Pipeline capacity gives Piceance an edge in gas market

Ample pipeline capacity — coming at a time of mounting opposition to U.S. pipeline projects — is providing a decided competitive advantage to natural gas producers in western Colorado’s Piceance Basin, a recently updated report says.

Representatives of the Grand Junction Economic Partnership and Colorado Mesa University’s Unconventional Energy Center will be touting the report’s findings in Washington, D.C., Wednesday through Friday as they meet with representatives of several federal agencies. The findings will be presented in concert with the university’s Colorado Capital Conference, which enables community leaders and university students to interact with, and learn from, national leaders.

Working in cooperation with the office of U.S. Sen. Cory Gardner, R-Colo., partnership and university representatives plan to meet with high-ranking officials in the departments of State and Interior, as well as the Bureau of Land Management and the Federal Energy Regulatory Commission. The meeting comes as many supporters of local gas development are hoping FERC will change its mind after last year rejecting a permit for the Jordan Cove liquefied natural gas terminal proposal, a coastal Oregon project seen as a means of opening Asian markets to gas produced in western Colorado.

Veresen Inc., the company behind the project, is going through a refiling process with FERC, as the makeup of that five-member commission stands to change dramatically due to vacancies to be filled by nominees of President Trump, a staunch advocate of domestic energy production.

The promise that LNG projects like Jordan Cove provide for locally produced gas was highlighted in 2014 in a white paper titled “From the Piceance Basin to the Pacific Rim.” John Harpole, president of Mercator Energy, a Littleton-based gas brokerage firm, wrote that analysis for the economic partnership.

Harpole has updated the report to account for market and other developments that have occurred since then. One point the revised report emphasizes involves revisions in the estimated potential for gas development in the Mancos shale within the Piceance.

The U.S. Geological Survey last year estimated that the Mancos holds 66 trillion cubic feet of technically recoverable gas, a 40-fold increase over its previous estimate.

The Mancos underlies the Mesaverde sandstone formation, which includes the Williams Fork formation, which has accounted for most local gas development so far.

“It is the combination of those (Williams Fork and Mancos) natural-gas-bearing reservoirs — one old, one new — that should be of particular interest to any party looking for an investment in long-term natural gas reserves,” Harpole writes in his update.

He adds, “The (gas) reserve base of the Piceance is impressive, but the marketability of those reserves is the favorable difference-maker when competing for market share with other North American shale plays. That favorable marketability is attributable to the existing available pipeline capacity to move the gas to markets.”

The current excess pipeline capacity to ship Piceance gas out of the region resulted from pipeline projects that were built to meet demand back when local drilling was booming about a decade or so ago.

“The collective (infrastructure construction) efforts were so significant that midstream processing and interstate pipeline capacity in western Colorado is currently over-built,” Harpole writes.


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