Lower Prices, Consumption, Near-Term Construction Lessens 2010 Spending Levels

By Rita Tubb, Managing Editor | February 2010 Vol. 65 No. 2
VESTAMID PA12 pipe ends are shown being jointed using heat fusion.

Insert table titled New & Replacement Mains & Services, 2006-2010
Lower prices and consumption coupled with lower near-term new construction spending to rehabilitate, repair and replace existing systems, is expected to slightly reduce overall spending levels in 2010. For this reason, Underground Construction’s latest survey figures indicate gas utility spending to serve new customers and rehabilitate, repair and replace mains and services, meters, valves, regulators, cathodic protection, SCADA networks and peak-shaving facilities will total about $11.9 million in 2010, compared to $12.1 billion this year.

New and Replacement Mains & Services, 2006-2010

These spending demands come at a difficult time for the distribution sector. Deliveries by LDCs have decreased by 15 percent since 2000 and some large-volume customers have switched to mainline pipeline systems. Nonetheless, the LDC remains the backbone of the natural gas distribution network.

As to higher spending for LDCs in some sectors, corrosion costs continue to be a costly problem for all facets of the oil and gas industry. The total annual direct cost to corrosion on the nation’s natural gas distribution system is estimated at $5-6 billion.

As a result, companies are seeking solutions. Energy West, a Montana-based gas utility and energy supplier, became the first utility in North America to install Evonik’s VESTAMID® LX9030 PA12 (VESTAMID PA12) pipe on a three-mile distribution system along Interstate 15 frontage roads outside Great Falls earlier this year.

Safety
Safety also is costly. Gas utility and pipeline companies spend close to $7 billion annually to ensure that natural gas is delivered safely and reliably.

Gas Distribution System Operators Incident Summary Statistics by Year. Historical totals may change as PHMSA receives supplemental information on incidents. Source: PHMSA.

All natural gas in distribution systems must be odorized so a leak can be readily detected without special instruments. Federal pipeline safety codes also require that distribution systems comply with requirements for design, construction, testing, inspection, operations and maintenance from the point of connection to the point of transmission, up to and including the customer’s meter.

Distribution systems regulated by a state agency are required by law to comply with standards that are at least as stringent, or more stringent, than those set forth in federal minimum safety mandates.