September 14, 2017 | By Kevin Adler
Fall is traditionally a time when many gas pipeline projects are put in service, as the efforts of construction that can be done in key spring and summer windows (to avoid impacts on protected animals and plants) are completed. This year is no exception, as an update of the PointLogic Energy gas pipeline data base indicates more than 30 projects could reach in service from Sept. 1, 2017 through the end of the year.
In this issue of “Get the Point,” we summarize those projects and look briefly at their potential market impact.
Overall, PointLogic has identified—and confirmed with their developers—31 projects in North America that are on track for in service by the end of the year. Combined, these projects will be able to transport about 14 billion cubic feet per day (Bcf/d) of natural gas. However, that volume should not be taken to represent a net increase in capacity because many of the projects are interrelated, and so their deliveries are linked rather than additive.
If there’s a theme to the projects, it could be summed up as: Appalachia. Eleven of the 32 projects originate in Pennsylvania or Ohio, indicating that they either support new Appalachia production or are moving higher volumes Marcellus and Utica gas on existing pipelines (see table).
In the last year, outflow capacity from the Marcellus and Utica has been increased by about 2.5 Bcf/d. This latest round of expansions (going into early 2018) will add another net 2.5 Bcf/d, or more.
In thinking about moving gas out of Appalachia, three prominent projects are reaching in service this fall (and in two cases, have already achieved partial in service): Rover Pipeline, Atlantic Sunrise, and Leach XPress/Rayne XPress.
Rover Pipeline is the biggest project coming online this fall—and probably the one with the highest profile nationally. Developed by Energy Transfer Partners (ETP), Rover is designed to move gas from West Virginia, Pennsylvania and Ohio to markets in the Midwest and Canada. When all of its phases are in service, it will provide new takeaway for up to 3.25 Bcf/d of Marcellus and Utica gas.
Source: Energy Transfer Partners
Rover Phase I, Part A went into service on Sept. 1, all in Ohio. According to PointLogic’s tracking service, volumes increased quickly within the first week and already are approaching 700 MMcf/d (see graph).
Taking gas off Rover are the Trunkline Backhaul and Panhandle Backhaul projects, each of which are in partial in service, too. At full operation, they will have capacity of 750 MMcf/d each. Panhandle takes Marcellus and Utica gas Rover at the newly constructed interconnect with PEPL near Defiance, Ohio into ETP’s Trunkline Gas Pipeline at PEPL’s existing Tuscola compressor station interconnect in Douglas County, Ill. The Trunkline project itself did not involve any new pipeline installations, but instead a series of additional compressors that raised the volumes that could be moved through existing lines.
The remainder of Rover Phase I is on track for in service by November 2017 and Phase II for December 2017 or early next year, says ETP.
The early impact of Rover Phase Ia has been modest strengthening of prices at the Dominion South hub.
The second project is Atlantic Sunrise, a Transco project that is coming online in phases, like Rover (see map). This three-phase, $3-billion project ultimately will move up to 1.7 Bcf/d of gas from Appalachia to the South and Gulf. Part of Phase I (call it Phase IA), came in service on Sept. 1, authorized by FERC for volumes of up to 400 MMcf/d.
The impact of Atlantic Sunrise Phase IA can be seen even in the first weeks of the first phase in operation. A good estimate of the flows supported by Atlantic Sunrise Phase IA can be found by using PointLogic’s data on flows through Maryland because the project is originating in Pennsylvania and moving south through Maryland to further destinations. For the month of August 2017, flows averaged 1.471 MMcf/d, but for the period of Sept. 1-13 they averaged 1.798 MMc/d, or a gain of 327 MMcf/d.
When Atlantic Sunrise Phase I is complete in November, it will support 850 MMcf/d of new gas flow.
The third major project affecting Appalachia production that is due for in service this fall is actually a pair of projects, Rayne XPress and Leach XPress, both on track for Nov. 1 in service.
Leach XPress is a Columbia Gas project (Columbia Gas has since been purchased by TransCanada) that will have capacity to move 1.5 Bcf/d of gas from Pennsylvania to Kentucky, where it will connect with the existing TCO pipe. From there, up to 1.1 Bcf/d of gas can flow on Rayne XPress, moving south to the Louisiana Gulf through an interconnect with Texas Eastern and on to a Columbia Gulf Transmission pipeline (see map). As with Trunkline Backhaul, the Rayne XPress project is mostly increased compression, as it entails only four miles of new pipeline.
Source: TransCanada (new parent company of Columbia Gas Transmission)
PointLogic is anticipating that these large new projects, in combination, will significantly reduce spreads between the Gulf (Henry Hub) and the Northeast, as Northeast producers see more outlets for their gas, and Gulf consumers, including LNG operators, have more options from which to procure gas.
The graph below shows an earlier timeline for many of these projects — some of which have been delayed are are only now coming in service, and others that are still on hold. Yet, even if the full buildout is delayed, the graph shows the immense increase in gas takeaway capacity that could provide outlets for Appalachian gas in the future.
While moving gas out of Appalachia is the biggest story of fall 2017, it’s not the only detectable trend. Several other projects are utilizing gas from the producing areas for more localized needs. Many of the projects coming into service later this year (and in 2018 and 2019) are driven by demand for specific markets.
In some cases, these projects can be thought of as moving gas within the Northeast, rather than moving it out of the region, as they serve demand sectors such as new gas-fired power plants and growing market share for natural gas home heating as it replaces heating oil or propane.
- Collierville Expansion Project a 200 MMcf/d project in Tennessee, which is designed for the Tennessee Valley Authority’s gas-fired power operations
- New Market, a 112 MMcf/d Dominion project, which will feed a power plant in New York State, as well as growing demand from LDCs serving New York customers who are switching from fuel oil and propane
- Virginia Southside Expansion, a 250 MMcf/d project in Virginia
- Northern Lights 2017 Expansion, a 77 MMcf/d project in Minnesota
- Continent to Coast Expansion Project, a 210 MMcf/d project to serve New England, being developed by TransCanada subsidiary Portland Natural Gas Transmission
The Garden State Expansion project, a Transco (Williams) project, is designed to increase deliveries in New Jersey, specifically to provide more system reliability by creating a parallel loop to towns on the New Jersey shore. Phase 1 of the project came in service on Sept. 8, and Phase 2 will come in service next year. The vulnerability of Jersey Shore towns became evident during Superstorm Sandy.
While small individually, these types of local, demand-oriented projects represent important incremental demand for gas production and support for an increasingly flexible gas infrastructure.
In addition to the localized projects, several other projects are designed to feed LNG exports or petrochemicals operations, in both cases aiming for export markets as the biggest growth opportunities.
Rayne XPress, noted above, will be delivering into networks in the Gulf that serve both LNG and petrochemical and industrial operations. In addition, Leidy South, which goes from Pennsylvania to Maryland, will deliver up to 155 MMcf/d to the Cove Point LNG facility that is aiming for commissioning volumes this fall. This will be the country’s second large LNG export facility, after Cheniere’s Sabine Pass.
The same can be said for a trio of related projects, all each developed by TETCO (now owned by Enbridge): Access South, Adair Southwest and Lebanon Extension. Access South will move up to 320 MMcf/d from Pennsylvania to Mississippi. Lebanon Extension is a scant two miles in length, serving as a link to Access South, and it came in service in August. Adair, picks up another 200 Bcf/d moves it further down to the Gulf.
The gas pipeline story so far this year has been Mexico exports, as numerous projects have reached in service to deliver gas to the U.S.-Mexico border, to cross the border or to move gas more deeply within Mexico to serve end users. More Mexico-inspired projects are due online this fall, including IEnova’s 1.5 Bcf/d El Encino-La Laguna Pipeline, a domestic Mexico project.
U.S. exports to Mexico are averaging 4.1 Bcf/d this summer, a seasonal record and 0.2 Bcf/d greater than summer 2016. Through the end of summer 2018, PointLogic projects that export capacity to Mexico could increase to 11.0 Bcf/d. Utilization of that capacity will be highly dependent on the expansion of Mexico’s power fleet and its ability to expand and transport gas across pipelines in-country as well (to be the subject of a future Get the Point).
From a demand perspective, the most striking conclusion one can draw is that exports are key to the majority of proposed capacity that will allow gas production in the continental U.S. to grow.
More insights on pipeline projects and their immediate impact will be available at the Natural Gas Next conference from PointLogic. Go to our conference agenda page for information about our New York City event on Sept. 25-26 or our Houston event on Nov. 16-17.