As the race to move Rocky Mountain natural gas from the Rockies Express Pipeline's (REX) terminus in Ohio to the Northeast continues to add new entrants, competitors will have to deal with a quickly moving forward pipe proposal from REX itself. Last week, prior to REX announcing that it had completed a successful nonbinding open season for its Northeast Express Project, El Paso Corp.'s Tennessee Gas Pipeline and Equitable Resources Inc. threw their hats into the ring with plans to jointly build a pipeline project from the terminus of REX to serve Northeast gas markets.
El Paso and Equitable plan to develop the Northeast Passage Project, a 471-mile, 36-inch diameter line with an initial capacity of 1.1 Bcf/d, as well as 70,000 horsepower of compression. The proposed pipeline would extend from the terminus of the nearly 1,700-mile REX in Clarington, OH, to a new interconnect with Iroquois Gas Transmission at Pleasant Valley, NY. The project is targeted to be in service on Nov. 1, 2011, subject to regulatory approval.
The pipeline also would interconnect with Transcontinental Gas Pipe Line, Texas Eastern Transmission, Algonquin Gas Transmission and Millennium Pipeline, according to El Paso and Equitable. And it would interconnect with Tennessee's Gulf Coast mainline in Ohio, providing access to Midcontinent, Appalachian and Gulf Coast supplies, including liquefied natural gas. To meet the planned in-service date, Tennessee said it will hold an open season for capacity on the line through Jan. 17, 2008.
"The Northeast Passage Project will provide critical new energy infrastructure to transport natural gas directly to citygates and strategic pipeline interconnects in the Northeast and Pennsylvania markets, while providing an alternative supply source for declining Canadian supplies," said Bryan Neskora, senior vice president at Tennessee.
The proposed pipeline "will have access to the newly resurgent Appalachian Basin where Equitable is the technological leader in horizontal drilling and in providing natural gas gathering and transportation infrastructure," said Equitable CEO Murry Gerber.
REX's Northeast Express Project proposal is a 375-mile extension of REX that would extend the pipeline's route from Clarington and add capacity to receive volumes from Lebanon, OH, to the endpoint in Princeton, NJ.
REX officials reported that market interest during the open season exceeded the pipeline's initial design estimate of 1.5 million Dth/d. REX, a $4.4 billion joint venture of Kinder Morgan Energy Partners LP (KMP), Sempra Pipelines and Storage and ConocoPhillips, said interested parties included natural gas producers, natural gas marketers, local distribution companies and power generators.
REX said it plans to begin negotiating binding agreements with these potential customers, noting that if it receives sufficient binding commitments and regulatory approvals the pipeline extension could go into service in late 2010. REX said the proposed expansion "capitalizes on the efficient design of the REX pipeline" and will have a low-cost fuel rate delivering gas to the Northeast.
While there is no lack of gas being produced in the Rockies, the long-standing problem has been getting the gas out of the region due to the lack of takeaway infrastructure. The ambitious REX project will alleviate that issue, but getting that gas out of the REX terminus at Clarington is another story altogether, which is why pipe project proposals are coming out of the woodwork. All told, there are at least six competing projects to move Rockies gas east from the Clarington terminus of REX. With some of the pipes aiming to serve different eastern regions, more than one project is likely to be built. However, construction of all six is seen as unlikely.
In November, Dominion unveiled its Dominion Hub III Project, which would allow existing firm transportation customers of Dominion Transmission to have the opportunity to move their firm receipt rights to a planned interconnection with REX at Clarington (see NGI, Nov. 19). Customers would retain their existing delivery points to move these supplies to growing Northeast markets. The Hub III project is a response to a growing interest in Rockies supplies by customers on the Dominion system, the pipeline said.
National Fuel Gas has said it is seriously exploring the prospect of building a 324-mile pipeline to deliver Rockies gas from Ohio to the Corning, NY, market. National Fuel's project, called the West to East Project, would be the largest ever tackled by the company. National Fuel's proposed line, which would move up to 700,000 Dth/d, would be a link between REX and the Millennium Pipeline that is under construction.
In September, Williams' Transcontinental Gas Pipe Line announced plans to build the proposed Rockies Connector Pipeline, which would extend approximately 250 miles, connecting Transco's Station 195 in York County, PA, to the eastern terminus of the REX line (see NGI, Nov. 5). The company expects the pipeline to transport approximately 688,000 Dth/d.
Also in September, Spectra Energy's Texas Eastern Transmission completed an open season for its proposed Northern Bridge, which would carry Clarington-bound gas supplies to the Philadelphia-Camden, PA, metropolitan area (see NGI, Sept. 10). The capacity is expected to be between 200 MMcf/d and 500 MMcf/d.
When completed, the 1,678-mile REX pipeline will have a capacity of approximately 1.8 Bcf/d. Binding firm commitments from creditworthy shippers have been secured for virtually all of the capacity on the pipeline. KMP is overseeing construction of the project and will operate the pipeline.
The first 328-mile segment of REX, which runs from the Meeker Hub in Rio Blanco County, CO, to the Wamsutter Hub in Sweetwater County, WY, and to the Cheyenne Hub in Weld County, CO, is in service and has a current capacity of 500,000 Dth/d. The next segment, REX-West, is a 713-mile, 42-inch diameter pipeline that will extend from the Cheyenne Hub to an interconnection with Panhandle Eastern Pipe Line located in Audrain County, MO. It is anticipated that interim service on REX-West will be available in late December, with full service by February 2008. Subject to receipt of regulatory approvals, it is anticipated that interim service on REX-East -- which will connect Audrain County to Clarington -- will begin as early as Dec. 30, 2008, and the pipeline will be fully operational by June 2009.
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