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Rockies Producers Eyeing NatGas Takeaway by (Surprise!) REX Pipeline

Tallgrass Energy Partners LP on Tuesday reignited a plan to carry natural gas from the left-behind Rocky Mountains through a system that would link production to the Rockies Express Pipeline (REX), which ironically was initially designed to do just that.

The proposed Cheyenne Connector pipeline, potentially in service by 3Q2019, would move gas supply from the Denver-Julesburg (DJ) Basin in north-central Colorado’s Weld County to the REX Cheyenne Hub. The 70-mile-long interstate pipeline would have capacity of 600 MMcf/d to 1.3 Bcf/d.

Cheyenne Connector already has secured long-term precedent agreements to transport 600 MMcf/d with affiliates of the leading DJ producer, Anadarko Petroleum Corp., and DCP Midstream LP. Separately, REX also is testing support to add compression and various services through the Cheyenne Hub Enhancement Project.

An open season to test support for both projects is being held through Sept. 26.

Tallgrass, which would operate the projects, is developing the pipeline jointly with Anadarko’s majority owned midstream partnership Western Gas Partners LP (WES) and with DCP. WES and DCP each hold an option to invest in Cheyenne Connector at a later date. The pipeline requires approval by the Federal Energy Regulatory Commission.

“Tallgrass is excited to work with Anadarko and DCP to serve the needs of the producing community in the DJ Basin,” said Chief Commercial Officer Matt Sheehy. “As production increases in the basin, additional pipeline capacity is needed, and by taking gas to the REX Cheyenne Hub, Cheyenne Connector will further link Rockies gas to diverse end-user markets across the country.”

Tallgrass Energy is a family of companies that operates across 10 states, with transportation, storage, terminal, water, gathering and processing assets

“With over 800 MMcf/d of recently announced new processing capacity in the DJ Basin, Tallgrass believes that current pipeline capacity, even with foreseeable expansions, is inadequate to serve natural gas takeaway demand” from the basin, management said.

The project could receive gas from multiple processing facilities, including the Anadarko Lancaster Processing Facility and the DCP Mewbourn Processing Facility. Tallgrass also may consider other potential receipt point locations based on prospective bidder requests in the open season.

The Cheyenne Hub, a confluence of pipelines in northern Colorado near Cheyenne, WY, has interconnects with REX, Tallgrass Interstate Gas Transmission, Trailblazer, Cheyenne Plains, Colorado Interstate Gas Co., Public Service Co. of Colorado and Wyoming Interstate Co.

Shippers on the REX mainline have access to 36 physical delivery points, comprised of 10 local distribution centers/end-use markets and 26 interstate pipeline delivery points, Tallgrass noted. “These interconnects provide shippers with access (through a separate mainline transportation agreement) to attractive western U.S. markets, Midwest markets, such as Chicago and Detroit, as well as traditional Gulf Coast and Southeast markets.” Shippers would gain access to western and eastern markets.

The REX mainline, initially launched in 2008 to carry Rockies gas to eastern markets, now is unavailable for DJ production because the pipeline operates at a higher pressure than other pipelines in Cheyenne. The 1,700-mile system, which stretches from the Rockies to Clarington, OH, now is a major Appalachian Basin artery, since it reversed to offer east-to-west flows.

In conjunction with the proposed pipeline, Tallgrass is holding an open season for the Cheyenne Hub Enhancement, testing support to install receipt booster compression, header piping modifications and modifications at the connector.

The enhancement involves installing 15,000 hp of booster compression. Additionally, REX would modify the current header system, as well as convert existing interconnects to have bi-directional capabilities.

Additional information on both open seasons is available by emailing REXOpenSeason@tallgrassenergylp.com.

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