The transportation system for natural gas consists of a complex network of pipelines, designed to quickly and efficiently transport natural gas from its origin to areas of high natural gas demand. To do this efficiently and effectively requires an extensive and elaborate transportation system. In many instances, natural gas produced from a particular well will have to travel a great distance to reach its point of use. Transportation of natural gas is closely linked to its storage. If the natural gas being transported is not be required at that time, it can be put into storage facilities for when it is needed.
The gathering system, the interstate pipeline, and the distribution system essentially make up the three major types of pipelines along the transportation route. The gathering system consists of low pressure, low diameter pipelines that transport raw natural gas right from the wellhead to the processing plant. If the natural gas from a particular well has high sulfur and carbon dioxide contents (sour gas), a specialized sour gas gathering pipe must be installed. Because sour gas is extremely corrosive and dangerous, its transportation must be done carefully from the wellhead to a sweetening plant.
Pipelines are either interstate or intrastate. Interstate pipelines carry natural gas across state boundaries, and in some cases, clear across the country. Intrastate pipelines transport natural gas within a particular state. The technical and operational systems are essentially the same for both interstate or intrastate pipelines. Natural gas pipelines are subject to regulatory oversight, which in many ways determines the manner in which pipeline companies must operate.
The exploration, production, and transportation of natural gas takes time. Natural gas, like most other commodities, can be stored for an indefinite period of time. Because the natural gas that reaches its destination is not always needed right away, it can be injected into underground storage facilities. These storage facilities are usually located near market centers that do not have a ready supply of locally produced natural gas.
The supply of natural gas has been traditionally regulated by the season. That is, partly because it is used for heat in both residential and commercial settings, the demand for natural gas is usually higher during the winter. Stored natural gas ensures that any excess supply delivered during the summer months is available to meet the increased demand of the winter months. Due to the demand for electricity to power air conditioners, recent trends toward natural gas fired electric generation has altered the demand for natural gas to increase during the summer months, however. Another vital role natural gas in storage serves is as insurance against any unforeseen accidents, natural disasters, or other occurrences that may affect the production or delivery of natural gas.
In the past, when natural gas was a regulated commodity, storage was part of the bundled product sold by the pipelines to distribution utilities. It is now available to anyone seeking storage for commercial purposes or operational requirements. Storage used to serve only as a buffer between transportation and distribution, to ensure adequate supplies of natural gas were in place for seasonal demand shifts, and unexpected demand surges. Now, in addition to serving those purposes, natural gas storage is also used by industry participants for commercial reasons; storing gas when prices are low, and withdrawing and selling it when prices are high, for instance. The purpose and use of storage has been closely linked to the regulatory environment of the time. Companies like Triple Diamond Energy Corporation consider all of the changes in both the nation’s available pipeline transportation systems and storage facilities when investing in the future of energy acquisitions.
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