Monday, May 7, 2012

Transco's Atlantic Access Pipeline Project delayed

A billion dollar-plus interstate pipeline planned to move natural gas from the West Virginia panhandle to the Eastern Seaboard is being delayed due to the sharp drop in natural gas prices.

The Atlantic Access Pipeline Project will be ready for service in 2015, rather than the 2014 date announced late last year, a company spokesman said.

"This delay is a result of historically low natural gas prices," said Christopher Stockton, spokesman for Transco, a division of Williams Co. Inc. of Houston. "Natural gas producers who are interested in moving gas on the pipeline have expressed to us that they would be better served by a 2015 in-service date rather than a 2014 service date."

The price of natural gas has been declining, in large part due to oversupply resulting from fracking, but in part due to the unusually warm winter reducing demand.

Natural gas prices of $4 per 1,000 cubic feet were not uncommon in the winter of 2011, but those prices have fallen to decade lows of less than $2, according to the U.S. Energy Information Administration.

The result has been a cutback in drilling by a number of companies in the Marcellus Shale region.

"Nobody is going to be able to (afford) to drill dry gas at $2," said Lou D'Amico, executive director of the Pennsylvania Independent Oil & Gas Association.

Drilling has not slowed as much in southwestern Pennsylvania, where companies are tapping the wet Marcellus gas that provides by-products, or in Ohio, where the Utica shale is located.

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