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U.S. ENERGY INFORMATION ADMINISTRATION Investments in New Natural Gas Pipeline Capacity May Grow to More Than $6 billion in 2000Planned new natural gas pipeline development and expansions could add as much as 16 billion cubic feet per day of capacity to the national transmission network over the next 2 years (1999-2000), at an estimated cost of about $9.5 billion. While all of the currently proposed projects may not be built because of changes in market conditions, total expenditures are expected to far exceed the $5.1 billion invested during the last major period of new pipeline development in 1992-1993. Since dipping in 1994, investment in additional natural gas pipeline capacity has increased each year and could reach $6 billion in 2000, as demand for natural gas has steadily grown and as sources of production have shifted. A major portion of this investment represents development of new pipeline capacity to carry supplies of Canadian natural gas to various U.S. markets, according to an analysis, "Natural Gas Pipeline Network: Changing and Growing," released today by the Energy Information Administration. While more than 11 billion cubic feet per day of additional capacity was added to the U.S. natural gas transmission network in 1998 (Figure 1), total costs were relatively low, at $2.9 billion, compared with projected spending of $3.1 billion in 1999 and $6.3 billion in 2000. Although the amount of new capacity slated to be added during each of those years, 8.2 and 7.8 billion cubic feet per day, respectively, would be less than the amount added in 1998, the investment will be greater because several major new and expensive long-distance pipeline systems, such as the Alliance, Independence, Tri-State, and Vector pipeline systems, are scheduled to be constructed during the period. Most of the new capacity added in 1998 was less expensive expansions and upgrades to existing systems. The growth in Canadian gas imports into the U.S. Midwest Region also is expected to spur additional growth and increased use of the Chicago (Hub) Market Center as a transshipment point for supplies en route to a growing natural gas market in the U.S. Northeast. Consequently, market centers located in the vicinity of Leidy, Pennsylvania, where a number of pipeline systems serving the Northeast interconnect, also should grow significantly. This major hub area will experience not only increased movements of Canadian import volumes but also several system expansions designed to transport additional supplies to the Northeast from Texas, Louisiana, and the Gulf of Mexico. Supporting this expansive pipeline growth, in large part, is the growing demand for natural gas to generate electricity. Growing environment concerns have spurred the construction of new gas-fired electric generating plants to replace coal- and oil-fired plants in many sections of the country. Since 1990, natural gas use for electric power generation has grown at an annual rate of 17 percent in the Midwest and about 9 percent in the Southeast. Although natural gas use for electric generation grew by less than 1 percent per year in the Southwest, it still accounts for more than 22 percent of all gas consumed in the region. That is the largest regional use of natural gas for electric generation in the nation. This analysis is contained in the first released portion of an upcoming report, Natural Gas 1998: Issues and Trends, expected to be published in February 1999. It may be accessed electronically from EIA's World Wide Web Site at http://www.eia.doe.gov/oil_gas/natural_gas/analysis_publications/natural_gas_1998_issues_and_trends/it98.html. Printed copies of the full report will be available from the U.S. Government Printing Office (202) 512-1800 or through EIA's National Energy Information Center (202) 586-8800.
EIA Program Contact: James Tobin, 202/586-4835 EIA-98-30 Contact:
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