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Distribution System to Bring Marcellus Gas to Locals

July 1, 2013
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Leatherstocking Gas Co., a 50-50 joint venture between Corning Natural Gas Corp. and Mirabito Holdings Inc., recently broke ground on a natural gas distribution system in Susquehanna County, PA, the latest step in its "local gas for local people" effort to supply Marcellus Shale gas to customers living in the area.

It would be the first natural gas distribution network in the county, which sits in the heart of the Marcellus Shale.

The Binghamton, NY-based supplier plans to add about four miles of pipeline every year over the next decade, bringing natural gas produced locally first to Montrose Junior-Senior High School and the Endless Mountains Health System Hospital in Montrose, PA, and then to residential and business customers. The school is converting its boiler to natural gas from oil.

The system's mainline is expected to be completed this year. Natural gas will be provided by Cabot Oil & Gas. Leatherstocking hopes to get annualized volumes of about 20,000 Mcf this year, "and then we'll build from there," according to CEO Mike German.

Leatherstocking gets 63% of the natural gas on its system from Corning interconnects in Tioga County. "Because of Corning's access to Marcellus supply, its customers pay some of the lowest gas costs in New York State," according to Leatherstocking.

"I believe we're really the only distributor who has interconnects and relies extensively on Marcellus production," German told NGI. "We also have several interconnects in New York into the Trenton-Black River formation, and I guess that's one of the reasons that we feel comfortable doing this in Susquehanna County -- we've done if before. It didn't seem unusual to us to hook into midstream assets, put in gate stations and all of the requisite equipment and work with midstream companies...we get a majority of our gas from the Marcellus, directly into our system; we built a compressor station and what we don't use we put into interstate commerce. We're moving 25-30 MMcf/d of Marcellus gas."

Constitution Pipeline Co. has said it will work with Leatherstocking to pursue agreements to design, build and operate delivery interconnects along Constitution's Marcellus Pipeline, essentially converting it to an "open access pipeline" (see NGI, Nov. 12, 2012). Both companies said they envision local municipalities and public utilities would be able to tap into the pipeline to provide natural gas to residential, commercial and industrial customers.

Constitution recently filed an application with the Federal Energy Regulatory Commission seeking approval to construct its pipeline, which would carry natural gas from northern Pennsylvania's Marcellus Shale to Northeast markets (see NGI, June 17). Constitution, which is owned by subsidiaries of Cabot, Williams Partners LP, Piedmont Natural Gas Co. and WGL Holdings (see NGI, June 3), hopes to have construction of the 122-mile pipeline completed by spring 2015. The 30-inch diameter gas line initially would carry up to 650,000 Dth/d from Susquehanna County, interconnecting with the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, NY.

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