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Trio Plans Marcellus Takeaway Pipeline

Inergy Midstream LP, UGI Energy Services Inc. and Capitol Energy Ventures Corp., a unit of WGL Holdings Inc., plan to develop the Commonwealth Pipeline to carry Marcellus Shale production to market.

The proposed 200-mile, 30-inch diameter system would carry at least 800,000 Dth/d from the southern terminus of Inergy Midstream's MARC I pipeline in Lycoming County, PA, through central and eastern Pennsylvania to markets across southeastern Pennsylvania, Philadelphia and the Baltimore and Washington, DC, areas.

Service would begin in 2015. UGI Energy Services and Capitol Energy Ventures Corp. are expected to be anchor shippers on the line.

"Gas production in the region has been limited by the lack of takeaway capacity in existing interstate pipelines, most of which currently serve markets outside of Pennsylvania," said UGI Energy Services President Bradley Hall. "Our goal in participating in this project is to bring gas produced in Pennsylvania directly to the major markets in central and eastern Pennsylvania."

The pipeline would connect markets to Marcellus Shale gas production from across Pennsylvania while providing a more cost-effective transportation path compared to traditional routes, the backers said. "The pipeline is expected to cross and interconnect with a number of interstate pipelines along its route, providing even greater supply diversity while providing producers with direct access to markets that are currently served only through existing interstate pipelines."

The sponsors expect to own equal equity interests in the project company formed to own the pipeline. Inergy Midstream will construct and operate the pipeline, which is expected to cost approximately $1 billion and be funded equally by the sponsors.

A nonbinding open season is to be announced this month, the partners said.

Marcellus Shale development has moved a number of infrastructure players to announce plans for new or expanded capacity.

El Paso Corp. recently said it is considering adding pipeline infrastructure to carry gas from northeastern Pennsylvania to an interconnection near Albany, NY, following a nonbinding open season that was held last year (see Shale Daily, Feb. 24). Also eyeing northeastern Pennsylvania, Williams Partners formed a joint venture with Cabot Oil & Gas Corp. to build the 120-mile Constitution Pipeline to connect a Williams gathering system in Susquehanna County, PA, to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, NY (see Shale Daily, Feb. 22).

Late last year El Paso's Tennessee Gas Pipeline Co. placed its long-awaited 300 Line forward-haul expansion in service, increasing capacity on the Tennessee Gas Pipeline system by 350 MMcf/d, a nearly 50% boost (see Shale Daily, Nov. 2, 2011). The pipeline's Northeast Upgrade Project, which when combined with the 300 Line expansion, will add 1 Bcf/d of capacity to transport gas from the Marcellus Shale to Northeast markets recently received a favorable environmental review at the Federal Energy Regulatory Commission (see Shale Daily, Nov. 22, 2011).

A recent analysis of the Marcellus region and natural gas infrastructure by LCI Energy Insight and Energy Ventures Analysis found that infrastructure developers are racing to keep up with producers. "At present, the Marcellus Shale play is the fastest growing gas play in the U.S.," LCI and EVA said. "In 2012, it is projected to account for over 40% of expected increases in U.S. shale production and approximately one-third of the increases in shale production in 2013" (see Shale Daily, Feb. 21).

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