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.

Penn Virginia buying Marcellus pipelines for $1 billion

NEW YORK - Penn Virginia Resources Partners L.P. (NYSE: PVR) said on April 10 that it will pay $1 billion to buy privately-held pipeline firm Chief Gathering LLC. Radnor, Pa.-based Penn Virginia said the acquisition will expand its presence in the Marcellus Shale in Pennsylvania and West Virginia.

Chief Gathering, which is owned by Chief E and D Holdings LP, is a midstream pipeline company with operating assets serving Marcellus Shale natural gas producers primarily in northeastern Pennsylvania.

Customers of Chief Gathering LLC include Chesapeake Energy Corp., Anadarko Petroleum Corp. and Exxon Mobil Corp.

Private-equity firm Riverstone Holdings LLC will be a significant owner of PVR units following the acquisition.

The transaction, when closed, will result in a major expansion of PVR's pipeline systems in the gas-rich Marcellus Shale.

PVR expects to finance the purchase through a combination of committed equity and debt. The transaction is expected to close in the second quarter of 2012, subject to regulatory clearances and other customary closing conditions.

Chief Gathering's assets include six natural gas gathering systems serving over 300,000 dedicated acres in Bradford, Lycoming, Sullivan, Susquehanna, Wyoming and Greene Counties, Pa., and Preston County, W. Va.. Additionally, Chief Gathering is currently constructing a new 750 MMcfd trunkline, anticipated to be in service in the third quarter of 2012, extending from northern Wyoming County to Luzerne County with a connection to Transco's interstate pipeline. PVR currently owns two gathering systems in Lycoming and Wyoming Counties, with a third system in early stage development in Susquehanna County.

William H. Shea, Jr., Chief Executive Officer of PVR's general partner, said, "We expect that by year-end 2013 our midstream business unit will account for almost 75 percent of PVR's EBITDA, up from 40-45 percent today. These assets, together with our Lycoming and Wyoming County gathering assets, position us well to capture significant midstream opportunities in six of the most prolific counties in the northeastern area of the Marcellus Shale. We believe that there are substantial operating synergies and capital cost savings to be realized because of the proximity of the PVR and Chief Gathering systems, and the connectivity to both the Transco and Tennessee interstate pipelines.”

All of the gathering, compression, and dehydration services for the Chief Gathering systems are provided under fee-based agreements with active Marcellus producers including Chesapeake, Anadarko, Statoil, Mitsui, EXCO/BG Group, ExxonMobil/XTO, Chief, Enerplus and Chevron.

As of February 2012, volumes on the Chief Gathering systems were approximately 235 MMcfd and volumes on PVR's Marcellus systems were approximately 210 MMcfd. The new Wyoming County trunkline has 15-year firm transportation volume commitments of 255 MMcfd for 2012, increasing to 355 MMcfd in 2013.

The purchase price of $1.0 billion, subject to adjustments to reflect, among other things, a Jan. 1, 2012, economic effective date of the acquisition, will be paid in a combination of cash and the issuance to Chief of $200 million in a new class of PVR limited partner interests ("Special Units"). The Special Units are substantially similar to PVR common units, except that the Special Units will not pay or accrue distributions until they automatically convert to common units, on a one-for-one basis once the Special Units have not received six consecutive quarterly distributions following issuance.

Enterprise extends open season for capacity on ATEX Express pipeline

HOUSTON, Texas - Enterprise Products Partners L.P. (NYSE: EPD) announced on Jan. 10 that it is conducting a two-week supplemental open commitment period to accommodate additional shipper demand on the partnership's Appalachia to Texas pipeline ("ATEX Express").

Earlier in January, Enterprise said that it had received sufficient long-term transportation commitments to move forward with development of the 1,230-mile ATEX Express pipeline, which will deliver growing ethane production from the Marcellus/Utica Shale areas of Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast.

"Since our announcement to proceed with development of the ATEX Express pipeline, we have received multiple inquires from producers seeking transportation capacity," said A.J. "Jim" Teague, executive vice president and chief operating officer of Enterprise's general partner. "We will use this extended open commitment period to execute additional binding, 15-year transportation agreements." 

The open commitment period ends Jan. 23.

Chesapeake, Enterprise line to ship ethane from Northeast to Gulf Coast

HOUSTON, Texas - Chesapeake Energy Corp. said on Nov. 2 that it will anchor Enterprise Products Partners LP's proposed ethane pipeline from northeastern states to the Gulf Coast.

The companies did not disclose financial details of their long-term contract.

The pipeline would have an initial capacity to carry 125,000 barrels per day (b/d) and could be expanded, the companies said.

Shippers who commit to use the pipeline would pay between 14.5 cents and 15.5 cents per gallon.

The companies said the pipeline would deliver ethane produced in the Marcellus and Utica shale formations of Pennsylvania, West Virginia and Ohio about 1,230 miles to their storage complex for natural gas liquids in Mont Belvieu, Texas.

The pipeline could begin operating in early 2014, they said.

UGI Energy to spend $150 million building Marcellus Shale gas pipeline

SPRING TOWNSHIP, Pa. - UGI Energy Services Inc. has announced that it will spend about $150 million to build an underground pipeline to extend its reach from the Marcellus shale region of Pennsylvania.

The midstream and energy marketing unit of UGI Corp. will extend for 28 to 30 miles from its Auburn Gathering System.

The pipeline will connect the southern part of Susquehanna County and northern Wyoming County to an undetermined location and include a connection to the Transcontinental (Transco) gas pipeline.

"We'll be taking the gas to market," Terranova said. "It's a brand-new pipeline."

He said that UGI Energy will buy land along the route and will own the rights to construct and operate the pipeline on that land.

He added that the company will have to get permits wherever they are required on the state, county and local levels.

Terranova said he expects that several hundred jobs will be created between the contractors working on the pipeline and those employed by UGI. About 230 employees work at the Spring Township headquarters.

El Paso announces MPP project to expand Tennessee Gas PIpeline's 300 line in Pennsylvania

HOUSTON, Texas - El Paso Corp. (NYSE: EP) on Oct. 7 announced that its wholly owned subsidiary, Tennessee Gas Pipeline Co. (TGP), has executed long-term agreements for the MPP project which will expand TGP's 300 Line in Pennsylvania.

The 240,000 dekatherms per day (Dth/d) project includes approximately eight miles of 30-inch pipeline, looping and modifications to four existing compressor stations in Pennsylvania to provide natural gas transportation from the Marcellus Shale supply area to existing delivery points on the TGP system.

All of the capacity is subscribed through agreements with Chesapeake Energy Marketing, Inc., a wholly-owned subsidiary of Chesapeake Energy Corp. for 140,000 Dth/d and Southwestern Energy Services Company, a wholly-owned subsidiary of Southwestern Energy Co., for 100,000 Dth/d.

"We are pleased to announce our fourth expansion project in as many years which brings our total investment in Marcellus infrastructure to $1.3 billion and adds nearly 1.5 Bcf/d of capacity," said Norman Holmes, president of Tennessee Gas Pipeline. "This project leverages TGP's strategic location and provides significant new firm transportation capacity for two prominent Marcellus Shale producers."

Capital for the MPP project is expected to be less than $100 million.

TGP anticipates filing a certificate application for the project with the Federal Energy Regulatory Commission in late 2011. Pending regulatory approvals, construction would begin in 2013, with a Nov. 1, 2013, in-service date.