Pipeline Company Purchase Creates Mega-Network

Susan Phillips / StateImpactPA

An under­ground pipeline snakes through the Susque­han­nock State For­est in Pot­ter County.

The Wall Street Jour­nal reports today on a deal struck by the nat­ural gas pipeline com­pany Kinder Mor­gan to buy its rival El Paso Cor­po­ra­tion. The $38 bil­lion dol­lar pur­chase (includes El Paso’s out­stand­ing debt) gives Kinder Mor­gan con­trol over the largest pipeline net­work in the coun­try at a time when shale gas devel­op­ment is cre­at­ing the need for new trans­mis­sion lines in the Northeast.

“The new entity would have a net­work of 67,000 miles of natural-gas pipelines stretch­ing into vir­tu­ally every major region where nat­ural gas is pro­duced. It would con­nect Penn­syl­va­nia, Arkansas and Texas, and give Kinder Mor­gan entry in to Florida, a grow­ing mar­ket for gas-fueled power generation.”-WSJ

The WSJ reports that although some energy com­pa­nies strug­gle to turn a profit while gas prices are so low, the demand for new pipelines that carry that gas to mar­ket has shot through the roof.

“The Inter­state Nat­ural Gas Asso­ci­a­tion of Amer­ica Foun­da­tion, a trade group, esti­mates that com­pa­nies will need to build 35,600 miles of big, high-pressure natural-gas pipelines between 2011 and 2035 to meet mar­ket demands, at a cost of $178 billion.”-WSJ

El Paso owns the Ten­nessee Gas Pipeline com­pany, which runs a large trans­mis­sion line across the top of Penn­syl­va­nia, into New Jer­sey and New York. Work on expand­ing that pipeline has already begun. The 127 miles of addi­tional pipes will also include two new com­pres­sor sta­tions in North­west Pennsylvania.

Gas drilling oppo­nents have begun to oppose pipeline con­struc­tion projects, say­ing they harm the environment.