Robust production in Oklahoma and North Texas has spawned another project to move gas eastward to markets in Florida and the Northeast, and this one's a big one.
Kinder Morgan Energy Partners LP (KMP) and Energy Transfer Partners LP (ETP) entered into a 50-50 joint development of the Midcontinent Express Pipeline (MEP) and the start of a binding open season for firm transportation capacity. The approximately 500-mile pipeline will originate near Bennington, OK, travel through Perryville, LA, and its growing gas pipeline hub, and terminate at an interconnect with Transco in Butler, AL. The $1.25 billion project will have an initial capacity of 1.4 Bcf/d.
MEP has executed a firm capacity lease agreement for up to 500,000 Dth/d with Enogex, an Oklahoma intrastate pipeline subsidiary of OGE Energy, to provide a seamless transportation path from various locations in Oklahoma into and through MEP. The new pipeline will also interconnect with Natural Gas Pipeline Company of America (NGPL), a wholly owned subsidiary of Kinder Morgan Inc., and with the previously announced ETP 36-inch pipeline extending from the Barnett Shale and interconnecting with ETP's Texoma pipeline near Paris, TX (see Daily GPI, Dec. 7).
Chesapeake Energy Marketing Inc., an affiliate of Chesapeake Energy Corp., has stepped up for 500,000 Dth/d of capacity for a 10-year term at negotiated fixed rates, Scott Parker, president of Kinder Morgan's gas pipelines group, told NGI.
"It's a producer-driven project, so what you have is a lot of production increases in Oklahoma and North Texas," Parker said. "The production is increasing so dramatically that the gas has no outlet, no place to go. The producers are working with the pipelines to find a way to get that gas out to markets. You've got to get it clear of the local area, and that's what this pipeline does. It moves it 500 miles over to the interstate pipes that serve Florida and the East Coast where the gas is really needed."
Besides connecting supply to markets, the project, once completed, could help keep the two connected during hurricane season in the Gulf of Mexico, Parker pointed out. "This is onshore gas, so it's not going to be really affected by a hurricane. This allows a path for gas to move into the East Coast pipes that are primarily being filled today by South Texas and offshore."
CenterPoint Energy Gas Transmission's (CEGT) Perryville Hub is seeing substantial development activity with pipeline projects proposed and under way to deliver and take away gas. Perryville is fast becoming the gateway to the Southeast for gas coming from western supply basins and eventually liquefied natural gas (LNG) in the Gulf Coast. The 270-mile Southeast Supply Header project is slated to take gas from Perryville to southeastern markets (see Daily GPI, Dec. 11). FERC recently issued CEGT a certificate to build a 172-mile pipeline from the Carthage Hub in Texas to the Perryville Hub, providing an outlet for production in North-Central and East Texas and North Louisiana (see Daily GPI, Oct. 4).
"We are pleased to support the MEP project and feel that it provides the best short- and long-term option to provide takeaway capacity for Chesapeake's increasing supplies of gas out of the Midcontinent and Barnett Shale areas," said James C. Johnson, president of Chesapeake Energy Marketing.
Pending necessary regulatory approvals, Midcontinent Express is expected to be in service by February 2009. MEP has prearranged binding commitments from multiple shippers for 800,000 Dth/d.
To gauge further shipper interest, MEP is conducting a binding open season beginning at 5 p.m. Wednesday and ending at 3 p.m. CST on Jan. 15, 2007. Depending on shipper support during the open season, capacity on the proposed pipeline may be increased. Shippers seeking additional information may contact David Matney, (713) 369-9218, or Kim Watson, (713) 369-9233. Open season information is available at http://www.kindermorgan.com.
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