NiSource Inc. may spend as much as $1.2 billion on a pair of pipelines by 2016 and look to partners to invest another $500 million in an effort to increase capacity out of the Marcellus Shale, the company said Thursday.

The Merrillville, IN-based company is considering spending $1 billion on a 1 Bcf/d express line with receipt and delivery points running along NiSource’s 1804 corridor between Waynesburg, PA, and Eagle, PA, according to NiSource spokesman Cindy Donaldson. The pipeline would have possible interconnects with Williams’ Transcontinental Gas Pipe Line or Texas Eastern Transmission. NiSource would seek partners to cover half of the cost for the pipeline.

Another $700 million could be spent to construct a pipeline to carry 500-800 MMcf/d from the Marcellus in southwestern Pennsylvania to Corning, NY, subsidiary Columbia Gas Transmission’s (CGT) “Columbia Penn corridor,” Donaldson said. The corridor parallels CGT’s existing Line 1711 near Waynesburg and extends in a northeasterly direction through the center of the state toward Corning, where it would connect with the Millennium Pipeline.

The pipelines may be needed to meet rising capacity demand from producers in the prolific Marcellus Shale, NiSource said.

Last month Terry Engelder, a geosciences professor at Pennsylvania State University, said as much as 489 Tcf of technically recoverable natural gas resources may be held in the Marcellus Shale, which stretches across Pennsylvania, West Virginia, Ohio, New York and Maryland. (see Daily GPI, July 30). Engelder, who had estimated the Marcellus’ technically recoverable gas at approximately 392 Tcf as recently as last November, said his calculation was ratcheted up 25% as more production data became available in recent months.

The 525,400 Dth/d Millennium Pipeline was placed into complete service last December (see Daily GPI, Dec. 23, 2008). Millennium is the centerpiece of a $1 billion investment in energy infrastructure that includes facilities by Empire State Pipeline, Algonquin Gas Transmission and Iroquois Gas Transmission. The pipeline is anchored by National Grid, Consolidated Edison of New York, Central Hudson Gas and Electric Corp. and Columbia Gas Transmission (CGT). Millennium is owned by affiliates of NiSource Inc., National Grid and DTE Energy. The bidirectional pipeline directly or indirectly serves markets in New York, New Jersey and New England.

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