Just days after FERC approved the mammoth pipeline project, backers of the Midcontinent Express Pipeline, which would give shale producers in Texas, Arkansas and Oklahoma access to southern and eastern markets, last Tuesday announced that they had completed a successful binding open season for a 300,000 Dth/d expansion of a portion of the planned system.

Midcontinent Express Pipeline (MEP), a joint venture of Kinder Morgan Energy Partners LP and Energy Transfer Partners LP, said the expansion capacity was awarded to two shippers, Chesapeake Energy Marketing Inc. and National Fuel Marketing Co. LLC. Subject to MEP’s application and receipt of regulatory approvals, the expansion will boost the main segment of MEP’s Zone 1 from the previously sold out capacity of 1.5 Bcf/d to a total capacity of 1.8 Bcf/d.

The main segment originates near the planned interconnect locations with Energy Transfer’s Houston Pipe Line system and Kinder Morgan’s Natural Gas Pipeline Company of America (NGPL) in the Paris, TX, area and terminates near the planned interconnect location with Columbia Gulf Transmission near Waverly, LA. In addition, Midcontinent Express said it was successful in subscribing the existing capacity available on the 30-inch segment from the Bennington, OK, area to the Paris area.

“We now have 1.8 Bcf/d of binding long-term contracts supporting the MEP project, which will assure that the participating customers have sufficient pipeline capacity to accommodate their future needs,” said Steve Kean, president of Kinder Morgan’s natural gas pipelines. “MEP can also be expanded up to 2 Bcf/d with more compression if demand for additional capacity is needed.”

On July 25, the Federal Energy Regulatory Commission approved the nearly $1.34 billion project, which calls for the construction of 506 miles of 30-, 36- and 42-inch diameter interstate pipeline from Bryan County, OK, to a terminus in Choctaw County, AL; a 4.2-mile, 16- and 24-inch diameter lateral in Richland and Madison Parishes, LA; approximately 111,420 hp of compression at one booster and four new mainline compressor stations; and associated facilities. The pipeline has a targeted operation date in the first quarter of 2009.

Midcontinent Express also plans to lease up to 272,000 Dth/d of capacity on the Oklahoma intrastate system of Enogex Inc. The Commission approved a limited jurisdiction certificate authorizing Enogex to lease its capacity to Midcontinent Express [CP08-9]. The agency rejected protests by several major and independent producers which claimed that the lease of capacity from Enogex to Midcontinent would impair the rights of existing Section 311 interruptible shippers on Enogex’s system. The producers also said that the lease would be unduly discriminatory because Enogex does not offer firm Section 311 service and because the lease payments for Midcontinent are lower than Enogex’s interruptible rates (see NGI, Oct. 29, 2007).

The FERC order found no undue discrimination because lessees are not treated as shippers and, therefore, are not considered to be similarly situated to interstate shippers on the pipeline. The order also dismissed claims that the lease arrangement would result in discriminatory rate stacking, and that the lease should be rejected because there is no defined capacity path. In addition, it imposed 40 conditions on Midcontinent Express to mitigate any potential adverse impact on the environment.

Midcontinent Express would have up to 13 receipt/delivery interconnections, providing access to downstream markets, including those served by NGPL, Transcontinental Gas Pipe Line, Texas Eastern Transmission, Tennessee Gas Pipeline, Columbia Gulf Transmission, Texas Gas Transmission, Southern Natural Gas, Destin Pipeline and ANR Pipeline (see NGI, Oct. 15, 2007).

Kinder Morgan Energy Partners LP and Energy Transfer Partners LP each own a 45% interest in Midcontinent Express. MarkWest Pioneer LLC, a subsidiary of MarkWest Energy Partners LP, in January entered into an option agreement to acquire 10% of the equity of Midcontinent Express after construction is completed and it is placed into service (see NGI, Feb. 4).

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