El Paso Corp.'s Tennessee Gas Pipeline Co. (TGP) has struck two long-term contracts for service on its MPP project, which is intended to improve takeaway capacity from the Marcellus Shale through expansion of TGP's 300 Line in Pennsylvania.

The 240,000 Dth/d project includes about eight miles of 30-inch diameter pipeline looping and modifications to four compressor stations in Pennsylvania to provide transportation from the Marcellus to existing delivery points on the TGP system.

All of the capacity is subscribed through agreements with Chesapeake Energy Marketing Inc. for 140,000 Dth/d and Southwestern Energy Services Co. for 100,000 Dth/d, TGP said Friday.

The project is the pipeline's fourth expansion in as many years. TGP's investment in Marcellus infrastructure is now $1.3 billion for an additional 1.5 Bcf/d of capacity. Rapid development of the Marcellus Shale has swamped portions of TGP in the region, turning what used to be a market-area pipeline into a supply-area pipeline.

In a recent note, analysts at Bentek Energy LLC predicted that new capacity slated to come online on TGP's Line 300 next month (see Shale Daily, Oct. 6) will fill up quickly (see Shale Daily, Sept. 27). Because of the evolution in the market caused by the growing Marcellus production (see Shale Daily, Sept. 7), NGI has expanded its price indexes for Tennessee in the Marcellus to better reflect market activity in the region (see Shale Daily's Price Notice).

El Paso said capital required for the MPP project is expected to be less than $100 million. TGP expects to file a certificate application for the project with the Federal Energy Regulatory Commission in late 2011. Pending regulatory approvals, construction could begin in 2013, with a Nov. 1, 2013 in-service date.

"This project leverages TGP's strategic location and provides significant new firm transportation capacity for two prominent Marcellus Shale producers," said TGP President Norman Holmes.