Publication Date
Authored by
Lauren E. Sittler
Advisor(s): Alexis H. Bateman
Topic(s) Covered:
  • Energy
  • Risk Management
  • Transportation

The U.S. energy portfolio is set to undergo drastic change in the coming decades. Policies to reduce emissions combined with growing demand for energy will test existing infrastructure. Large reserves of shale gas provide an attractive near-term solution to help states transition from coal-powered plants to cleaner fuel. Most commercial production growth in shale gas occurred in the early 2000’s. Yet most of the natural gas pipeline system was constructed long before the “shale gas revolution”. Almost half of all interstate transmission pipeline mileage is over 50 years old. In order to best utilize the country’s natural gas reserves, the pipeline transportation network must respond to accommodate changing flow patterns. Consumption of natural gas often occurs far from production sites. This research seeks to identify states where the required inflow and outflow of natural gas may be constrained by pipeline capacity limitations. A literature review of the natural gas production and consumption outlook reveals an expected steady growth in the industry until 2050. The current state of the system is then evaluated. A simple analysis is performed to determine the inflow and outflow transmission pipeline capacity utilization rates for each state. It is found that some states, namely Florida, California, and New England, are indeed at risk for natural gas shortages. It is further discovered that some states with access to reserves, namely Pennsylvania, may be limiting production due to insufficient outflow pipeline capacity. The pipeline approval process, managed by FERC is reviewed. The process is found to be inefficient at allocating new capacity where it is needed. Alternative solutions to address the supply risk were also considered. A literature review confirms that pipeline transportation has a much lower incidence of accidents per volume of natural gas moved than either rail or truck transportation. The dangers of underground storage are also explained. A major risk in the current pipeline system, age, is investigated using a simple analysis of PHMSA data. It is found that three of the top four causes of accidents are related to pipeline age, with older lines having higher rates of accidents. Lastly, the risks of over-reliance on natural-gas for electricity generation are discussed and it is recommended that states take a more balanced long-term approach to energy development and incorporate locally accessible renewable energy.