The growing inclination toward natural gas as a sustainable fuel source and the subsequent surge in new project developments will pave the way for gas pipeline infrastructure market expansion.
The global energy mix has been in a state of evolution over the past 15 years, gradually making the shift away from conventional coal-based resources to more sustainable alternatives like natural gas and eventually, renewables. Natural gas, especially, is taking up a prominent role in the ongoing energy transition of late.
Despite being a fossil fuel, natural gas is less carbon-intensive and emits fewer pollutants like nitrogen oxides, sulfur oxides, and fine particulate matter, making it more environmentally sound than its counterparts. According to a 2019 UNECE (United Nations Economic Commission for Europe) report, natural gas is proving to be a strong contributor to the energy transition, mainly due to its ability to deliver a relatively low backup of carbon at peak energy use times.
Essential to this shift is a robust and efficient gas pipeline infrastructure. Oil and gas pipelines are necessary for the transport of raw materials from their production facilities, which are often in remote regions, to chemical plants and refineries, and eventually to power plants and terminals as finished products. According to a Global Market Insights Inc. report, the gas pipeline infrastructure market is poised to exceed a valuation of nearly USD 1.5 trillion by 2025, supported by the numerous efforts being made worldwide to advance pipeline infrastructures and meet growing energy demands.
A notable example of this is the evolution of the natural gas pipelines in the U.S., which is considered the most extensive pipeline network globally, spanning more than 300,000 miles interstate and intrastate. In April 2022, FERC (The Federal Energy Regulatory Commission) granted an extension to Sempra Energy, for two gas pipeline construction projects in Louisiana and Texas, in order to connect to a Texas LNG facility.
Natural gas distribution systems to transform with retrofitting of gas pipeline infrastructure on the rise
Over the years, the United States has continued to prove its mettle as one of the largest producers of oil and natural gas across the globe, as it strives to accommodate the ever-increasing demand for energy. However, most of the existing pipeline infrastructure existing in the region today was installed over 60 years ago and is still used to deliver natural gas to businesses and homes. Since these pipelines were made primarily of wrought and cast iron, the degrading nature of the alloys, coupled with the age of the pipelines has emerged as a major challenge in recent years in terms of safety. This, in turn, is likely to provide gas pipeline infrastructure industry contenders with viable growth opportunities.
With the energy demand burden in the U.S. growing heavier with each stage of development, government authorities and private organizations alike are shifting their focus on modernizing and retrofitting aging systems, particularly distribution gas pipeline infrastructure.
To illustrate, in August 2020, the U.S. DOE (Department of Energy) announced funding worth $33 million, aimed at facilitating the progress of 10 projects under the REPAIR (Rapid Encapsulation of Pipelines Avoiding Intensive Replacement) established by the Advanced Research Projects Agency-Energy. The program was focused mainly on rehabilitating existing bare steel and cast-iron pipelines by building newer and sturdier pipes inside the old ones, through the use of retrofitting technologies. The advancement of these technologies via the projects under the REPAIR program was geared towards adding a minimum of 50 years of life to rehabilitated pipes in natural gas distribution systems, by reducing the load on the older exterior pipe.
Efforts have also been made by private entities in this regard. Enbridge Gas Inc., for instance, requested the approval for gas pipeline construction of almost 19.8 kilometers in December 2021 for natural gas and ancillary facilities in Ottawa, citing pipeline integrity concerns arising from the condition and age of the St. Laurent Pipeline as the primary reason. If approved, this application would allow Enbridge to replace the aging St. Laurent Pipeline in the last two phases of its multi-year project.
Burgeoning clean hydrogen evolution to foster offshore gas pipeline infrastructure market growth
Growing support from regulatory bodies at state as well as national levels for the transition to clean hydrogen, alongside falling prices has added tremendous momentum to offshore wind development in recent years. In the U.S. alone, offshore wind pipelines grew by almost 24% in 2021, with a report from the Office of Energy Efficiency and Renewable Energy suggesting that over 35,324 MW was in development as of August 2021.
This is further corroborated by various efforts from entities like the MoU (memorandum of understanding) signed by NOV and Lamprell in April 2022. Under the terms of this agreement, Lamprell was tasked with delivering the fabrication, assembly, and outfitting of the tri-floaters of NOV, that were scheduled for installation at the floating wind project established by Cerulean Winds. A major objective of this deal was to boost the production of green hydrogen as well as facilitate the electrification of Scotland’s oil & gas assets.
Given that so many offshore wind projects are already being scrutinized or under development, the establishment of sturdy and safe offshore gas pipeline infrastructure designed for the transportation of clean hydrogen has become a major area of focus for many businesses worldwide. In general, offshore pipelines carry higher risks for environmental impacts or leaks than their onshore counterparts. However, this issue is already being addressed through various advancements aimed specifically at enhancing the safety as well as efficiency of these pipelines.
Energy certification body DNV is one of the most prominent driving forces behind this, having established a JIP to develop the world’s first guideline for the transportation of hydrogen gas in new and existing offshore pipelines. With the support of key players like Vallourec, the main objective of the H2Pipe JIP was to create a guideline for the reliable and safe design, re-qualification, building, and operation of the robust offshore gas pipeline infrastructure needed for the transport of hydrogen gas, in compliance with existing standards set for submarine pipeline systems by DNV.
As a result of such endeavors, the role of hydrogen in the imminent energy transition will receive a tremendous boost. Targeted efforts to trigger evolution in the gas pipeline infrastructure industry are likely to pave the way for a cleaner and more sustainable energy ecosystem in the years to come.