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    Moving Marcellus, Utica gas to the Southeast – Part three

    Housley Carr for RBN Energy

    The southern half of the Eastern Seaboard is a logical market for the natural gas surplus that will be flowing out of the Marcellus/Utica in coming years. Annual gas consumption in the fast-growing Maryland-to-Florida region now tops 8.7 Bcf/d and is rising quickly, largely due to the ongoing shift from coal-fired to gas-fired power generation. The region is close to major gas production areas in Pennsylvania, West Virginia and Ohio, and already has Williams’ Transco mainline, the gas-transportation equivalent of an eight-lane highway, as well as other Trunkline interstate pipes running right through it.  In this episode of our series on moving gas out of the Marcellus/Utica, we look at pipeline projects Williams and others are planning to transport gas to Southeast consumers.

    In our series opener, we discussed how quickly gas production has been rising in the Marcellus/Utica (from 2 Bcf/d in 2010 to more than 15 Bcf/d now and an estimated 22 Bcf/d by 2019), and how the regional and interregional pipeline network has been struggling to catch up. Production in the “dry gas” area in northeastern Pennsylvania (now at 7.8 Bcf/d) is set to rise to 10.4 Bcf/d within five years. We also noted that a lot of the initial push on increasing takeaway capacity involves moving gas from northeastern Pennsylvania into New York, New Jersey, New England and Ontario, and how midstream companies are now giving more attention to moving gas west and south. In Part 2, we explored plans by Spectra Energy to rework its Texas Eastern Transmission (TETCO) mainline to allow southbound gas deliveries. We also looked at Spectra’s plan (with NextEra Energy) to build the 460-mile, 1.1 Bcf/d Sabal Trail gas pipeline from Transco’s Station 85 (in west-central Alabama) to near Orlando by May 2017.

    The six-state Maryland-to-Florida region (Maryland, North Carolina, South Carolina, Georgia, Virginia and Florida) is increasingly hungry for gas. The latest gas consumption numbers from  the US Energy Information Administration, (EIA), show the region using 3.2 Tcf in 2012 (or 8.7 Bcf/d)—up 38% from 2007 (see Figure #1). Gas-fired power plants in the region consumed about 2.0 Tcf (or 5.3 Bcf/d) of the 2012 total, accounting for 62% of the regional demand. Several new gas-fired power plants are under development, and more coal units are being retired, so gas consumption by the power sector will only rise.

    Figure #1

    Source: EIA

    Florida Power & Light (a NextEra subsidiary that depends on natural gas for 70% of its power output) and other Sabal Trail customers are counting on that new pipeline (and a planned lateral from Orlando to South Florida) to deliver Marcellus/Utica gas as far south as South Florida, a feat to be made possible by Williams’ Atlantic Sunrise project, which by the second half of 2017 will allow up to 1.7 Bcf/d to flow south on Transco to Station 85. Atlantic Sunrise will consist of 178 miles of greenfield pipeline (red lines in Figure #2), two pipeline loops totaling 15 miles, and new compressor stations and other enhancements. Receipt points for Marcellus/Utica gas delivered via Atlantic Sunrise will be along a prime stretch of Marcellus activity: Transco’s Leidy Line between the existing Grugan Interconnect in Clinton County, PA and Transco’s Station 515 in Luzerne County, PA. The gas would run to Transco’s mainline, which with the Atlantic Sunrise project’s improvements will make the mainline bi-directional through Transco zones 4, 5 and 6. Atlantic Sunrise is actually only one of several Transco-related projects aimed at adding bi-directionality and southbound capacity to the mainline. It will be a follow-up to Williams’ Leidy Southeast project, which by December 2015 will enable 525 MMcf/d of Marcellus/Utica gas to move south by building about 30 miles of additional looping in Pennsylvania and New Jersey.

    Figure #2

    Source: Williams

    In addition to the bi-directionality work Williams is planning on the Transco mainline, the company wants to build at least four major laterals to transport Marcellus/Utica gas off the mainline to customers in Maryland, Virginia, North Carolina and Georgia. They are (in order, from north to south):

    • The Rock Springs Lateral, which by August 2016 will add 11 miles of new, 20-inch-diameter pipeline (nine miles in Lancaster County, PA and two in Cecil County, MD) and allow 192 MMcf/d to move from the Transco mainline to a 1,000-MW, gas-fired plant being planned by Old Dominion Electric Cooperative.
    • The Virginia Southside Expansion, which will run 100 miles of new, 24-inch-diameter, west-to-east pipeline across the central portion of Virginia’s southern tier--from the Transco mainline in Pittsylvania County, VA to Brunswick County, VA—and end at a planned 1,300-MW, gas-fired plant Dominion Virginia Power is developing. The pipeline project, to be completed by September 2015, will provide 270 MMcf/d of incremental capacity.
    • The Dalton Expansion, a 106-mile lateral that will connect to the Transco mainline in Coweta County in northwestern Georgia and run north to existing Oglethorpe gas-fired units in Murray County, GA. The target date for completing the 448 MMcf/d pipeline project is May 2017.

    The Hillabee Expansion, which will provide the needed physical connection between Transco’s Station 85 in Choctaw County, AL and the northwestern terminus of the Sabal Trail pipeline in Tallahoosa County, AL. Hillabee will involve 43 miles of new pipeline looping, and will provide a 818 MMcf/d link to Sabal Trail by May 2017; a second phase will add another 206 MMcf/d of capacity by May 2020 and a third phase will add another 106 MMcf/d by May 2021. Sabal Trail’s link to Station 85 will allow Florida customers to ship gas from the connected Transco Zone 4 Pool, Midcontinent Express Pipeline (MEP) and Gulf South pipeline. That versatility of supply means Sabal Trail will have access to natural gas supplies from the Gulf Coast as well as gas supplies from the Midcontinent (such as the Haynesville, Woodford, Fayetteville, Barnett shale) and, with Atlantic Sunrise, from the Marcellus/Utica too.

    Williams is not the only midstream company planning pipeline projects to help move Marcellus/Utica gas south. For instance, Dominion Transmission (subsidiary of Dominion, and sister company to Dominion Virginia Power) in mid-April started a non-binding open season for the proposed Southeast Reliability Project, a new pipeline (of as-yet-unknown length or capacity) that would run “from the Marcellus and Utica shale production regions to markets in Virginia and North Carolina. According to Dominion’s recent (April 30) investor call, the company saw the need for gas infrastructure in the Virginia-North Carolina region “coming out of [the polar vortex] this February and the reliability issues associated with that.” The line could be in service as soon as November 2018. More details will be available this summer. (Dominion Transmission also is planning a Pennsylvania-Ohio takeaway project; we will take a look at that in our next episode).

    Yet another pipeline project in the Southeast tied to Marcellus/Utica gas supplies will likely emerge from a request for proposals Duke Energy and Piedmont Natural Gas issued in April. Duke (whose Duke Energy Carolinas and Duke Energy Progress utility subsidiaries have been building several new gas-fired plants) and Piedmont (which supplies all the new plants) are looking for proposals for a pipeline that could deliver at least 900 MMcf/d through the heart of North Carolina starting in late 2018. (As we noted in Part 2, Spectra is developing a $4 billion, 1.1 Bcf/d pipeline from the Marcellus to North Carolina in response to the Duke/Piedmont RFP.) Having covered Spectra’s plans for southbound and westbound Marcellus/Utica take-away projects in Part 2 and plans by Williams and others to move Marcellus/Utica gas into the Southeast, we will continue our series next time with a look at several projects that will help move gas from Ohio, West Virginia and Pennsylvania to the Midwest and to LNG-export and other consumers along the Gulf Coast.

     

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