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Spectra's 2014 Plans Include Expanding NatGas Pipes Into New England

Last year was a significant one for Spectra Energy Corp., which opened a series of projects, including the New Jersey-New York Expansion Project on its Texas Eastern Transmission Co. and Algonquin Gas Transmission systems, and the Houston-based company has no intention of resting on its laurels.

Spectra on Wednesday announced plans for the Atlantic Bridge project, a proposed expansion of its Algonquin Gas Transmission, and Maritimes & Northeast Pipeline systems, to connect natural gas supplies with markets in New England and Canada's Maritime provinces. The expansion would increase pipeline capacity by 100,000-600,000 Dth/d by November 2017, depending upon additional market commitments across the region. A majority of the project's construction is expected to occur within existing rights-of-way and at Spectra-owned facilities.

Algonquin and Maritimes & Northeast recently executed an agreement with Unitil Corp. to participate as an anchor shipper in the project, Spectra said. An open season for the project closes March 31. Interested parties should contact Greg Crisp at (713) 627-4611.

On Tuesday, Spectra announced 4Q2013 earnings before interest taxes depreciation and amortization (EBITDA) of $787 million, compared with $663 million in 4Q2012, and full-year 2013 EBITDA of $3 billion, up from $2.78 billion in 2012.

Spectra Energy Partners reported 4Q2013 EBITDA of $368 million, compared with $316 million in 4Q2012. Results "benefited greatly" from the dropdown of the Express-Platte Pipeline System, "which has performed better than expected due to higher revenues," Spectra said. The increased earnings also reflect contributions from pipeline expansions, primarily the New Jersey-New York project.

The distribution business reported EBITDA of $156 million, compared with $147 million a year ago. The increase was due in part to higher approved rates and colder weather.

Western Canada transmission and processing reported EBITDA of $215 million compared with $152 million a year ago. The segment experienced higher earnings at the Empress natural gas liquids business, attributable mainly to higher propane prices and lower production costs compared to 4Q2012.

Field services reported third quarter EBITDA of $72 million, compared with $58 million in 4Q2012 due primarily to higher commodity prices and the favorable effect of natural gas liquids marketing and movement on hedges at DCP Midstream Partners.

"Perhaps our most notable accomplishment in 2013 was placing into service our New Jersey-New York project, the $1.2 billion connection into northern New Jersey and Manhattan [see Daily GPI, Oct. 30, 2013]," Bill Yardley, president of U.S. transmission and storage, said Wednesday. The expansion added 800 MMcf/d of capacity to serve the region. Construction included drilling nine tunnels to route the pipe under rivers and streets, one of which holds the industry record for the longest 30-inch horizontal directional drill in North America (the crossing at the Kill Van Kull) at just over 8,100 feet. "It's of course a highly strategic infrastructure project that brings significant economic and environmental benefits to this region and very nice returns to our investors," Yardley said.

Spectra seems prepared to continue its 2013 pace, announcing this week the Atlantic Bridge project and seeking authorization for the Ohio Pipeline Energy Network (OPEN) project (see Daily GPI, Feb. 4). OPEN would create 550,000 Dth/d of takeaway capacity out of the Marcellus and Utica shales for delivery at points along the company's Gulf Coast system. Texas Eastern asked the Federal Energy Regulatory Commission to grant authorization by December 5 in order to place the facilities into service by Nov. 1, 2015.

"The supply of natural gas is growing, as we all know, and it's shifting, and demand is growing everywhere our pipeline system reaches," Yardley said. "For example, this past winter season we've seen the highest total delivery quantities for the November through January period ever for Algonquin, the Texas Eastern Market Area and East Tennessee Gas Pipeline. This supply and demand growth is boosting the value of our base assets and giving us continuing opportunities for new projects."

Spectra expects to invest around $1.3 billion in expansion capital in 2014 and an average annual growth capital expenditure of about $2 billion through 2016. Company officials on Wednesday said the company would pursue an additional $10 billion of natural gas and liquids opportunities over a previously announced $25 billion of opportunities through the end of the decade.

"Our three-year plan is built upon 2013's strong performance, in which we placed $6 billion of capital into service, secured $7 billion in new projects and bolstered our MLP [master limited partnership] to a $20 billion enterprise by dropping substantially all U.S. transmission, storage and liquids assets into Spectra Energy Partners," said CEO Greg Ebel. "We will fully leverage this positive momentum coming out of 2013 to accelerate our growth and value proposition."

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