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Arkoma Connector Pipe Receives FERC Green Light

FERC last Wednesday approved MarkWest Pioneer LLC's proposal to build an interstate natural gas pipeline that would allow producers in the Woodford Shale area of Oklahoma to interconnect with the proposed Midcontinent Express and Gulf Crossing pipeline systems for delivery of their gas to eastern markets [CP08-404].

Denver-based MarkWest's proposed 24-inch diameter Arkoma Connector Pipeline would extend 50 miles southeasterly from the outlet of an affiliate's existing treating plant in northeast Oklahoma to near Bennington, OK, where it would interconnect with the Midcontinent Express and Gulf Crossing pipeline systems that are under construction. The project also calls for the construction of approximately 19,500 hp of compression at two compressor stations and associated facilities in Coal, Atoka and Bryan counties in Oklahoma. The Arkoma Connector is targeted for operation in the second quarter of 2009.

The Arkoma Connector, which is 90% subscribed, would have the capability to deliver 638,000 Dth/d out of the Woodford Shale area to the Bennington area. MarkWest Pioneer, a subsidiary of MarkWest Energy Partners LP, has inked precedent agreements with two anchor shippers -- Newfield Exploration Mid-Continent Inc. for 500,000 Dth/d of firm transportation for a term of nine years, and with Chesapeake Energy Marketing Inc. for 76,000 Dth/d of firm transportation for a term of 10 years.

MarkWest earlier this year entered into an option agreement to acquire 10% of the equity of Midcontinent Express after construction is completed and the project is placed into service (see NGI, Feb. 4). Kinder Morgan Energy Partners LP and Energy Transfer Partners LP will each own a 45% interest in Midcontinent Express.

The estimated $1.3 billion Midcontinent Express would extend 500 miles from southeastern Oklahoma, across northeast Texas, northern Louisiana and central Mississippi to an interconnection with Transcontinental Gas Pipe Line (Transco) near Butler, AL. The proposed pipeline is expected to interconnect with several pipes that serve downstream markets, including Natural Gas Pipeline Co. of America, Transco, Texas Eastern Transmission, Tennessee Gas Pipeline, Columbia Gulf Transmission, Texas Gas Transmission, Southern Natural Gas, Destin Pipeline and ANR Pipeline.

FERC in late July approved the 1.5 Bcf/d Midcontinent Express Pipeline project (see NGI, Aug. 4). The pipeline is targeted for operation in March 2009.

Just days after the pipeline got FERC approval, the backers of Midcontinent Express said they had completed a successful binding open season for a 300,000 Dth/d expansion of a portion of the planned system. Midcontinent Express said the expansion capacity was awarded to two shippers, Chesapeake Energy Marketing and National Fuel Marketing Co. LLC. Subject to regulatory approval, the expansion would boost the capacity on the main segment of the proposed pipeline's Zone 1 to a total capacity of 1.8 Bcf/d.

In May, FERC approved Boardwalk Pipeline Partners LP's proposal to build its Gulf Crossing Pipeline project and the related Fayetteville and Greenville Laterals (see NGI, May 12). The projects are expected to provide an outlet for significant volumes of gas production from the Barnett Shale, Woodford Shale and other areas in Texas and southeast Oklahoma. The Gulf Crossing line, which would have capacity of 1.7 Bcf/d, is expected to be in service in the first quarter of 2009, while the laterals are slated for operation either later this year or early in 2009.

The much-anticipated Arkoma Connector, Midcontinent Express and Gulf Crossing projects are in response to robust gas production in Oklahoma and North Texas. They would help move gas eastward to markets in Florida and the Northeast. The pipe projects are also seen as a way to keep supply and markets connected should Gulf of Mexico production go off-line in the event of a hurricane.

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