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Proposed Bluegrass NGL Pipeline Stirring Interest

Planning for the proposed Bluegrass Pipeline, which would carry mixed natural gas liquids (NGL) from the Northeast to the Gulf Coast, is still in early stages, but the project has piqued the curiosity of analysts who follow Bluegrass partner Boardwalk Pipeline Partners LP.

During an earnings conference call Monday, analysts peppered Boardwalk CEO Stan Horton with questions about the project, but his response was mostly "wait and see," as a definitive agreement for the project has yet to be signed with Williams.

As proposed, Bluegrass would have capacity to carry 200,000 b/d of mixed NGLs from Ohio, West Virginia and Pennsylvania, with the potential to expand to 400,000 b/d with the addition of pumping capacity (see Shale Daily, March 7). Bluegrass would use a portion of the Texas Gas Transmission system no longer needed for gas service, which would be converted for NGL service.

Horton said Boardwalk is "working through the project with Williams" and is in the market talking with potential customers at "both ends of the pipe." An application for the abandonment of the Texas Gas segment of the project is to be filed with the Federal Energy Regulatory Commission as soon as agreements between Boardwalk and Williams are finalized, Horton said.

He declined to discuss how much of Texas Gas would be converted for the project or what level of commitment from customers is needed for the project to go forward. "We're in the process of having a lot of discussions with customers. I'd like to let those discussions go forward without commenting on it right now," he said.

When Bluegrass was announced, Boardwalk said it was exploring options to export liquefied petroleum gas (LPG). Horton was asked whether LPG exports could be accomplished without Bluegrass. "Right now," he said, "the [LPG export] project is somewhat tied into the Bluegrass pipeline project. Is it possible to do something outside of it? Right now, at this point, I don't want to say yes or no, but right now it's tied into the Bluegrass project."

Separately, Enterprise Products Partners LP has proposed the Appalachia-to-Texas (Atex Express) pipeline to carry ethane from the MarkWest Liberty Midstream & Resources LLC fractionation, processing and storage complex in Houston, PA, to Enterprise's natural gas liquids storage complex in Mont Belvieu, TX. The pipeline is expected to come online in the first quarter of 2014 (see Shale Daily, Jan. 5). Separately last month, Enterprise started up LPG expansion capacity on the Houston Ship Channel (see Daily GPI, March 8).

Boardwalk reported first quarter net income of $101.4 million, a 10% increase from $92.6 million in the year-ago quarter. Compared with the first quarter of 2012, operating revenues increased $15.6 million, operating expenses increased $7.5 million and earnings before interest, taxes, depreciation and amortization increased $11.3 million, each primarily driven by the acquisition of Boardwalk Louisiana Midstream LLC, which was completed in October 2012 (see Daily GPI, Aug. 20, 2012), the company said.

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