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FERC Approves NGPL's REX-Fed Chicago Market Expansion

FERC has approved Natural Gas Pipeline Company of America LLC's (NGPL) request for certificate authorization for the Chicago Market Expansion Project.

The project, which calls for constructing a 30,000 hp compressor station and related facilities in Livingston County, IL, would provide about 238,000 Dth of incremental northbound firm transportation capacity to the city of Chicago and neighboring areas. The Federal Energy Regulatory Commission approved NGPL's request without comment as part of its consent agenda Thursday.

FERC began an environmental assessment of the project last summer (see Daily GPIJuly 14, 2015).

In October 2014, the Kinder Morgan Inc. (KMI) pipeline held a binding open season for expansion capacity on its mainline system from the Rockies Express Pipeline (REX) interconnection in Moultrie County, IL, to points north on NGPL's system (see Daily GPI, Oct. 16, 2014). The open season resulted in binding agreements with Antero Resources, Nicor Gas, North Shore Gas and Occidental Energy Marketing Inc. (see Daily GPI, April 15, 2015).

After adding east-to-west flows to accommodate the mighty Marcellus and Utica shales, REX has been a major outlet for Appalachian Basin gas to reach Midwest delivery points. To keep tabs on the evolving dynamics, NGI created the Rockies Express Zone 3 Tracker, which provides the latest flow data and associated natural gas price movement in the region (see Daily GPI, Feb. 19).

Late last year, KMI and Brookfield Infrastructure Partners LP agreed to pay $242 million for the 53% equity interest in NGPL that they didn't already own (see Daily GPIDec. 1, 2015). KMI agreed to pay $136 million and increase ownership interest from 20% to 50%, while Brookfield Infrastructure paid $106 million to increase its ownership from 27% to 50%. The transaction put a total enterprise value of $3.4 billion, including debt, on NGPL.

The pipeline, which is operated by KMI, is one of the largest interstate systems in the country with 9,200 miles of pipeline, more than 1 million hp of compressor facilities and 288 Bcf of working gas storage.

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