Photo Courtesy of Sheehan Pipeline Construction
Road ahead for pipeline outfits looks good, with ample demand from the utility and chemical sectors and stable costs for materials and labor

These are good days for pipeline engineering and construction firms. There is a steady flow of work, thanks to booming natural-gas and oil production from U.S. shale plays, increased use of gas for power generation and other factors. The activity is driving a major expansion and reworking of the nation's natural-gas, oil and natural-gas-liquids pipeline network.

While most public attention regarding pipelines is focused on the controversial Keystone XL project, experts say the real action involves dozens of smaller but sizable pipeline jobs, many of which are aimed at connecting shale-play areas with existing pipelines, reinforcing regional pipeline networks and delivering gas to new gas-fired powerplants.

They note that renewed emphasis on pipeline safety and integrity in the wake of the 2010 gas-pipeline explosion in San Bruno, Calif., is giving the industry an added boost. Regulatory and other sources expect the amount of pipeline inspection, monitoring, and repair, rehabilitation and replacement work to rise considerably.

"Right now, the market [for pipeline work] is good," says David Sheehan, chairman of Sheehan Pipe Line Construction Co., Tulsa, Okla. "It's not great like it was in the 2008-10 period, when the industry was building a lot of long-distance, large-diameter pipelines. But it's good" and likely to stay that way for the foreseeable future, he says.

Sheehan, whose company is part of a three-contractor consortium that would build Keystone XL, says a current primary need is for smaller-diameter pipelines to deliver natural gas from shale plays, such as the Marcellus and Utica regions in West Virginia, Ohio and Pennsylvania, Eagle Ford in southern Texas, and Bakken in North Dakota and Montana.

More Marcellus Lines Planned

Examples of such projects abound. Williams Partners, Cabot Oil & Gas and Piedmont Natural Gas on June 13 jointly filed for Federal Energy Regulatory Commission approval for a 122-mile Constitution pipeline, which, by April 2015, would carry 650,000 dekatherms per day of Marcellus-formation natural gas from Susquehanna County, Pa., to Schoharie County, N.Y.

Spectra Energy, in turn, is planning the Algonquin Incremental Market Project, also known as AIM, which, by 2016, would expand the capacity of the existing Algonquin pipeline through New York, Connecticut and Massachusetts and permit delivery of more Marcellus gas to New England.

To the west, a joint venture of Spectra, DTE Energy and Enbridge is planning the $1.2-billion-plus Nexus Gas Transmission line, which would transport Utica shale gas from eastern Ohio to Detroit and southeastern Ontario. And on May 30, WBI Energy, a subsidiary of MDU Resources Group, announced plans for a $650-million gas pipeline that would run from western North Dakota to western Minnesota, where it would tie into an existing interstate pipeline.

Demand for natural gas by electric utilities and industrial companies in Minnesota and Wisconsin is increasing, and there is interest in developing gas-based fertilizer-production facilities in eastern North Dakota, "but there is no direct way to get [Bakken] gas" to those potential customers, says WBI Energy spokesman Tim Rasmussen.