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Natural Gas Pipelines Report

U.S. Natural Gas Projects
Shale Development Continues to Drive Gas Pipelines 

By Bradley KramerNatural Gas Pipelines Report

All anyone can talk about when it comes to natural gas is shale, shale and more shale. The booming natural production from the shale formations, primarily the Marcellus and Utica in the Northeast, are driving new pipeline construction and the expansion of existing systems throughout the United States.

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Three major pipeline companies are driving current natural gas pipeline activity. Kinder Morgan, Spectra Energy and Williams Partners are leading the pack with several projects each that are currently under construction or progressing toward startup. In fact, Williams just announced it has completed a major expansion of its Transco pipeline system. On Nov. 1, the company placed into service the remaining capacity of its Northeast Supply Link, after bringing half the capacity into service three months ahead of schedule in response to customer demands. The project marks the first major expansion of the Transco pipeline and is designed specifically to connect Marcellus natural gas supply with Northeastern markets.

Williams’ Northeast Supply Link provides 250 million cubic feet (MMcf) of incremental firm natural gas transportation capacity from Marcellus supplies to nearby customers in Pennsylvania, New Jersey and New York. The total expansion will deliver enough natural gas to provide service to approximately 1 million homes.

“Northeast Supply Link is a good example of our focus on bringing large-scale infrastructure projects into service in a timely manner to meet our customer requirements,” said Rory Miller, senior vice president of Williams Partners’ Atlantic-Gulf business segment. “We are currently executing on approximately $1.5 billion in other natural gas transportation projects, including our interest in the Constitution interstate gas pipeline, to provide service to high-value demand centers in the northeastern United States and all along the eastern seaboard.”

The $390 million Northeast Supply Link project involved the construction of about 13 miles of pipe in Pennsylvania and New Jersey, in addition to existing compressor facility modifications and a new 25,000-hp compressor station in Essex County, N.J. Half of the project’s capacity was placed into service in August, after Williams Partners received approval from the U.S. Federal Energy Regulatory Commission (FERC) for an early in-service date.

“We see tremendous appetite from a wide range of industry participants for additional firm transportation capacity, particularly along the Transco system,” Miller said.

The Transco pipeline is a 10,200-mile system that provides natural gas transportation and storage services for markets throughout the Northeast and Southeast United States. In the last decade, Williams’ Transco and Gulfstream systems have placed into service 21 growth projects totaling more than $2 billion of capital investment. With the Northeast Supply Link project now in service, Transco’s current system capacity is approximately 10.15 billion cubic feet per day (Bcf/d).

Likewise, other pipeline companies are answering the call to increase delivery of natural gas and related products, such as liquefied natural gas (LNG) and natural gas liquids (NGLs). The following natural gas projects are currently under way, awaiting approval or in the planning phase.

Alaska LNG Project
Location: Alaska
Stakeholder(s): Exxon Mobil Corp., ConocoPhillips Co., BP PLC and TransCanada Corp.
Overview: In October 2012, Alaska Gov. Sean Parnell announced that a team of energy companies may invest up to $65 billion for an 800-mile natural gas pipeline from the North Slope region to export to markets in the Pacific Rim. The proposed pipeline would include five off-take points to serve Alaskan energy needs before surpluses could be exported to Northeast Asia. On Oct. 7, the project stakeholders identified Nikiski, Alaska, an industrial town 60 miles southwest of Anchorage on the Kenai Peninsula, as the lead site for location of the proposed liquefaction plant and export terminal. The project remains in the planning stages.


Algonquin Gas Transmission

Many of the currently proposed gas pipeline projects involve the expansion of existing transportation systems. Spectra Energy is increasing capacity on its Algonquin Gas Transmission system to better serve markets in the Northeast.

Algonquin Incremental Market (AIM) Project
Location: New York, Connecticut, Rhode Island and Massachusetts
Stakeholder(s): Spectra Energy
Overview: As currently proposed, the project involves the construction of approximately 21.7 miles of various segments of existing mainline take-up/relay and loop that includes 1.2 miles of new pipeline to be installed beneath the Hudson River using a horizontal directional drill; construction of approximately 15.3 miles of lateral pipeline take-up/relay, loop and expansion that includes 4.8 miles of new 16- and 24-in. diameter pipeline lateral; addition of six new compressor units, for a total addition of 72,240 hp, at five existing compressor stations; construction of three new meter stations; and modifications to existing meter stations. The project will expand pipeline capacity of the existing Algonquin Gas Transmission system up to 342 million cubic feet per day (MMcf/d). Spectra expects the project to be completed by November 2016.

Bluegrass Pipeline
Location: Kentucky, Louisiana, Ohio, Pennsylvania and West Virginia
Stakeholder(s): Williams and Boardwalk Pipeline Partners LP
Overview: Phase one of Bluegrass Pipeline is being designed to provide customers with 200,000 barrels per day (bpd) of mixed NGLs take-away capacity in Ohio, West Virginia and Pennsylvania. Phase two would increase capacity to 400,000 bpd to meet market demand, primarily by adding additional liquids pumping capacity. The pipeline will deliver mixed NGLs from these producing areas to proposed new fractionation and storage facilities that would have connectivity to petrochemical facilities and product pipelines along the coasts of Louisiana and Texas. In addition to these domestic markets, the fractionation and storage facilities are expected to have connectivity to a proposed new liquefied petroleum gas (LPG) export terminal. The project consists of constructing two new NGL pipelines and converting a third. One of the new pipelines will be built from numerous natural gas processing plants in producing areas in Ohio, West Virginia and Pennsylvania to an interconnect with Boardwalk’s Texas Gas Transmission system near Hardinsburg, Ky. The second new pipeline will be built from Eunice, La., to a proposed large-scale fractionation plant and expanding storage facilities in the Lake Charles, La., area. The stakeholders are converting a portion of existing pipeline on the Texas Gas Transmission system from natural gas service to NGL service from Hardinsburg to Eunice. By combining new construction with an existing pipeline, Williams and Boardwalk believe that the Bluegrass Pipeline should be placed into service and begin serving customers sooner than other options. Williams and Boardwalk are engaged in comprehensive project development planning including permitting, public consultation and right-of-way acquisition. On May 29, Boardwalk filed with FERC the Abandonment Application for the portion of Texas Gas Transmission that would be converted to NGL service, and the abandonment process is estimated to be complete in the second quarter of 2014. The Bluegrass Pipeline is commencing a binding open season to determine industry commitments to natural gas liquids (NGLs) transportation capacity from the Marcellus and Utica shale plays to the petrochemical and export complex on the U.S. Gulf Coast. The open season began on Oct. 29 and will conclude on Dec. 16. Williams and Boardwalk are targeting to place the project into service in late 2015.


Kinder Morgan’s Y-Grade Pipeline Project

Kinder Morgan’s Y-Grade Pipeline Project is one of many to tap into the growing production of the Marcellus and Utica shale plays.

Constitution Pipeline
Location: Pennsylvania, New York
Stakeholder(s): Williams, Cabot Oil & Gas, Piedmont Natural Gas and WGL Holdings
Overview: The approximately 124-mile Constitution Pipeline is being designed with a capacity to transport 650 MMcf/d of natural gas (enough natural gas to serve approximately 3 million homes). Buried underground, the 30-in. pipeline would extend from Susquehanna County, Pa., to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, N.Y. The proposed project route stretches from Susquehanna County, Pa., into Broome County, N.Y., Chenango County, N.Y., Delaware County, N.Y., and terminates in Schoharie County, N.Y. The stakeholders began pre-filing procedures with FERC in April 2012 and provided updated environmental information on Nov. 11. As the project awaits approval, the proposed construction start date is June 2014, with a target in-service date of March 2015.

Front Range Pipeline
Location: Colorado, Texas
Stakeholder(s): Enterprise Products Partners LP, Anadarko Petroleum Corp. and DCP Midstream LLC
Overview: The Front Range Pipeline will originate in the Denver-Julesburg Basin in Weld County, Colo., and extend approximately 420 miles to Skellytown, Texas. The 12- and 16-in. diameter pipeline will have connections to the Mid-America Pipeline system and the Texas Express Pipeline and feature an initial capacity of 150,000 bpd, which can be readily expanded to approximately 230,000 bpd. Enterprise will construct and operate the pipeline. The project was announced in April 2012 and is expected to be in service by late 2013.

New Jersey-New York Pipeline Expansion
Location: New Jersey and New York
Stakeholder(s): Spectra Energy
Overview: The New Jersey-New York project is an expansion of Spectra’s existing Texas Eastern Transmission and Algonquin Gas Transmission pipeline systems to deliver new, critically needed natural gas supplies to the New Jersey and New York areas, including Manhattan. The expansion includes the installation of approximately 16 miles of new pipeline and 5 miles of replacement pipeline for a capacity of 800 MMcf/d. Construction began in the summer of 2012 and is expected to be in service this November.

Ohio Pipeline Energy Network (OPEN)
Location: Ohio (Columbiana, Carroll, Jefferson, Belmont and Monroe counties)
Stakeholder(s): Spectra Energy
Overview: The project will consist of approximately 73.17 miles of new 30-in. diameter mainline pipeline and associated pipeline support facilities in Ohio, including a new compressor station. Reverse flow modifications at existing compressor stations along Texas Eastern’s existing mainline will be located in Ohio, Kentucky, Mississippi and Louisiana. Approximately, 35 miles (49 percent) of the proposed pipeline facilities will be either within or adjacent to existing transmission line or pipeline right of way. OPEN will provide 550 MMcf/d of pipeline transportation capacity to deliver new incremental production from the emerging Utica and Marcellus shale plays to growing and diverse markets in the Midwest, Southeast and Gulf Coast. Spectra has conducted an open season to seek interest in the OPEN project and has agreements in place with an anchor shipper. The company has begun the regulatory review of the project and continues to engage with potential customers interested in capacity, as it moves forward with the project. Spectra expects OPEN to be completed by November 2015.

Y-Grade Pipeline Project
Location: Kentucky, Louisiana, Mississippi, Ohio, Pennsylvania, Tennessee and Texas
Stakeholder(s): Kinder Morgan Energy Partners
Overview: Kinder Morgan Energy Partners LP proposes to develop a Y-grade NGLs pipeline, to be known as the Y-Grade Pipeline Project, for the purpose of transporting Y-Grade NGLs from the Utica and Marcellus shale plays to the Texas Gulf Coast. The project will involve converting more than 1,000 miles of Kinder Morgan’s 24- and 26-in. Tennessee Gas Pipeline system, currently in natural gas service to NGL service, and the construction of approximately 200 miles of new pipeline to extend the Y-Grade Pipeline from Natchitoches, La., to a proposed Kinder Morgan joint venture fractionation facility with a third party that has existing facilities at Mont Belvieu, Texas. The Y-Grade Pipeline will extend from Mercer and Harrison counties, Pa., to Mont Belvieu.

This is not a comprehensive list of the natural gas pipeline projects in the United States. For updates regarding ongoing projects, refer to the Project Roundup on page 20 and published every issue.

North American Oil & Gas Pipelines provides quarterly updates of oil and gas pipeline projects in the United States in Canada. Previous reports were published this year in February, May and August. The next update will be February 2013, covering Canadian oil pipeline projects.

Bradley Kramer is managing editor of North American Oil & Gas Pipelines. Contact him by writing to bkramer@benjaminmedia.com.

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