Atmos Energy Corp. and Equitrans LP are pinning their hopes on FERC approving their proposals in September to build new pipelines to ease the capacity constraint in eastern Kentucky that has led to natural gas production being shut in for much of the year in that region.
Equitrans, a subsidiary of Equitable Resources in Pittsburgh, PA, is seeking to build a 60-mile, 20-inch diameter pipeline that would extend from the existing Kentucky Hydrocarbon plant in Langley in eastern Kentucky to Tennessee Gas Pipeline’s Broad Run Lateral in Carter County. The Big Sandy Pipeline project would provide 70 MMcf/d of takeaway capacity for Kentucky producers to transport their gas to markets in the Northeast (see Daily GPI, Jan. 27). Dallas, TX-based Atmos Energy proposes to build a pipeline that would originate in Floyd County, KY, and extend north 50 miles to interconnect with the Tennessee system in Carter County as well. The 20-inch diameter system would be capable of initially moving up to 100,000 MMBtu/d of gas, with the ability to expand throughput to 225,000 MMBtu/d. Atmos has requested that its Straight Creek project be declared gathering and exempt from FERC jurisdiction under the Natural Gas Act.
Assuming it receives FERC approval in the near term, the Equitrans pipeline project would be targeted for in-service later in the summer of 2007, according to David Spigelmyer, a spokesman for Equitable Resources. Atmos Energy said it expects to begin construction later this year, with operations to begin by the summer of 2007.
Both proposed pipelines are direly needed because the existing pipeline that runs through the state — Columbia Gas Transmission — is fully subscribed due to the coalbed methane production that’s coming from Virginia, said Rick Bender, director of Kentucky’s Division of Oil and Gas Conservation. “That’s the bottleneck,” he told NGI.
NiSource Inc.’s Columbia Gas Transmission Corp. in March launched an open season for up to 65,000 Dth/d of newly created firm transportation service on a proposed expansion of its Appalachian pipeline system in West Virginia and Kentucky (see Daily GPI, March 7).
As a result, gas production in eastern Kentucky has been routinely shut in, except during periods of high demand (winter) when interruptible service is available on Columbia, Equitable Resources’ Spigelmyer said.
Brandon Nuttall, a geologist for the Kentucky Geological Survey, estimated that 25-30% of the state’s natural gas production is shut in due primarily to a constrained pipeline infrastructure. The latest figures show that producers in Kentucky produced 92.8 Bcf of gas in 2005, up significantly from 74.8 Bcf in 1995. Nuttall estimated that 98% of Kentucky’s gas production comes from the eastern half of the state.
He reported that the recoverable natural gas resources in eastern Kentucky are about 9-23 Tcf. The western half of the state holds approximately 8-10 Tcf, according to Nuttall.
Mark H. Johnson, senior vice president for non utility operations at Atmos Energy, said that some 1,700 natural gas wells in the eastern part of Kentucky have been shut in for long periods, blocking a “substantial amount of gas” from reaching the consuming public. He believes the economic benefit to Kentucky of Atmos Energy’s proposed gathering system could exceed $150 million a year.
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