According to the U.S. Energy Information Administration, natural gas pipeline construction slowed significantly in 2012 – the lowest since 1997. In North America, 367 miles of new pipeline were added, which is dramatically lower than construction in the past 10 to 15 years.

With increased production and prices as low as they are, these statistics are somewhat surprising and concerning. What does this mean for production and prices in the future?

Aimee Duffy, contributor at Motley Fool see this as a non-issue. She calls it an anomaly and not a trend. Fear of takeaway capacity will keep natural gas prices low, and many producers will more than likely hold off until some of the projects in the next year or two come to fruition. She foresees the addition of 1000 miles of pipeline construction in the U.S. this coming year and the following year.

What This Means For Natural Gas

The future of energy hinges on the expansion of the pipeline network. In order to attain wider use and adoption of natural gas pipeline infrastructure needs to expand.

Take for example BNSF Railways, who have been testing natural gas in their locomotives. They use about 1.3 billion gallons of diesel annually, and natural gas would provide an obviously economical alternative for them. Shell estimates switching from diesel to liquefied natural gas would save approximately 30 percent on their fuel costs.

Representatives from major rail companies who’s priority it is to cut costs, met in Houston last fall to discuss the viability of switching to natural gas – what they call “a cataclysmic transition similar to the move decades ago from coal to diesel power.”

The problem is two-fold:

1. The infrastructure doesn’t exist to get them the gas they need
2. Diesel-electric locomotives would have to be modified at a cost of roughly $600,000 to $1 million per engine

Pipeline & Gas Journal’s 2013 Worldwide Construction Report indicates that 41,810 miles of pipeline construction is planned worldwide, and new pipeline for the upcoming year is credited largely to increased shale gas production. A continuing trend such as that will only help to expand infrastructure and accommodate growing needs in the marketplace. This is great news for Snelson Companies, who continues to be a leader in natural gas pipeline construction. We are looking to the future of pipeline construction with confidence.