Pipeline capacity location and demand-supply matching

A Wall Street Journal article (29 July 2011) describes the reduced demand for pipeline capacity from the Midwest and Canadian locations to the Northeast (with capacity reported to drop by 44 %) as increased gas is shipped from the Marcellus shale locations in the Northeast itself.   In West Texas, prices have dropped as more gas is shipped south.  With pipelines being infrastructure assets that cannot be relocated, the pressure to fill the pipe with alternative flows suggests new materials such as NGLs, projected to have demand growth, and which are mixed into fuels or used as ingredients in plastic.   How will these supply-demand mismatches for pipeline capacity across the US be resolved Should the industry move to contracting like the electricity grids to better manage its capacity ? Should the industry move to support consideration of the entire environmental cost of gas generation to maintain its capacity utilization (i.e., focus on the cost of fracking) ? IS there a coordinating role for the Federal government to ensure long term capacity availability ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Service Operations, Supply Chain Issues and tagged , , , , . Bookmark the permalink.

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