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Transco Secures Full Capacity for Atlantic Sunrise Expansion from Marcellus to Eastern Seaboard

Transcontinental Gas Pipe Line -- Transco -- has received binding commitments from nine shippers for 100% of 1.7 million Dth/d of firm transportation capacity for its proposed Atlantic Sunrise expansion project, infrastructure that would connect natural gas supplies in northeastern Pennsylvania with growing demand centers on the Atlantic Seaboard. The project brought in 15-year shipper commitments from producers, local distribution companies and power generators.

Atlantic Sunrise, expected to cost more than $2 billion, could be in service by the second half of 2017, assuming all regulatory approvals are received, said Williams CEO Alan Armstrong. He discussed the project on Thursday during a conference call.

The project includes compression and looping the Transco Leidy line in Pennsylvania along with a greenfield pipeline segment, referred to as the Central Penn Line, then connecting the northeastern Marcellus Shale producing region to the mainline near Station 195 in southeastern Pennsylvania. The greenfield segment would be owned jointly by Transco and an undisclosed third party.

“This is a very important project for Transco in that it only only serves as a great investment, but it opens up a lot of supply available to expand the markets as well,” Armstrong told analysts. “The project represents vital energy infrastructure” that’s critical to supplying thirsty East Coast markets.

Late Thursday WGL Holdings Inc. said it would be the lead investor to create a company that jointly would develop and own with Transco the Central Penn Line, a 177-mile gas pipeline originating in Susquehanna County, PA, to Lancaster County, PA. The line is the greenfield pipeline segment of Transco’s Atlantic Sunrise project.

As part of the agreement, WGL Midstream is planning to invest about $410 million. In connection with the investment, it entered into an agreement with Cabot to purchase 500,000 Dth/d over a 15-year term.

Atlantic Sunrise adds to the list of Transco mainline expansions, including Leidy Southeast and Virginia Southside. It also is pursuing expansions that may add more than 50% to system capacity between 2013 and year-end 2017. The open season for Atlantic Sunrise was launched last August (see Shale Daily, Aug. 13, 2013).

"We expect to invest some $5 billion over the 2013 to 2017 timeframe in Transco expansions that represent vital connections between diverse, surging supplies of domestic natural gas and growing demand centers on the Eastern Seaboard from New York City to the far Southeast,” said Armstrong. "We see this significant investment as an early read on Transco's continuing growth opportunities...

"Already in this heating season, Transco has set peak-day throughput records on three separate occasions. The demand for our pipeline capacity on those peak days was above and beyond the peaks that we could attribute to weather, even the brutal polar-vortex episodes all of our markets have endured."

Earlier this month Armstrong said Transco recently had a peak day of about 11.8 Bcf/d (see Daily GPI, Feb. 13). "If you just did that in degree days, there should have been about a 20% increase over our normal, just if you look at heating degree days. We actually saw a 30% increase on that day relevant to the norm. Part of the reason for that is, is that gas has found its way into lot of crooks and crannies...and additional industrial loads."

Williams Partners, 64% owned by Tulsa-based Williams, in March expects to request a pre-filing process with the Federal Energy Regulatory Commission. The project is subject to final approval by the board.

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