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Marcellus Takeaway Capacity Taking Off

For Marcellus Shale producers, the gift-receiving season began last week and continues through the end of the year in the form of additional pipeline takeaway capacity. Multiple projects are slated to come online by the end of the year, giving Marcellus producers increased access to markets, and presumably better prices for their gas.

One of the most significant expansions, according to Bentek Energy LLC energy analyst Kyle Martinez, is National Fuel Gas Supply Corp.'s Northern Access Project, which is expected to enter service in November. It will increase capacity from the company's interconnection with Tennessee Gas Pipeline (TGP) at Ellisburg, PA, to the TransCanada Pipeline at Niagara, near Niagara Falls, NY.

Additionally, TGP's Northeast Supply Diversification (NSD) Project is providing up to 250,000 Dth/d of incremental firm capacity from the Marcellus along the pipeline's 300 Line to serve markets in New England and the Niagara Falls area of New York as of last Thursday. This project is of particular note, too, said Martinez, who added that it will work in concert with Dominion's Ellisburg to Craigs project, which is expected to come online in November and provide 150,000 Dth/d of Marcellus capacity.

Martinez said National Fuel's Northern Access and TGP's NSD projects should give some price support in Tennessee's Zone 4, an area that has been plagued by low prices due to too much Marcellus gas trying to get to market. However, Martinez said the break from low prices would likely only be temporary. "There's just so much production and wells that are waiting to come online," he said.

Dominion's Northeast Expansion also is slated to come online in November. It will provide 200,000 Dth/d of firm capacity to take Marcellus gas to the Leidy Hub. However, according to Martinez, getting gas into Leidy could prove to be difficult as Transco's Leidy Line has been running full at about 1.6 Bcf/d ever since Penn Virginia Resource Partners LP's Wyoming Pipeline system came online a few weeks back (see NGI, Oct. 8).

Texas Eastern Transmission LP's Team 2012 also entered service last Thursday at the first-year contractual volume of 115 MMcf/d. The project will ramp up to its full volume of 200 MMcf/d on Nov. 1, 2013, a spokesperson said. Parent Spectra Energy and shippers Range Resources and Chesapeake Utilities have agreements to deliver up to 200 MMcf/d of Marcellus gas supply along the Texas Eastern system to the Northeast United States.

National Fuel Gas Supply Corp.'s Line N 2012 Expansion Project went online Thursday, too. It is a 4.85-mile, 24-inch diameter pipeline with compression and related facilities in Washington County, PA. Initial facilities entered service Oct. 3. These include the 4.85-mile 24-inch diameter segment of Line N, four road crossings and one new 10,310 hp turbine at the existing Buffalo Compressor Station. The project is intended to improve system reliability and enable National Fuel to transport additional gas from the Appalachian region to Northeast markets.

Martinez said Inergy Midstream's Inergy Marc 1 Pipeline Project in Bradford and Sullivan counties, PA, had been expected to enter service in November. The company said that will now be by the end of the year. The project is a 39-mile, 30-inch diameter bi-directional pipeline connecting Inergy's Stagecoach South Lateral at Tennessee Gas Pipe Line's (TGP) 300 Line to Transco's Leidy Line. Firm capacity is 550 MMcf/d. Together with Inergy's 325 MMcf/d North-South Project, which entered service last December, it will allow shippers to transport gas bi-directionally on a firm basis 75 miles between the Millennium Pipeline and Transco's Leidy Line and all points in between.

Operations recently began at MarkWest Energy Partners' Sherwood I gas processing plant and the initial phase of its high-pressure gas gathering system in Harrison and Doddridge counties, WV, to serve the Marcellus production of Antero Resources. Earlier this year MarkWest struck an agreement with Antero to expand the Doddridge and Harrison counties' gathering facilities to support the company's growing gas output. The 200 MMcf/d facility is the first phase of its planned processing capacity at the Sherwood complex. MarkWest is constructing the 200 MMcf/d Sherwood II facility, which is expected to be in service during the second quarter of 2013.

And in December the first phase of Dominion's Natrium project is expected to enter service, providing 200 MMcf/d of processing capacity and 36,000 b/d of fractionation capacity to handle Marcellus production.

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