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CNYOG's MARC I on Track to Boost Marcellus Storage Access

Inergy subsidiary Central New York Oil & Gas Co. LLC (CYNOG) is ready to move forward with construction of the MARC I Hub Line project in northeastern Pennsylvania -- a project that is expected to give northern markets greater access to Marcellus Shale gas -- following a FERC order this week granting the project a certificate of public convenience and necessity.

"We are ready to begin construction and expect to be in service next summer," Inergy CEO John Sherman said during a conference call with analysts Tuesday.

The project calls for the construction of a 39-mile, 30-inch diameter pipeline in three counties in northeastern Pennsylvania -- Bradford, Sullivan and Lycoming -- as well as installation of a 15,300 hp Northern Compressor Unit at CNYOG's NS2 Compressor Station in Bradford County, and a 16,360 hp Southern Compressor Unit at CNYOG's M1-S Compressor Station in Sullivan County (see Shale Daily, June 2). The project would have about 550,000 Dth/d of firm capacity.

The proposed MARC I Hub gas transmission line would connect to Tennessee Gas Pipeline's (TGP) Line 300 and Transcontinental Gas Pipe Line's Leidy Line, as well as existing Stagecoach laterals that tie in with Millennium Pipeline. The project would clear the way for gas produced in the northeastern Pennsylvania counties to be stored at CNYOG's Stagecoach Gas Storage facility near Oswego, NY.

The Federal Energy Regulatory Commission (FERC) approved CNYOG's plans to begin construction of the MARC I Hub Line project [CP10-480] Monday. CNYOG officials last month called on FERC to quickly issue a certificate so the company could begin construction of the project, saying failure to do so "would have significant adverse commercial consequences for CNYOG and its shippers" (see Shale Daily, Oct. 26).

CNYOG's related North-South Project was placed in service late last month, enabling shippers to transport up to 325 MMcf/d bidirectionally on a firm basis from the Millennium Pipeline to Tennessee Gas Pipeline's 300 Line. North-South "is currently flowing volumes in excess of firm commitments from Tennessee to Millennium," Sherman said. "We recently completed an open season on our North-South II expansion and extension project, which returned favorable results in excess of 300,000 Dth/d of additional incremental volume. We expect this will lead to a doubling of the capacity of the North-South project, and result in our shippers having access to Tennessee, Millennium, Dominion, Iroquois and, with completion of the MARC I pipeline, Transco."

Stagecoach, which is located about 150 miles northwest of New York City, is the closest natural gas storage facility to the Northeast market and anchors Inergy's storage platform with 26.25 Bcf of working gas storage capacity. Inergy also operates the Thomas Corners facility in Steuben County, NY, which has 7.0 Bcf of working gas capacity; the Steuben Gas Storage facility in Steuben County, NY, which has 6.2 Bcf of working gas capacity, and the Seneca Lake Gas Storage facility in Watkins Glen, NY, which has 1.5 Bcf of working gas capacity with planned expansion to 2.0 Bcf.

Pipeline applications to transport Marcellus Shale gas appear to dominate at FERC. The approval of the MARC I project comes on the heels of FERC's recent order giving Empire Pipeline Inc. the green light to place into service a major interconnection on its Tioga County Extension Project to transport Marcellus Shale production in Pennsylvania to the U.S.-Canadian border (see Shale Daily, Nov. 8). That order cleared the way for Empire to begin service on the interconnection with Tennessee Gas Pipeline in Hopewell, NY, but Empire still is awaiting FERC approval to place into service the entire 15-mile Tioga County Extension and other components of the project, including a 1.36-mile lift-and-lay segment near Victor, NY, and the repiping at the Oakfield Compressor Station and the old and new Victor stations [CP10-493].

Northeast Pennsylvania Marcellus Shale producers got some relief from sagging prices and an outlet for their gas when El Paso Corp.'s Tennessee Gas Pipeline Co. placed its long-awaited Line 300 forward-haul expansion in service, increasing capacity on the Tennessee system by 350 MMcf/d, a nearly 50% boost (see Shale Daily, Nov. 2). FERC approved start-up of the expansion Oct. 28. And National Fuel Gas Co. recently completed two related projects that added 150,000 Dth/d of capacity in Washington and Green counties, PA, to carry Marcellus gas to markets.

The Tioga County Extension and other projects due to come online this month will provide the Marcellus with nearly 1.0 Bcf/d of increased takeaway capacity, and natural gas pipeline takeaway capacity will more than double its current level by 2013, according to Bentek Energy LLC.

The Marcellus Shale has been making its heft felt on the Northeast region's pipelines, wreaking havoc with traditional basis on lines such as Tennessee (see Shale Daily, Sept. 7).

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