields. That’s about $30 billion a year, or roughly three
times the average annual investment seen in the preceding decade, and the next
six years or so look to be the heaviest period of activity.
With around half the yearly $30 billion in expenditures
going straight into accommodating new gas supplies and hooking up new shale
plays to existing infrastructure, or facilities that are currently still on the
drawing board, and around 35k miles of new transmission pipes and some 303k
miles of gas gathering lines needing to be built, a huge opportunity exists for
EPCM (engineering, procurement, and construction management) companies like
ENGlobal Corp. (NASDAQ: ENG). With a wealth of energy-related automation
integration services at the ready and a successful track record of engineering
and constructing a broad array of different hydrocarbon transportation and
distribution systems, from pipelines and pump/flow stations, to high-pressure
gas and water injection facilities, as well as compressor and metering
stations, ENGlobal is one of a handful of U.S. companies with the established
market presence, full-spectrum capability and domestic manufacturing capacity
needed to fill this vital role. Especially since ENGlobal has considerable
experience handling the often difficult logistics and constraints imposed on
project executions in remote locations and harsh climates.
Demand for new natural gas pipeline infrastructure linked to
ongoing shale booms can clearly be seen with projects like the Northeast Energy
Direct Project from energy infrastructure giant Kinder Morgan (NYSE:KMI), which
is designed to bring natural gas from the prolific Marcellus Shale to New
England in order to keep up with growing regional demand from consumers and
industry, and whose eventual capacity could be scaled up to 1.2 billion, or
ultimately 2.2 billion cubic feet per day (initial capacity of 500k
dekatherms/day, or about 0.5 Bcf/d). Another good example is the $5 billion,
550-mile Atlantic Coast Pipeline by Duke Energy (NYSE:DUK) and Piedmont
(NYSE:PNY), who have tapped Dominion (NYSE:D) to build and operate the massive
1.5 Bcf/d interstate pipeline, which will carry much needed gas from West
Virginia through Virginia and into eastern North Carolina, in order to meet the
rapidly mounting regional demand.
ENGlobal actually just announced a 5-year extension
agreement with major utility supplier of electric power and natural gas
service, Xcel Energy (NYSE:XEL), via a new professional services agreement that
will see ENG doing a variety of construction, design, engineering, management
and procurement work in support of Xcel’s sprawling natural gas pipeline and
facility projects. ENGlobal has already been instrumental in helping Xcel
advance their West Main Natural Gas Replacement Project in Colorado, where some
77 miles of a 90-mile high pressure transmission pipeline are being worked on,
with Larimer and Weld counties completed between 2012 and 2014, and the
remainder of the work in Boulder County slated for between 2015 and 2016. ENGlobal
also helped Xcel on their Colorado Public Utilities Commission-approved CACJ
(Clean Air-Clean Jobs Act) Plan last year, which involved, among other things,
34 miles of new, 24-inch steel, high-pressure natural gas transmission
pipeline, which was installed between a new Fort Lupton metering facility and
the Cherokee Generating Station’s new gas plant.
Another major driver behind all this gas pipeline demand has
been the slew of new initiatives announced last year by Secretary of Energy,
Ernest Moniz, that are part of the DOE’s sweeping Administration Strategy to
Reduce Methane Emissions, which follows up on the White House and DOE Capstone
Methane Stakeholder Roundtable. The primary goal is to modernize national
natural gas transmission and distribution systems, while reducing methane
emissions. The directive by Secretary Moniz to the main oversight agency for
all interstate pipelines, the FERC (Federal Energy Regulatory Commission),
recommending that the agency look at providing new ways to achieve greater cost
certainty for developers when it comes to recovering outlays on new investments
in modernized natural gas transmission infrastructure, has already created
substantial buzz within the EPCM industry. One of the chief initiatives, The
Natural Gas Infrastructure R&D Program, which is being launched this year
by the Office of Fossil Energy via the National Energy Technology Laboratory,
will be focused on enhancing midstream deliverability efficiency and should
provide solid tailwinds for ENGlobal and other infrastructure development
firms.
Learn more by visiting www.ENGlobal.com
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