The lagging natural gas pipeline business is poised for a boom in the next two years that will continue well into the next decade, say industry analysts.

Construction expenditures could double from a recent low of $1.3 billion in 2005 to $2.7 billion in 2006 and further climb to $3.1 billion in 2007, according to a report released last month by the Energy Information Administration. The liquefied-natural-gas market will drive the surge. "The development of new LNG plants will have a major impact on short-range pipeline development," says James Tobin, an EIA gas industry analyst.

New LNG regasification plants will require significant investments in pipeline construction to transport gas to market, says Roland George, senior principal at oil-industry consultant Purvin & Gertz, Calgary, Alberta. Conventional procurement has fallen off, and the industry has no choice but to use LNG and "frontier gas" from remote regions to bridge the gap created by growing demand, he says. There currently are 35 proposed new LNG regasification plants. Nine to 12 likely will be built in the next five to ten years, barring unforeseen shifts in the natural-gas market, he says.

Frontier gas will drive the market for new long-range pipeline projects, says George. Collecting gas from remote sites will force construction of long, expensive pipelines. He expects projects to pipe gas from Alaska and the Mackenzie Delta in Northwest Canada will be under construction in the early part of the next decade at a cost that could exceed $20 billion. Pipeline expenditures for frontier pipelines, new LNG plants and general repairs could reach $100 billion over the next 15 years, George says.

The Interstate Natural Gas Association of America, Washington D.C., a trade association representing natural-gas pipeline owners, estimates capital expenditures of $61 billion during the same period, says Martin Edwards, vice president of legislative affairs. Edwards shares the view that the $15-billion to $20-billion Alaskan pipeline will be built in the near future, even though it has been on the table for 25 years.

Pipe replacement likely will rival or exceed the Alaska project in capital expenditure over the next 15 years, says Edwards. According to a study by INGAA, the pipeline owners will have to spend $19 billion on replacing pipe over the next 15 years. Edwards attributes the massive expenditure to the new pipeline integrity management program enacted by Congress in 2002.