While multiple pipeline projects to carry natural gas liquids (NGL) from the Appalachian Basin’s Marcellus Shale have been announced, ultimately only one, or perhaps two, will be needed, according to analysts at Wells Fargo Securities.

The firm’s analysts looked at projects proposed by Buckeye Partners LP (see Daily GPI, April 8), Enbridge Inc. (see Daily GPI, March 23), Kinder Morgan Energy Partners (see Daily GPI, April 21), and MarkWest Energy Partners (see Daily GPI, April 27). They also looked at a project proposed by privately held Cumberland Plateau Pipeline Co., which unlike the other projects to serve either Chicago or Sarnia, Ontario, would originate in the Marcellus and deliver NGLs to end-use markets in the Louisiana Gulf Coast.

The analysts suggested that Enterprise Products Partners LP, as well as ONEOK Partners might also enter the ring with their own projects, and they cautioned that should fractionation capacity be added in the Marcellus region, it could throw a wrench into everyone’s pipeline plans as liquids could then be used to meet regional demand.

“…[O]ur estimates suggest NGL production growth in the Marcellus Shale is only sufficient to support the development of one NGL pipeline in the near term and at most two NGL pipelines over the next five to 10 years,” the analysts wrote.

“The race to sign up shippers and construct an NGL pipeline in the Marcellus Shale will ultimately come down to competitive advantages borne by the pipeline operator. To this end, we believe [Buckeye Partners’] and [Kinder Morgan Partners’] proposed pipelines are the most likely candidates…”

Buckeye, in partnership with Nova Chemicals Corp., is proposing the Union Pipeline, which would share about 90% of the right-of-way of Buckeye’s existing infrastructure, the analysts noted. Nova owns the petrochemical plant in Sarnia where the pipeline would terminate. “Hence, potential shippers on the pipeline would have access to both raw NGL takeaway capacity and fractionation capacity downstream of the pipeline.”

Kinder Morgan is proposing to modify and expand the existing Cochin Pipeline. The company “should benefit from a first-mover advantage in the region give that the partnership is simply converting an existing pipeline (i.e., refined products to y-grade NGL) and building a small interconnect,” the analysts said. “This should enable the partnership to offer among the lowest-cost options for NGL takeaway capacity, in our view.”

However, “if [MarkWest] or other midstream companies build additional fractionation capacity in Appalachia, this could reduce the volume of NGL products available for transport on the proposed y-grade pipelines,” the analysts said. In fact, MarkWest Liberty Midstream & Resources LLC recently announced a processing and fractionation capacity expansion in the Marcellus (see Daily GPI, April 19).

And Enterprise and ONEOK “are perennial dark horses given their ability to offer downstream fractionation capacity,” the analysts said.

Last month Enterprise executives made note of the multiple projects proposed in the Marcellus and suggested that they might have a more comprehensive project in mind to address the need for NGL takeaway capacity (see Daily GPI, April 28). “It’s not just a matter of extracting the NGLs and shipping them to a point. You’ve got to have a market that really needs it; otherwise the netback price to the producers is pretty underwhelming. We’re really looking for an industrywide solution that takes care of the producers,” Enterprise CEO Michael Creel said.

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