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Texas Gas Plans to Expand Arkansas Shale Lateral Project

April 7, 2008
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Due to increasing shipper interest, Texas Gas Transmission LLC pipeline on Thursday said it will seek FERC approval to increase the planned capacity of its proposed Fayetteville and Greenville laterals to 1.2 Bcf/d from 800 MMcf/d. The lateral projects would provide takeaway capacity for natural gas from the Fayetteville Shale play area in north-central Arkansas.

Texas Gas, a subsidiary of Boardwalk Pipeline Partners LP, said it has entered into a binding precedent agreement with XTO Energy Inc. to transport 300 MMcf/d of natural gas on the Fayetteville and Greenville laterals. The 10-year firm transportation agreement will begin at 50 MMcf/d when the project is placed into service and will increase to 300 MMcf/d by 2012, according to Boardwalk.

In addition, anchor shipper Southwestern Energy Services Co., a subsidiary of Southwestern Energy Co., has exercised an option to increase its contractual commitments to 600 MMcf/d from 500 MMcf/d on the Fayetteville lateral and to 480 MMcf/d from 400 MMcf/d on the Greenville lateral, effective April 1, 2010.

These increases, combined with XTO's precedent agreement, increase the aggregate contractual commitments on the Fayetteville expansion project, after phase-in periods, to 975 MMcf/d, with additional options for 225 MMcf/d that can be exercised by various shippers over the next two years, Boardwalk said.

"These new commitments demonstrate the growth of natural gas production in the Fayetteville Shale," said Boardwalk Chief Commercial Officer Brian Cody.

The Fayetteville lateral will be a 167-mile, 36-inch diameter pipeline that would run through several counties in Arkansas and interconnect with Texas Gas pipeline in Coahoma County, MS. The Greenville lateral would be a 98-mile pipeline that would extend from Texas Gas' mainline near Greenville, MS, east to Kosciusko, MS.

In March the Federal Energy Regulatory Commission issued a favorable final environmental review of Texas Gas Transmission's proposed Fayetteville and Greenville laterals (see NGI, March 10). The pipeline has said it anticipates receiving a FERC certificate this month. It expects the first 60 miles of the Fayetteville lateral to be in service during the third quarter of this year and the remainder of the Fayetteville and Greenville lateral project to start up during the first quarter of 2009.

Separately, Boardwalk Pipeline reported that it has received a favorable final environmental review of its Gulf Crossing Pipeline project and that it has received a special permit from the Department of Transportation for its East Texas-to-Mississippi expansion project, allowing that pipeline to operate at higher pressures than under previous authorizations (see NGI, March 31).

Gulf Crossing will be a 356.3-mile, 42-inch diameter pipeline extending from Sherman, TX, to an interconnect with affiliate Gulf South Pipeline's Tallulah Compressor Station in Madison Parish, LA. The project would provide up to 1.65 Bcf/d of capacity, and is expected to be in service by Oct. 1.

Gulf South Pipeline's East Texas project is a 242- mile, high-pressure pipeline that connects Gulf South's existing system in DeSoto Parish in northern Louisiana to its 30-inch diameter pipeline in Simpson County, MS. The pipeline went into service in January (see NGI, Jan. 21).

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