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Bentek: Tennessee Line 300 to Loosen, Then Tighten Again

Producers in northeastern Pennsylvania will get a respite from the region's pipeline capacity pinch -- but not for long -- according to Bentek Energy LLC.

The firm said in a market note that 575 MMcf/d of new capacity slated to come online during November in Tennessee Gas Pipeline's Line 300 will fill up quickly. "The Tennessee 300 Line expansion, which adds a total of 575 MMcf/d of forward-haul and backhaul capacity, will enable strong production growth from northern Pennsylvania," the firm said.

That should be welcome news to producers in the region who have experienced constraints and depressed prices on Tennessee's Line 300 since about the beginning of summer (see Shale Daily, Sept. 7). Traditionally, that leg of Tennessee served a market area with gas brought up from the Gulf Coast, but the Marcellus Shale has changed all that, and Tennessee parent El Paso Corp. has several projects in the works to remake its system.

Bentek said an additional 150 MMcf/d of production is expected in the region during November and another 200 MMcf/d in both December and January.

Tennessee's Line 300 is not slated for another expansion until November 2012, Bentek said. "This will force producers in the Northeast portion of Pennsylvania to utilize other options for transporting Marcellus production growth," Bentek analysts said. "However, the [Tennessee] expansion, which is fully producer subscribed, will enable Marcellus producers to reach premium markets during peak winter demand on top of potential declines in inflows from the [southeastern] Gulf [of Mexico] and Midcontinent as a result of freeze-offs."

Bentek noted that northeastern pipeline expansions and/or "an extreme, early winter" could lift prices and encourage more drilling in the region.

Tennessee is upgrading its existing 24-inch diameter Line 300 by constructing five 30-inch diameter pipeline loops and modifying four compression stations. The company's 300 Line Project is currently under construction and involves installation of seven looping segments in Pennsylvania and New Jersey totaling about 127 miles of 30-inch diameter pipeline, as well as the addition of about 55,000 hp of compression. "Upon completion Tennessee expects that the project will increase natural gas delivery capacity in the region by approximately 350,000 Dth/d," the company said.

The pipeline's Northeast Upgrade Project, currently in the permitting stage, would allow an additional 636,000 Dth/d to be transported on Line 300 in Pennsylvania and delivered to markets in the Northeast. "The Northeast Upgrade Project, along with the company's 300 Line Project, will add about 1 Bcf/d of new firm transportation capacity...to key Northeast markets," according to Tennessee's website.

Tennessee also has the proposed MPP Project, slated to enter permitting this fall, to provide about 240,000 Dth/d of incremental firm capacity from the developing production region along its Line 300 to serve established markets, including those in the Northeast, the company said. The MPP Project is separate from the 300 Line Project but is a complement to it.

According to Tennessee, its Northeast Supply Diversification project (see Shale Daily, Sept. 16), currently in the permitting phase, will provide up to 250,000 Dth/d of incremental firm capacity from the Marcellus region along Line 300 to serve existing markets in New England and the Niagara Falls, NY, area.

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