NGI The Weekly Gas Market Report
MarkWest Pioneer LLC, a subsidiary of MarkWest Energy Partners LP, last Monday said that it submitted a pre-filing application with FERC to build an interstate natural gas pipeline that would give producers in the Woodford Shale area of Oklahoma the ability to interconnect with the proposed Midcontinent Express Pipeline in Bennington, OK.
At the same time, Denver-based MarkWest said it entered in an option agreement with Midcontinent Express to acquire 10% of the equity of Midcontinent Express after construction is completed and it is placed into service. Kinder Morgan Energy Partners LP and Energy Transfer Partners LP will each own a 45% interest in Midcontinent Express.
MarkWest’s proposed Arkoma Connector Pipeline would extend approximately 50 miles from an interconnect with MarkWest’s gathering system in the Woodford Shale production area in southeastern Oklahoma to an interconnect with the proposed Midcontinent Express Pipeline in Bennington. MarkWest said it has executed agreements with significant Woodford producers, including Newfield Exploration Co., to transport more than 500 MMcf/d on the Arkoma Connector line.
In related action, Midcontinent Express last Monday said it entered into a contract with Newfield Exploration Mid-Continent Inc. for a minimum of 200,000 Dth/d of additional firm capacity on the Midcontinent Express system. Midcontinent Express said it now has long-term binding commitments of approximately 1.2 Bcf/d from creditworthy shippers on its proposed pipeline.
“The Woodford Shale Play is the fastest growing component of our portfolio today,” said Newfield Chairman David A. Trice. “We exited 2006 producing 85 MMcfe/d, 2007 at 165 MMcfe/d and we expect to exit 2008 with another 50% increase in rate at approximately 250 MMcfe/d. This agreement ensures that a large portion of our expected future production from the Woodford will move out of the region on firm transportation.”
The estimated $1.3 billion Midcontinent Express project will extend 500 miles from southeastern Oklahoma, across northeast Texas, northern Louisiana and central Mississippi to an interconnection with Transcontinental Gas Pipe Line near Butler, AL. The proposed pipeline is expected to interconnect with several pipes that serve downstream markets, including Natural Gas Pipeline Co. of America, Transco, Texas Eastern Transmission, Tennessee Gas Pipeline, Columbia Gulf Transmission, Texas Gas Transmission, Southern Natural Gas, Destin Pipeline and ANR Pipeline.
Midcontinent Express, which filed an application at FERC in October, would have an initial capacity of 1.4 Bcf/d, and is targeted for operation in March 2009, according to the sponsors (see NGI, Oct. 15, 2007).
The much-anticipated project is in response to robust natural gas production in Oklahoma and North Texas. It will help move gas eastward to markets in Florida and the Northeast. The pipe project is also seen as a way to keep supply and markets connected should Gulf of Mexico production go off-line in the event of a hurricane.
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