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NGPL Testing Customer Support to Expand Two NatGas Systems -- Chicago Market, Gulf Coast Southbound

Natural Gas Pipeline Company of America LLC (NGPL) on Tuesday launched open seasons to test interest in expanding two natural gas pipeline systems, the Chicago Market Expansion Project and the Gulf Coast Southbound Expansion Project.

The proposal by the pipeline, operated by Kinder Morgan Inc. (KMI), comes less than two months after FERC approved certificate authorization for the first phase of the Chicago expansion, designed to carry 238,000 Dth/d of incremental northbound firm capacity on the Gulf Coast mainline system from the Rockies Express Pipeline (REX) interconnection in Moultrie County, IL, to the Chicago area (see Daily GPIMarch 17). Phase 1 of the Chicago expansion is scheduled to go into service late this year.

The certificate application for the Gulf Coast expansion is underway.

"We believe these projects provide benefits to our various customers, including local distribution companies, power plants, producers and marketers," as well as for emerging markets in Mexico and via liquefied natural gas exports, said NGPL President David Devine. "As the national pipeline grid continues its transformation, NGPL's transmission and storage assets are uniquely positioned to move gas supplies to both traditional and emerging markets with the highest value."

The Chicago expansion's Phase 2 as proposed would provide up to 200,000 Dth/d to markets in the Chicago area from the existing REX interconnection or other NGPL receipt points. The expansion would add compression facilities at Compressor Station 312, which is underway in Livingston County, IL. The targeted start date would be based on shipper needs.

The Gulf Coast Southbound Expansion Project "is a market-driven response to access increasing domestic natural gas supplies available to NGPL for delivery to growing industrial demand in the Gulf Coast area," NGPL management said.

Phase 1 of the project, fully subscribed under long-term customer contracts, is designed to transport 460,000 Dth/d of incremental firm transportation service from NGPL’s interstate pipeline interconnects in Illinois, Arkansas and Texas to points south on NGPL’s system in South Texas. Cheniere Energy Inc.'s Corpus Christi Liquefaction LLC. signed up for 385,000 Dth/d of the southbound capacity on NGPL's expanding Gulf Coast mainline for a 20-year term (see Daily GPISept. 10, 2015).

NGPL expects to file a 7(c) certificate application with FERC for the Gulf Coast project in 3Q2016, with an anticipated inservice date of 4Q2018, pending regulatory approval. Phase 1 would reverse four compressor stations in the Texas counties of Victoria, Wharton, Montgomery and Angelina and add a compressor station in Cass County. It also includes minor pipe replacement and upgrades.

As proposed, Phase 2 of the Gulf Coast expansion would provide up to 250,000 Dth/d of incremental firm transportation service to "existing and expanding markets in NGPL's Texas and Louisiana Gulf Coast service areas from existing or new receipt points in the Midwest." The projected in-service date, with regulatory approval, is 4Q2019.

NGPL, jointly owned by KMI and Brookfield Infrastructure Partners LP, owns one of the largest interstate pipeline systems in the country with 9,200 miles of pipeline, more than 1 million hp of compressor facilities and 288 Bcf of working gas storage.

The two proposed expansions should not require REX to build more capacity, according to KMI, which had partially owned the system until 2012. It now is 75% controlled by Tallgrass Development LP (see Daily GPIMarch 30).

"We do not believe that additional expansion would be required by REX, as they have sufficient capacity to flow these volumes to NGPL, rather than other Zone 3 interconnects," spokeswoman Sara Hughes told NGI.

By the end of this year, REX plans to move another 800,000 Dth/d of east-to-west capacity from Appalachia through its Zone 3 Capacity Enhancement Project (see Daily GPIFeb. 29). Zone 3 total capacity would increase to 2.6 Bcf/d from 1.8 Bcf/d under the expansion. Anchored by 15-year precedent agreements, the expansion is scheduled to begin service in 4Q2016.

NGI created the Rockies Express Zone 3 Tracker to provide the latest flow data and associated natural gas price movement in the region.

Last month KMI's Tennessee Gas Pipeline Co. (TGP) suspended the Northeast Energy Direct (NED) pipeline project, citing limited customer support (see Daily GPIApril 21). But the project, which has drawn protests from New England elected officials and landowners, has not been canceled, said Hughes.

NED as proposed would carry Marcellus gas from northern Pennsylvania to consumers in New York and New England, with a market path segment from Wright, NY, to Dracut, MA (see Daily GPINov. 20, 2015July 16, 2015). At the time KMI's board approved the NED market path, $3.3 billion had been allocated to the project.

Whether the proposed expansions could help KMI recoup some of the gas proposed to be carried on NED remains a question. "We do not want to speculate" about that, Hughes said.

For information on the Gulf Coast Southbound Expansion Project, contact NGPL's Jason Sweeney, director of business development, at Jason_sweeney@kindermorgan.com or (713) 420-6055. Information on the Chicago Market Expansion Project is available from NGPL's Mark Menis, director of business development, at CMEP@kindermorgan.com or (630) 725-3052.

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