A collection of energy players announced plans Wednesday to expand a major interstate pipeline to accommodate emerging shale gas supplies from Ohio.
Texas Eastern Transmission LP (Tetco), American Electric Power and Chesapeake Energy Marketing Inc. said they will proceed with the Ohio Pipeline Energy Network (OPEN), an expansion of the Tetco pipeline system to connect Marcellus and Utica shale gas supplies in Ohio to existing markets.
The OPEN project involves 70 miles of new pipelines adding 1 Bcf/d of capacity to serve local distribution companies, industrial users and power generation. The group plans to hold a binding open season in the first quarter and is looking to bring the system into operation by November 2014. Although the route of the proposed pipeline is still under discussion, it will likely start in Carroll County and run south to the Tetco mainline. The project is expected to cost $500 million, but could grow depending on the interest.
Tetco is a subsidiary of Spectra Energy Corp.
Although the Marcellus and Utica are still exploration plays in Ohio, industry is eager to get started on infrastructure to avoid the bottlenecks that constrained production in Pennsylvania (see Shale Daily, Dec. 8; May 26).
Seeing a "critical" need for midstream assets, MarkWest Energy Partners LP and private equity fund The Energy & Minerals Group plan to develop gas processing and natural gas liquids fractionation, transportation and marketing infrastructure in eastern Ohio beginning next year (see Shale Daily, Dec. 15).
"It's a little bit of a cat and mouse game at the start here," Larry Wickstrom, director of the Ohio Geological Survey, said in November about the state of shale-ready infrastructure in Ohio. Midstream companies are reluctant to sanction major projects before production comes online, but producers are reluctant to produce without access to existing markets (see Shale Daily, Nov. 18a).
But because the Utica is already home to major players, a rarity among shale plays in their infancy, Ohio could sidestep the full brunt of that Catch-22. The OPEN project, for instance, brings together the largest leaseholder in the Utica, the largest power generator in the region and a major pipeline company.
Chesapeake Energy Corp. is the only company to release production figures from multiple wells in the Utica, and the most active driller in the play. Much of that activity is in or around Carroll County.
OPEN broadens Tetco's reach in the region. The company recently received FERC certification for its Texas Eastern Appalachia to Market Expansion (TEAM) project to expand its mainline system in southwestern Pennsylvania to transport Marcellus gas to the Northeast (see Shale Daily, Nov. 18b).