A quartet of Marcellus and Utica shale producers has signed up for all of the capacity -- 550,000 Dth/d -- on what would be a new pipeline route out of Ohio to the Gulf Coast.
Spectra Energy Partners' Texas Eastern Transmission LP is seeking FERC authorization for a project to create 550,000 Dth/d of takeaway capacity out of the Marcellus and Utica shales for delivery at points along its Gulf Coast system. Chesapeake Energy Marketing Inc. has signed up for the lion’s share of the capacity.
The "production-driven project" would involve installation of 76 miles of 30-inch diameter pipeline (the Ohio extension), two compressor units and related facilities in Ohio, as well as modifications to compressor stations to allow flow reversal on a portion of the Texas Eastern system. Existing Texas Eastern facilities in Ohio, Kentucky, Mississippi and Louisiana would be modified. The plan is called the Ohio Pipeline Energy Network (OPEN) project.
"...Project shippers will be able to further transport their production to markets in the Southeast through Texas Eastern's interconnections with downstream pipelines in its access area," the pipeline told the Federal Energy Regulatory Commission (FERC) in a filing dated Friday.
"Specifically, the project is designed to provide 275,000 Dth/d of incremental transportation service from eastern Ohio to the Egan Hub Storage LLC facilities and 275,000 Dth/d of incremental transportation service from eastern Ohio to the eastern boundary of the Gillis Compressor Station in Louisiana."
Production in the Marcellus has been booming for some time now. The king of the shale gas plays regularly drives the monthly production figures released by the Energy Information Administration (EIA). The latest round of data was no exception.
Production from the Other States category, which includes Pennsylvania, Ohio and West Virginia, was a record high 28.41 Bcf/d in November, a 4.1% increase from 27.28 Bcf/d in October and a whopping 5.02 Bcf/d more than in November 2012, according to EIA data. It was the largest volumetric increase from October in the report and came "as many operators reported new wells coming online or wells that returned from shut-ins in the Marcellus Shale," EIA said (see Shale Daily, Feb. 3).
“Marcellus gas production is now twice that of the GOM [Gulf of Mexico], which used to be 25% of U.S. natural gas supply,” Societe Generale analysts said in a note late last month.
Now that new school gas from the Marcellus wants to travel to the Gulf of Mexico, the country’s old school natural gas breadbasket and current hotbed of petrochemical industry activity and future exports of liquefied natural gas.
In the cover letter for its filing, Texas Eastern told FERC that the project is in response to "significant interest from Utica and Marcellus shale producers who require firm pipeline capacity as their production comes online."
Texas Eastern has agreements with four shippers for long-term firm service for the project's entire 550,000 Dth/d, it said. Chesapeake Energy Marketing committed to 350,000 Dth/d; CNX Gas Co. LLC committed to 50,000 Dth/d; Rice Drilling B LLC committed to 50,000 Dth/d; and Total Gas & Power North America Inc. committed to 100,000 Dth/d.
“The OPEN Project will improve the flexibility and reliability of service on the Texas Eastern system and the overall pipeline grid by providing the Texas Eastern system with direct access for the first time to the rapidly growing Utica Shale production, as well as increasing access for Gulf Coast and Southeast markets to both the Utica Shale and Marcellus Shale production,” Texas Eastern said in the filing.
The pipeline asked FERC to grant authorization for the project by Dec. 5 in order that the facilities may be in service by Nov. 1, 2015.