Multiple deals inked to move Marcellus gas to Gulf Coast, Canada

Midstream company Energy Transfer Partners said Thursday it is planning a new pipeline to connect Marcellus and Utica shale production to Canada and the Gulf Coast.

Meanwhile, Range Resources, a drilling company with operations in the shale plays, inked multiple deals to ship natural gas and ethane on one of Energy Transfer‘‍s projects and others targeting production from the northeastern shale plays.

Dallas-based Energy Transfer Partners approved building a new pipeline to transport natural gas from processing facilities in the prolific Marcellus and Utica. The company said it signed long-term agreements with multiple shippers and is launching a binding open season for drillers to reserve space on the pipeline system.

The planned natural gas pipeline, called ET Rover Pipeline, is currently sized to transport 2.2 billion cubic feet per day (Bcf/d). Depending on additional shipper commitments, the project could be expanded to transport up to 3.25 Bcf/d.

Energy Transfer said the three largest shippers on the project are American Energy–Utica, Antero Resources and Range Resources. American Energy and Antero Resources both have options to purchase non-operating equity interests in the project, according to Energy Transfer Partners.

The first 400 miles of the pipeline project will take natural gas from Pennsylvania, West Virginia and Ohio to points of interconnection with Energy Transfer’s existing Panhandle Eastern Pipe Line and another Midwest pipeline near Defiance, Ohio.

Shippers in the ET Rover project also will be able to use the system to access industrial markets and potential liquefaction export markets in the Gulf Coast.

Additionally, ETP expects to build a 195-mile segment from the Defiance area through Michigan and ultimately to the Union Gas Dawn Hub (Dawn) near Sarnia, Canada.

The open season for shippers to secure capacity on the pipeline begins Friday. Initial service to the Midwest Hub near Defiance, Ohio, and Gulf Coast markets could happen by the fourth quarter of 2016, and the remaining service to markets in Michigan and Canada by the second quarter of 2017, Energy Transfer said.

In Range Resources’‍ deal with Energy Transfer, it agreed to transport up to 400,000 million cubic feet per day (MMcf/d) for 20 years starting in October 2017, the Fort Worth, Texas-based driller said Thursday.

In addition, Range said it had signed its first two agreements to supply liquefied natural gas (LNG) from the Appalachian Basin, the vast geological formation that includes the Marcellus and Utica.

Range inked a deal with Cheniere Energy, the Houston-based developer of the Sabine Pass LNG export project in Cameron Parish, Louisiana. The Sabine Pass facility is expected to start service in late 2015, and Range is expected to supply gas to the facility for five years starting in 2017, the company said Thursday.

Range said it also signed an agreement with another unnamed company to supply natural gas to another LNG terminal for a term of 10 years.

And the company said it is in “active discussions with several major international companies to supply natural gas to other LNG facilities.” It noted it has existing firm capacity agreements to supply gas to these LNG customers.

Additionally, Range said it executed two more fixed-term agreements for its ethane production.

The first contract will potentially supply an affiliate of Sasol Ltd., a South Africa-based energy company, with 10,000 barrels of ethane per day for a multi-year term. Range expects to use its transportation capacity on the Appalachia-to-Texas Express pipeline to supply the contract.

Sasol expects to reach a final investment decision later this year on its proposed 1.5 million ton per annum ethane cracker near Lake Charles, Louisiana.

The second ethane agreement would supply Ascent, the petrochemical complex planned by the Odebrecht Organization in Parkersburg, W.Va. That ethane agreement commits Range to 5,000 barrels per day for a term of 15 years.

"Range's marketing team continues to expand our marketing capabilities for natural gas and ethane,” said Jeff Ventura, Range's CEO, in a statement. “The Rover pipeline provides Range flexibility in selling natural gas to high demand markets in Canada and the Gulf Coast, while the LNG and ethane supply agreements further diversify and strengthen our customer base with industry leading companies.

“These various contracts support our plan to grow production by 20 percent to 25 percent for many years giving us base contracts in place with leading companies in key areas that allow for possible future expansion," Mr. Ventura added.

Stephanie Ritenbaugh: or 412-263-4910

First Published June 26, 2014 11:41 AM

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