A natural gas producers’ association in the Rocky Mountain region is advocating for boosting supply of its product via pipeline expansions in the Northwest and Southwest that could increase natural gas delivery to both domestic and export markets.
The Western States and Tribal Nations Energy Initiative on Oct. 20 released a study, conducted by Guidehouse, identifying routes for delivery of natural gas from Rocky Mountain basins to growing markets in both the Northwestern and Southwestern U.S. Under both scenarios, the gas would ultimately make its way to Asia from North American export terminals.
“It would be foolhardy of us to take care of exports without serving the energy needs in the U.S.,” WSTN Chair Jason Sandel said in a phone interview with California Energy Markets. “We can capitalize on the domestic markets that are on the way toward exports,” he said.
Demand for natural gas in the West has increased considerably in recent years owing to growing power demand and the need for dispatchable resources to augment intermittent renewables. The proliferation of data centers in the Southwest, which is expected to continue there and elsewhere, along with extreme weather events, is driving further demand.
Midstream operators are already planning to invest in westbound pipeline expansions to meet growing demand in the Pacific Northwest, according to the study. Demand in the region reduces the risk involved in a larger-scale buildout that could also support a liquefied natural gas export facility from U.S. shores, it says.
The most likely scenario for a Southwest pathway is one that would help serve growing demand for natural gas in Arizona and northern Mexico and ultimately take advantage of Sempra’s LNG export facilities at Energía Costa Azul in Baja, Mexico, Sandel said. The ECA export facility is more than 94 percent complete and slated to begin Phase 1 operations in early 2026, according to the study.
“Any and all markets are the priority, so I’m for getting them there as quickly as possible,” Sandel said on the phone, adding that he is a strong advocate for both pipelines.
“But the Asian market needs gas commitments quickly, and the Southwest route would make the export option feasible more quickly,” he said. At about 50 miles shorter and at a cost roughly $2 million less, a Southwest pipeline is also closer to being shovel-ready, he said.
Both pipelines would access production from all five Rocky Mountain basins and ultimately culminate in West Coast LNG export terminals. Demand for LNG in Asian nations is expected to double by 2050, and those nations also seek to diversify their supply of the fuel, according to the study. New export infrastructure will enable U.S. exports of LNG to Asia to bypass the increasingly constrained Panama Canal, where drought and congestion have increased wait times, it says.
WSTN representatives including the governors of New Mexico and Wyoming visited Japan, Singapore and Taiwan earlier this year to discuss business and political interests, Sandel said on the phone. Shigeo Yamada, Japanese ambassador to the U.S., was present for the study’s release in Santa Fe.
Options for the Southwest route begin in southwestern Colorado and lead to Phoenix, where demand growth has intensified due to data centers and increasingly hot summers. The pipeline would most likely follow existing rights of way as proposed by Tallgrass Energy in a presentation to the Arizona Corporation Commission in August (California Energy Markets No. 1863). From there, a new pipeline would be necessary to access Sempra’s LNG facilities in Mexico.
The Southwest currently receives 25 Bcf per day of natural gas from the Permian Basin, with an additional 10 Bcfd in projected demand from new and upcoming pipeline projects, according to the study. Energy Transfer in August announced plans for a new 516-mile line from the Permian to serve markets in New Mexico and Arizona (California Energy Markets No. 1860).
Permian producers are also planning a new eastward pipeline, which would increase competition for their resources, potentially driving up costs and leading to supply constraints. The study—which considered current inventory, upcoming projects and planned expansions—estimates that demand for Permian Basin natural gas resources could reach 42 Bcfd, which the authors say would create a significant domestic supply risk.
Rocky Mountain assets could supply diversity that reduces that risk, the study says. Inventory among the combined basins is estimated to be as much as 277 Tcf, according to the study. Unlike in the Permian, where natural gas is a byproduct of oil production, Rocky Mountain producers drill for natural gas as their primary product, which gives them greater contractual flexibility and results in more stable pricing, according to the study.
An additional outlet for natural gas resources would also benefit the Pacific Northwest, which receives roughly two-thirds of its natural gas from Canada. Average utilization of an interstate pipeline in the region has exceeded 95 percent for the past five years, according to the study, which cites research by the Northwest Gas Association. The situation leaves almost no margin to accommodate unexpected outages.
A new pipeline to serve the Northwest would originate in southwestern Wyoming and either follow the Northwest pipeline’s existing right of way through Idaho or take advantage of available capacity on the Ruby Pipeline, which runs west through northern Utah and Nevada. Either route would serve growing demand in Washington and Oregon as well as additional load centers along its interior route.
“We really want to be addressing domestic gas needs as the priority for the Pacific Northwest,” Sandel said. Exporting from the region is more of a long-range plan because the infrastructure doesn’t yet exist there, he said.
Producer commitments to leak reduction and legislative limits on flaring in Colorado and New Mexico have significantly decreased greenhouse gas emissions from Rocky Mountain natural gas compared with resources from the Permian Basin. Wyoming producers have also made progress on GHG-reduction goals, making Rocky Mountain natural gas more attractive to markets in Western states as well as internationally, the study says.
Both the Northwest and Southwest proposals also create commercial and partnership opportunities for Native American tribes in the West.
“If the stars aligned and everybody said, ‘Today we’re moving forward with this project,’” Sandel estimates a new Southwest pipeline would reach full buildout and operation within three to five years. “We’ve brought the players to the table, and we’re now defining what an agreement will look like,” he said.