Assuming construction of the Ruby natural gas pipeline does not get delayed in the current storm of legal proceedings, completion of the line in March should provide enough additional access to the Western market to ensure Rockies gas flows westward for decades.
With the additional 1.5 billion cubic feet of gas per day capacity, Rockies natural gas producers will -- for a time, at least -- have more pipe than they do production, according to the Wyoming Pipeline Authority.
"We're going to have total pipeline capacity, finally, out of the Rockies that exceeds our requirements," said Brian Jeffries, executive director of the Wyoming Pipeline Authority.
So far, 73 percent of Ruby's capacity is under contract -- both on the producers' end and the consumers' end. Ruby Pipeline officials say they are currently marketing the remaining capacity, and could have it under contract before completion of construction in March.
When Ruby and other Wyoming-to-West Coast pipelines were envisioned several years ago, the Rockies remained under export capacity restraints, meaning competition among producers to get their gas into the pipe forced them to take lower and lower prices compared to the national average. The situation is known as suffering a "price differential," and it irks state officials because lower prices translate into lower revenues from the sales and production of natural gas.
The conventional wisdom behind Ruby was to connect Rockies gas to the northern California market where industry experts had forecast a significant decline in natural gas flowing from Canada. However, that scenario has been somewhat altered.
Jack Weixel, director of natural gas market analysis at BENTEK Energy, said the recent ramping up of natural gas production from shale gas plays in the eastern United States, such as the Marcellus, has slowed the flow of Canadian gas to the Midwest. That means, for now, there's still plenty of Canadian gas that could flow to the U.S. West Coast market.
"When Ruby is completed to Malin, Oregon, there's going to be competition between Rockies gas and gas coming out of British Columbia," said Weixel.
That doesn't mean Rockies gas will hit a brick wall at Malin by any means, however. Several utilities along the West Coast are padding their energy portfolios with natural gas in order to meet state-level carbon reduction goals, so the market supposedly can take more natural gas as time goes on.
In other words, just as Rockies producers should enjoy broader access to the West Coast market through Ruby, utilities may enjoy having more options for supply.
"We are in an over-supply situation in the U.S. with natural gas," said Weixel.
Which may explain some speculation that Rockies gas could one day be exported to the Pacific Rim via liquid natural gas (LNG) ports yet to be built on the West Coast. Weixel said this is an unlikely scenario, however, because it may be too politically unfavorable to export domestic natural gas -- which is considered the nation's "bridge fuel" to a low-carbon energy portfolio.
In fact, the at-home favoritism for cleaner energy has already played out in Wyoming's budding wind energy industry. In May, the California Public Utilities Commission flirted with rules favoring California's in-state renewable energy over importing renewable energy from out of state, which had a chilling effect on the proposed Zephyr Power Transmission Line tying Wyoming wind to the southwest corner of the country.
For now, it seems, there's still plenty of domestic demand to justify continued production from the Rockies.
"We hope the (natural) gas price gets stable and regulatory commissions get more comfortable that gas can be a baseload fuel," said Weixel.