Buckeye Partners LP has received “favorable responses” from potential customers to transport natural gas liquids (NGL) produced in the Marcellus Shale Basin in Pennsylvania to the market in Sarnia, ON, on its proposed Union Pipeline project, the partnership said Wednesday.

“The initial interest we received during the open season exceeded our expectations,” said Forrest E. Wylie, CEO of Buckeye’s general partner. “Based on this level of interest, Buckeye is now considering the possibility of adding a destination near Chicago, which has existing NGL pipeline infrastructure, in addition to the Sarnia, ON, market.”

Buckeye, along with project partner Calgary-based NOVA Chemicals Corp., announced the Union project in February (see Daily GPI, Feb. 11).

“We believe the Union Pipeline would provide a comprehensive solution for producers of NGLs in the Marcellus Shale Basin and would provide customers with competitively priced alternative distribution options,” Wylie said.

Buckeye held an open season for the project last month and said it expects to hold a binding open season in mid-2010.

Faced with low prices for dry gas, producers have been targeting more liquids-rich shale gas plays, noted analysts at Barclays Capital on Tuesday. “Condensates and NGLs sell at prices linked more to oil than to natural gas,” the analysts wrote. “The additional revenue from producing condensates and NGLs gives these ‘wetter’ wells an advantage over dry gas wells.”

However, the wetter gas requires additional infrastructure, noted Bentek Energy LLC Managing Director Rusty Braziel recently. “The problem is they’re not keeping up [with the need for processing capacity],” Braziel said. “What that has meant is that basically budget dollars for Marcellus producers that have the option have moved to that northeast Pennsylvania region. That’s the reason it’s been growing so fast, and that’s because it’s relatively dry gas and generally does not require processing to remove liquids…

“From what we’ve seen in terms of the opportunity in the [southwestern] region [of Pennsylvania], no matter how much liquids capacity they add, the production in the area can probably continue to outgrow it” (see Daily GPI, March 23).

Last month Enbridge announced plans for an NGL pipeline to carry Marcellus liquids to Chicago. The proposed pipeline would deliver into existing NGL infrastructure in the Chicago area, including the Aux Sable facility, which processes gas from Alliance Pipeline and fractionates NGLs from various supply sources, it said (see Daily GPI, March 23).

And last December Range Resources Corp. said completion of the third phase of a Marcellus Shale gas processing infrastructure expansion program had been completed, adding 120 MMcf/d of cryogenic processing capacity. The increased ability to process the rich Marcellus gas from southwestern Pennsylvania would improve the company’s netbacks, Range said (see Daily GPI, Dec. 15, 2009).

Barclays analysts noted that the Eagle Ford Shale in South Texas offers the best example of producers’ rush to liquids-rich gas basins. “Wells in the Eagle Ford Shale vary in their hydrocarbon content, but it is not uncommon for a well to produce three distinct commercial products: a) condensate, b) NGLs, and c) natural gas,” the analysts wrote. “Condensate can be blended into crude oil products and sells near energy-equivalent parity with oil. WTI [West Texas intermediate oil] currently is priced around $14.90/MMBtu, more than three times the energy-equivalent price of natural gas.”

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