FERC on Thursday approved Fayetteville Express Pipeline LLP’s (FEP) project to boost takeaway capacity from Arkansas’ Fayetteville Shale play to markets in the Midwest, Southeast and Northeast.

“The Fayetteville Express Pipeline project, as conditioned, will provide an important new outlet to the interstate market for natural gas from capacity-constrained production areas that are expected to serve as rich supply sources,” the Federal Energy Regulatory Commission said in its order [CP09-433-000]. “The project will likewise help create market alternatives and enhance gas supplies available to customers on other connected pipelines.”

Fayetteville Express is a 50/50 joint venture of Kinder Morgan Energy Partners LP and Energy Transfer Partners LP. The project would include a new 185-mile, 42-inch diameter pipeline from Conway County, AR, eastward through White County, AR, to an interconnect with Trunkline Gas in Quitman County, MS. The pipeline would also interconnect with Natural Gas Pipeline Company of America (NGPL) in White County; Texas Gas Transmission in Coahoma County, MS; and ANR Pipeline Co. in Quitman County. Besides the pipeline facilities, the project would include 71,465 hp of compression.

FERC found that the project would not adversely affect existing pipelines or their captive customers as it will transport gas from new domestic sources.

FEP filed its FERC application for the $1.3 billion project this summer (see Daily GPI, July 2), and the project received a favorable environmental review in the fall (see Daily GPI, Oct. 16). According to the FERC order, FEP has entered into four precedent agreements with nonaffiliated shippers for more than 92% of the Fayetteville Express design capacity.

FEP said it hopes to begin construction in early 2010. It has targeted interim service for October 2010 and full service in January 2011.

“Fayetteville Express states that it anticipates that it will be able to offer service on a portion of the pipeline upstream of the NGPL delivery point for delivery to NGPL on an interim basis during the fourth quarter of 2010,” FERC noted in the order. Rates for the interim service would be based upon the minimum facilities required and the anticipated daily capacity that could be available. “Fayetteville Express proposes to charge its full system rates for any additional service that may become available downstream of the NGPL delivery point prior to the system being fully in service.”

Texas Gas Transmission, a pipeline subsidiary of Boardwalk Pipeline Partners LP, already has two pipes — the Fayetteville Lateral and Greenville Lateral — providing takeaway capacity from the Fayetteville Shale. The Fayetteville Shale play is estimated to have natural gas potential of 20-30 Tcf.

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