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These Shale Gas Plays Are Changing America's Energy Landscape

http://www.fool.com/investing/general/2013/10/20/these-shale-gas-plays-are-changing-americas-energy.aspx

Matthew DiLallo
October 20, 2013

Shale gas well in Pennsylvania. Photo credit: Flickr/Nicholas A. Tonelli

Shale gas flowing out of the Utica and Marcellus shale plays currently accounts for 18% of current total U.S. output. Over the next decade, those two shale gas plays will grow to account for about a quarter of America's natural gas production. This soaring production growth is really changing the energy landscape in America, especially when it comes to our pipeline infrastructure.

According to a new report by Bentek Energy, these two shale gas plays have the potential to reverse the traditional south-to-north flow of natural gas. This will cause significant reconfiguration and repurposing of natural gas pipeline infrastructure. It's something we're already starting to see with Enterprise Product Partners' (NYSE: EPD) ATEX Express Pipeline project and the proposed Bluegrass Pipeline joint venture project between Williams (NYSE: WMB) and Boardwalk Pipeline Partners (NYSE: BWP).

To build the 1,230-mile ATEX Express Pipeline, Enterprise Products Partners is using existing pipeline to both limit the environmental impact and complete the project sooner. Overall, about 70% of the project will use repurposed pipelines that were underutilized because of the changing energy landscape. Enterprise Products Partners is also reversing the repurposed pipeline. This isn't the first Enterprise has reversed the flow of one of its pipelines, as the reversal of the Seaway Pipeline was one of the keys to helping reduce the glut of oil stored in Cushing, Okla., that was causing American oil prices to trade at a major discount to the global benchmark.

A similar bottleneck has developed in the Marcellus and Utica shale gas plays. The only way to de-bottleneck is to increase southern-flowing pipeline capacity, which is why Enterprise's ATEX Express is being built. Producers need projects like that so these natural gas liquids can reach both the Gulf Coast petrochemical market and export markets. However, as bad as the bottleneck is today, it's only projected to get worse as producers keep drilling.

That's one reason Williams and Boardwalk Pipeline Partners are pursing the Bluegrass Pipeline venture. Williams sees up to a million barrels of NGLs per day needing to be transported out of the Marcellus and Utica Shale by 2020. That's over and above the NGL volumes that would be taking a ride on the ATEX Express. At its maximum capacity, Bluegrass could supply the takeaway capacity of nearly half of the NGLs that need to catch a ride to the south.

Like the project from Enterprise Products Partners, this project would also repurpose a pipeline. Specifically, Boardwalk Pipeline Partners would convert some of its Texas Gas Transition System from natural gas to liquids without disrupting service to existing customers. Williams and Boardwalk are also con