FERC approves two pipelines at deadline
Prior to losing quorum last Friday, the Federal Energy Regulatory Commission (FERC) approved the Rover Pipeline and the Atlantic Sunrise Pipeline, which will transport gas out of the Marcellus and Utica Shale to other parts of the United States and Canada. The pipelines are estimated to boost prices in Pennsylvania by as a much as $2 a cubic foot and help alleviate some of the oversupply in the region.
The pipeline system in the United States was originally designed to transport gas INTO the northeastern states and cities from Texas and Canada. The system was not originally capable of carrying gas OUT of the Marcellus and Utica Shale to other areas, and even to their own states. Once gas was discovered in Appalachia, the scramble was on to not only build a pipeline system to transport gas out of the region but to reverse the flow on some of the existing pipelines. While gas has been produced in the Marcellus and Utica Shale for several years now, the approval and construction of new pipelines has been slow to develop, resulting in a surplus of gas to build up in the region. Pipeline constraints have caused large spot pricing disparities between Appalachia and the Henry Hub benchmark in Louisiana. Adding more pipelines capable of carrying Marcellus and Utica Shale gas to other regions should narrow this gap.
While the Rover and Atlantic Sunrise were approved, the Nexus Pipeline, which is a joint venture between Spectra Energy Corp. and DTE Energy Co., did not receive approval before the quorum was lost and now could face a significant delay. DTE stated that DTE and Spectra remain committed to the Nexus Pipeline starting up by the end of 2017, pending a new FERC quorum.
Here’s a more detailed look at the Rover Pipeline and the Atlantic Sunrise Pipeline:
The Rover Pipeline is a $4.2 billion, 715-mile pipeline that will run from Pennsylvania to Michigan. The Rover Pipeline will transport 3.25 billion cubit feet per day (Bcf/day). Analysts at U.S. financial services firm Cowen and Company said that the approval of construction of Rover will benefit several companies that plan to ship gas on it, including Antero Resources, Eclipse Resources, EQT, Gulfport Energy, Rice Energy, Range Resources, and Southwestern Energy.
Atlantic Sunrise Pipeline
The Atlantic Sunrise Pipeline is a $3.8 billion, 200-mile pipeline through Pennsylvania which will connect to existing Transco pipeline transporting natural gas to the Mid-Atlantic and southeastern states. Additional existing Transco facilities will also be modified to allow gas to flow bi-directionally. Cabot Oil & Gas will be the main shipper in the Atlantic Sunrise Pipeline with 850 million cubic feet per day capacity. Additional companies that have agreed to ship gas on Atlantic Sunrise include Chief Oil & Gas and Seneca Resources.