PITTSBURGH--A lot has changed in the North American energy landscape since 2009. The biggest worry when it comes to crude oil isn’t so much high prices of imported product or the necessity to find new markets for domestic production. There is no longer any thought to importing LNG. Instead producers are seeking to export gas around the world, and the flow of natural gas is now heading north-to-south and east-to-west.

Like a reflection in a funhouse mirror, the industry has been stood on its head. What was once a demand center is now a production region, which is causing companies to quickly adapt and in some cases make quick changes.

A clear example of this need for quick adaptation is the Rockies Express (REX) pipeline. When it was originally put into operation by Kinder Morgan in November 2009, the 1,698-mile system was designed to deliver natural gas from Colorado to the Midwest and Northeast markets. However, as production from the Marcellus and Utica shales have forced out gas from other plays, the system has begun reversing its flow to ship gas from the Northeast to more markets.

“The Rockies Express pipeline’s east-to-west project will allow the Northeast to touch many great markets, including the Midwest and Southeast,” Matt Sheehy, VP, Tallgrass Energy Partners, said at Hart Energy’s recent DUG East conference.

Tallgrass Energy acquired a 50% interest in the REX pipeline, along with other midstream assets, from Kinder Morgan in November 2012 as part of Kinder Morgan’s FTC-mandated divestiture process related to its acquisition of El Paso Corp.

According to Sheehy, the east-to-west expansion project will help meet growing demand for gas along the Gulf Coast related to increased LNG export capacity and new petrochemical cracking capacity. In addition, utilities in the Southeast are switching from coal-fired to gas-fired power generation.

Thus far, the east-to-west project has contracted 1.2 Bcf/d of incremental capacity with multiple participants in the open season bidding process. This segment is scheduled to come online in 2015 and the company is continuing to work with producers, processors and gathering companies and pipelines to establish new supply inputs on the east end of REX.

The large size of the REX system ? the company has given the system the motto of “Shale to Shining Shale ? provides Tallgrass with a great benefit in that it can connect to multiple interstate pipeline systems that are also in the process of reversing their flow. According to Sheehy, REX is the new null point for many destinations.

Originally the bulk of these pipeline systems were built to transport gas from the south to the northeast demand center with initial southbound transactions being backhauled by displacement, Sheehy said. The full reversal of some of these systems helps cut down on costs and time to begin providing access to new markets to customers.

Sheehy noted that several other pipelines connected to REX are investing capital to reverse flows from north to south. These include the NGPL pipeline, which is working with REX to expand the receipt point in Moultrie County, Ill., to allow increased gas flows between the two systems; the Texas Gas pipeline, which has an agreement to transport more than 600 MMcf/d of gas and is considering plans to expand its current interconnect with REX and add a new one in Indiana; and the ANR pipeline, which has more than 2 Bcf/d of commitments that will move bilaterally with an average term of 23 years.

While these reversals are extremely useful in finding markets for new production, the rise of the Appalachian Basin will also necessitate the construction of new infrastructure in the region, according to Sheehy.

“Optimizing existing infrastructure, with modifications, is the cheapest and fastest way to add capacity. This will meet the short-term demands of producers, but this ‘easy’ capacity will run out soon with many systems having already sold out of their reversal capacity from Appalachia. There are only smaller increments left,” he said.

The next step for pipeline operators with existing infrastructure is to increase capacity via looping projects or adding compression. These projects are more expensive and slower than optimizing current assets, but are still faster and cheaper than greenfield projects. Sheehy said that Tallgrass is reviewing projects to add intermediate compression and looped pipeline segments to increase incremental takeaway capacity by up to 2.4 Bcf/d via the Clarington West project. Should the open season prove successful, the new pipeline would be scheduled to go into service by mid- to late-2017.

However, despite these additions, Sheehy noted that new infrastructure will still be required to relieve growing supply vs. demand disparities. “It is estimated that more than $20 billion of long-haul gas transportation investment will be required,” he said while adding that Tallgrass is continuing to evaluate numerous projects to provide takeaway capacity for Appalachian Basin producers.

“Pure greenfield projects are the most expensive types and take the longest to complete as well as requiring the most extensive regulatory process. It does give the greatest flexibility for linking supply with demand as it does not rely on current infrastructure to dictate flow. However, these projects also have the greatest risk of experiencing cost overruns and schedule slippages,” he said.

Even as REX is in the midst of reversing capacity and linking up to new markets, the system still performed admirably in meeting Midwest heating and electric demand during the past frigid winter. Tallgrass had been nervous about the increased gas demand in the Midwest, but it managed to deliver. “REX had a wonderful winter. We helped keep the lights on in Chicago,” Sheehy said.

During the polar vortex, gas prices rose to more than $60/MMBtu in Chicago as demand spiked with pipelines going down due to operational issues related to freezing temperatures. However, REX delivered 1.3 Bcf/d to Chicago-bound pipes on a peak day and maxed out deliveries to the NGPL, Midwestern and ANR systems on the coldest days. “REX was able to keep flowing due to superior compressor availability/reliability and delivered at full capacity throughout the winter,” he said.