Interest in developing infrastructure to handle Appalachian natural gas liquids (NGL) production continues to grow along with producer interest in moving high-value NGLs to market.

Dominion has announced a project to gather, process and transport high-Btu gas from the Marcellus Shale as well as separate plans to partner with Exterran Holdings Inc. in the development of two gas processing plants in the Appalachian Basin.

Separately on Tuesday Kinder Morgan Energy Partners said it intends to modify and expand the existing Cochin Pipeline system to transport NGLs from the Marcellus Shale to fractionation plants and chemical markets near Sarnia, ON, and Chicago.

These projects targeting Appalachian production are not alone in the market. Last month Enbridge Inc. said it is planning an NGL pipeline from the Marcellus in southern Pennsylvania and northern West Virginia to markets in the Midwest (see Daily GPI, March 23). And in February Houston-based Buckeye Partners LP and Calgary-based NOVA Chemicals Corp. said they would explore the potential for a mixed NGL pipeline from the Marcellus in Pennsylvania to the refining and petrochemical complex in the Sarnia-Lambton area of Ontario (see Daily GPI, Feb. 11). More recently MarkWest Liberty Midstream & Resources LLC said it would expand its processing and fractionation capacity in the Marcellus (see Daily GPI, April 19).

One of the two processing plants to be designed and built by Exterran is to be an 8 MMcf/d plant in Carlisle, OH, and the other is to be a 10 MMcf/d plant in Schultz, WV, Dominion said. The plants are to be owned and operated by Exterran under a 12-year services agreement with Dominion. Construction is expected to begin immediately. Commercial operation of the Carlisle plant is anticipated in January, and commercial operation of the Schultz plant is anticipated in May 2011.

The Carlisle plant is expected to allow more gas to be processed and delivered into the Dominion East Ohio distribution system. The Schultz plant is expected to allow more gas to be produced into Dominion's gathering system in West Virginia, processed, and then delivered to market through Dominion Transmission's interstate pipeline system.

"Growing local production calls for increased processing equipment in the Appalachian Basin," said Paul Ruppert, senior vice president of Dominion Transmission. "These projects will benefit both local producers and the local economy. The two new state-of-the-art processing plants will provide high-quality natural gas for consumers and will also produce a variety of natural gas liquids valued in the market today."

On Monday Dominion Transmission announced a project to gather, process and transport high-Btu Marcellus gas in Marshall and Wetzel counties, WV, and surrounding counties in West Virginia, Pennsylvania and Ohio. The company's Marcellus 404 Project is designed to provide firm and interruptible transportation, as well as gathering and processing services, for up to 300 MMcf/d. Fractionation capacity for 32,000 b/d of NGLs will be available.

Dominion plans to locate new processing and fractionation facilities in north-central West Virginia. Once processed, the gas can be delivered into Dominion Transmission's system, or into one of several other gas outlets in the vicinity of Clarington, OH.

As part of the project, Dominion will request authorization to convert an existing transmission line in Ohio and West Virginia, TL-404, into a wet gas service line. Producers may connect directly to TL-404 or request that Dominion construct additional gathering facilities to allow delivery of their production to TL-404. The project will be phased in, providing 45 MMcf/d of service initially and ultimately expanded to 300 MMcf/d. Initial service will be available approximately one year after receipt of adequate support for the project, Dominion said. Processing and fractionation will be phased in to correspond with producer needs.

For more information on the Marcellus 404 Project, contact Jeff Keister at (804) 771-4459 or Ron Ridgway at (304) 627-3207.

Kinder Morgan's Cochin Pipeline includes plans to construct approximately 250 miles of NGL pipeline from the Marcellus Shale in southern Pennsylvania to the Cochin interconnect at Riga, MI. From Riga, Kinder Morgan anticipates that product would be transported through the existing Cochin Pipeline to Windsor, ON, and then through the Windsor-Sarnia Pipeline to Sarnia.

Kinder Morgan also plans to reverse the eastern leg of its Cochin pipeline in order to move NGLs from Riga to the Chicago area, where it expects to build an additional pipeline to connect to existing fractionation facilities and chemical plants.

"Our proposed pipeline and key existing infrastructure offer NGL producers the quickest and most efficient solution to get their product to the market," said Don Lindley, vice president of business development for Kinder Morgan's products pipeline group.

The pipeline would be designed to transport mixed NGLs (Y-grade), as well as purity NGLs, such as ethane, and will have an initial throughput capacity of 75,000 b/d, which could be expanded to handle up to 175,000 b/d.

A recent decision by Canada's National Energy Board directing the reconnection of the Cochin Pipeline to the Windsor-Sarnia Pipeline will enable Cochin shippers to have access to the Sarnia chemical complex. Kinder Morgan anticipates offering transportation from Marcellus to Sarnia for less than 14 cents/gal.

An open season for the project is expected to be held in the second quarter. For information, contact Karen Kabin at (713) 369-9268, or Karen_Kabin@kindermorgan.com; or Don Lindley at (713) 369-8840.

On Monday analysts at Tudor, Pickering, Holt & Co. Securities Inc. noted the currently favorable economics for NGLs and said NGL production is likely to grow faster than gas production (see Daily GPI, April 20). They noted that since their last update on NGLs in June 2009, production is up 2%, and ethane -- which accounts for 40-45% of the NGL barrel -- has seen production climb 7%; meanwhile, gas production is flat.

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