Natural gas to exit Appalachia on reversed mainline pipes, NGI Reports

Thursday, March 13, 2014

With Marcellus/Utica shale producers still clamoring for exits from the gas-bloated region, a number of major pipelines have been obliging with offers to turn portions of their northbound systems south and flow excess gas to the Gulf Coast

This week, TransCanada Corp.'s ANR Pipeline is holding an open season for up to 600,000 Dth/d reverse capacity on its Southeast Main Line, which for many decades has been a mainstay of pipeline deliveries from the Gulf Coast to the Midwest. Now ANR is offering to carry gas from the Marcellus and Utica Shales in the other direction, from Indiana to south Louisiana, home of a rapidly expanding petrochemical industry and potential export terminals for liquefied natural gas (LNG).

Never mind, that Indiana isn't in the Marcellus/Utica area, the first step was reversal of ANR's Lebanon Lateral, a 350,000 Dth/d project that is slated to come online in early April, carrying gas west from Lebanon, OH to a connection with the mainline in Indiana for the trip south. At Lebanon there are connections to Texas Eastern Transmission, Dominion Transmission and Columbia Gas Transmission, all of which tap into Appalachian gas.

"Several years ago we obviously saw this coming, like most people did," John Hampton, ANR director of business development, told NGI's Shale Daily. "What could we do as ANR Pipeline? We are not in the Marcellus or Utica basins; we're farther to the west."

"Of course, Dominion, Columbia, Texas Eastern are all up in the Marcellus/Utica area," Hampton said. "So we thought as they start getting to the point where they need to reverse their systems to help...get gas out of the Utica/Marcellus, then we would have an opportunity to tie into some of that production and help move that to our markets or south to the Gulf Coast."

ANR's announcement comes just after Natural Gas Pipeline Company of America LLC (NGPL), another Midwestern supply stalwart, held an open season for potential reversal of part of its Gulf Coast mainline to move gas north to south, picking up as much as 750,000 Dth/d of incremental volume from the Rockies Express Pipeline (REX) interconnection in Illinois.

REX, which was completed not that many years ago to flow gas from the Rockies to eastern markets, now is seeking regulatory approval to reverse the flow on the eastern end of its system to provide another exit to market for Marcellus gas. In light of growing Marcellus production, REX could be expanded to provide 2.5 Bcf/d of westbound capacity.

A combination of repurposed ANR pipeline combinations adds up to more than 1.6 Bcf/d of capacity out of the Marcellus/Utica. "So we've been talking to a lot of parties to sell that much capacity," Hampton said, "and they're telling us they have more interest in moving on ANR beyond that."

Once Appalachian gas gets onto the ANR system, it can go north to the upper Midwest and Chicago or south to the Gulf Coast. Lately, producers have been asking ANR about a greenfield project, and Hampton said the pipeline is considering a pipeline that would start in the Utica/Marcellus area and connect with the existing ANR system.

"We've had enough interest that we're going to try to get some kind of open season out there as quickly as we possibly can," he said. "I don't know if that's going to be for the greenfield project or just further expansions on our system, or a combination of the two."

The ANR, NGPL and REX proposals are among the largest turnarounds on the drawing boards. But they aren't alone. Spectra Energy's Texas Eastern, Columbia Gas Transmission, Dominion Transmission and Williams' Transcontinental Gas Pipeline, all have plans in the works to send gas in new directions.

To read more details of new pipeline proposals for exiting the Marcellus/Utica, visit naturalgasintel.com and sign up for a free trial.

NGI has been an independent voice delivering real-time news and price survey reports for the natural gas market since 1981 in its publications: Natural Gas Intelligence, Daily Gas Price Index, Weekly Gas Price Index and NGI's Shale Daily. Relied on by industry and government since 1988, NGI data is the industry's lowest cost essential data available on conventional and unconventional natural gas pricing.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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