How much does it cost to build a Natural Gas Transmission Pipeline?

I have long wondered as to how much it costs to construct a Natural Gas Transmission Pipeline?

The high pressure gas gathering and transmission lines are not the wimpy little plumbing related to the shallow (low pressure) OH, PA, WV, NY wells of the 20th century; Toto, we are not in Titusville anymore.

Sometimes it is difficult to wade through all the chaff resulting from a Google search in order to locate a couple grains of useful information.

What little I have found (but am not sure of its accuracy) is that it costs around $100,000 per inch-mile; that is $100,000 per inch ID of pipe - per linear mile of high pressure steel pipeline.

To simply by example: it would cost around $2,400,000/mile to install a 24" ID steel Natural Gas Transmission Line.

Furthermore, for a 24" ID pipeline, about 8% of the cost ($192,000/mile) is allocated to the expense of obtaining ROW Easement.

I cannot vouch for the accuracy of these (very generic) estimated costs.

I have thrown this figure out in hopes of generating a discussion in which individuals more knowledgeable than I might offer their opinions or present their experiences.

Does anyone have any insight that they are prepared to share?


JS

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Permalink Reply by gary smith on November 23, 2012 at 1:53pm

your estimate is probably good. it would cost a million to install one mile of 24 inch schedule 35 sewer pipe 10 feet deep in a city, crossing utilities and paying the labor prevailing rate ( operators cost an employer 60 dollars an hour ,with insurance included)  . that crew would only have four people,two operators, two laborers. three machines. a gas pipe crew on a 24 inch line would probably have 4 or 5 sidebooms,a couple excavators and dozers.all at union wages. your number is good. on a side note, my brother watched a shell safety film a few months ago, camera caught 9 sidebooms on a 36 inch line,all flip on their side at once. wow.

Permalink Reply by Jack Straw on November 24, 2012 at 5:00am
Thanks Gary, Josh and Gary; all good information.

Regarding the REX pipeline, I did a quick calculation using the figures provided and arrived at $96,429/inch-mile. Since this pipeline route was mostly across the Great Plains, they did not encounter the “washboard” terrain we of the Marcellus/Utica call home.
It would appear that $100,000/inch-mile is the cheapest that a (sizable) pipeline can currently be constructed; and this when the terrain is cooperative.

Josh’s link provides a high end of $300,000/inch-mile for the Marcellus.
Splitting the difference, $200,000/inch-mile could well represent the current lowest cost one might expect that a “generic” large high pressure natural gas transmission line could be built in our “neck of the woods”. Using that figure, it would cost around $4,800,000/mile to install a 24" ID steel Marcellus/Utica Natural Gas Transmission Line.

This exercise helps put in perspective the costs associated with building out the infrastructure that will be required to move our gas from well head to market. The costs (higher than I had anticipated) help explain the seemingly slow pace of construction of infrastructure; even a short section of pipeline represents a substantial financial commitment. Recent low Natural Gas prices may have made it more difficult to obtain and commit capital.

It is interesting to note that the REX Pipeline was built to move Natural Gas stranded in the Rockies to a Mid-West and East Coast that were (at the time of inception of the REX Pipeline) in need of additional supplies of Natural Gas. By the time the REX Pipeline was completed, the discoveries in the Marcellus and Utica resulted in an indigenous East Coast over supply of Natural Gas. It appears that the $6.8 Billion REX Pipeline has turned out to be an exercise in ‘Carrying Coals to Newcastle’.

All IMHO,
JS
Permalink Reply by C.BURGER on November 24, 2012 at 2:25pm

The eastern end of the REX is less than a quarter mile from my farm.  It ended with the largest compressor station on the entre route. 

When it was nearing completetion two different pipeline company's were beating on my door about the continuation of the line.  That was 5 years ago and there has been no more mention of the expantion of the REX. 

In fact there have been 5 different company's on my property doing the peliminary work in the past 5 yrs.  None have materialized yet.  There for I don't get too excited when they come come a knock'n

 

Permalink Reply by owner on December 19, 2012 at 3:21am

Hi Jack, I appreciate all of your info!  I have a few questions.  All of the above talks about high pressure transmission lines.   Would these costs be similar to costs for pipelines transporting gas and ngls from wells to the transmission lines?  I am working with  company trying to place 2-16 inch lines on  my property.   Thanks!!  

Permalink Reply by Jack Straw on December 19, 2012 at 2:13pm

owner,

I went to your particulars and see that you are in PA; that is a good thing, in that PA is not as liberal as some other states in allowing condemnation by "eminent domain"; though the industry is lobbying to change that.

I did some quick arithmatic, and 2 x 16" lines would have the capacity to carry the same amount of natural gas as one 24" line. A bit odd that they are interested in installing two 16" lines, instead of one 24" line; perhaps one is intended for NG and one is intended for NGLs; perhaps they arrive at/near your property from different directions.

The reality is that the pressures of the NG encountered in the depths at which the Marcellus and (even more so) the Utica are encountered are much higher than present in the shallow gas wells that dot the countryside of much of PA. Also, the quantities of gas potentially obtained from a few multi-well pads dwarfs the amounts obtained from a like number of shallow wells.

The  Marcellus/Utica gathering lines are not that much different in pressure and capacity than many transmission lines.

The physical width and depth of burial of a Marcellus/Utica multi-well gathering would equal that of transmission lines. Also, the cautions and concerns would be the same as for a transmission line.

It is my expectation that the costs per inch/foot would be in line with those earlier quoted for transmission lines.

This is my personal opinion, and one that I will hold until such time as someone can convince me otherwise (and it would take someone other than a Landman to do that).

Best wishes for the Holidays and best of luck in the New Year (something needed in dealing with a pipeline right of way).

 

JS

 

 

 

 

Permalink Reply by gary smith on December 19, 2012 at 3:47pm

woops

Permalink Reply by Dan on December 19, 2012 at 4:01pm

I have seen as many as 5 lines being plowed in, in a ROW a few places this year.  One spot in WV had three different companies plowing in three 30" lines in the same row at once.

Permalink Reply by owner on December 20, 2012 at 4:44am

Thanks Jack.  I was assuming that the 2-16 inch lines would be equivalent to the 24" and I thought the pressures would be similar or maybe even higher from the Utica.  I appreciate your help and your knowledge!   Have a Merry Chirstmas and a Happy New Year!

Permalink Reply by farmgas on December 20, 2012 at 10:19am

Jack, how about the cost for directional drilling under roadways, streams, rivers or wetlands?  Is this cost higher then typical pipeline work?

Permalink Reply by Jack Straw on December 21, 2012 at 6:50am

RE: “how about the cost for directional drilling under roadways, streams, rivers or wetlands?  Is this cost higher than typical pipeline work”

I try to pass along what I have learned, but I must admit that I am still learning and have much more to learn.

Logic would suggest that extraordinary situations would result in higher costs. However, dealing with the width of a roadway (as a percentage of the length of a pipeline should not make much difference in the costs per mile.

Wetlands would be a bit more problematic; it would be up to the Landowner to assure that a proper clause in included in a ROW agreement to handle reclamation.                 

Streams and especially Rivers could add substantial costs; again, it would be up to the Landowner to assure that a proper clause in included in a ROW agreement to deal with the circumstances (buried beneath the stream/river bed in a concrete lined trench and covered in a manner that prevents scouring – rather than aerial above the stream/river. Specifications provided to assure proper installation to prevent stream/river bank erosion).

All “special” situations need be addressed in the ROW agreement, the landowner cannot assume that matters will be adequately addressed unless it is in writing.

 

All IMHO,

Permalink Reply by Ed MYers on December 21, 2012 at 8:53am

 Directional drilling cost is $1,000 per foot for 24" pipe. That pipe is also heaver then the buried pipe.  24" dia. and .500 thick.

Permalink Reply by Jim on December 20, 2012 at 5:03am

I have not installed any plastic drain pipe in my fields.  My neighbors have in the form of a grid.  Will a pipeline company avoid the fields with a large amount of drain pipe or is point A to point B at any cost how a pipeline company think.  I'm thinking I should get more money for an easement.

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