NFG Announces Two Pipeline Projects

June 2010 Vol. 237 No. 6

National Fuel Gas (NFG) announced its Pipeline Supply Corp. and Empire Pipeline subsidiaries have entered binding precedent agreements for the Northern Access and Tioga County Extension pipeline projects, respectively.

These pipeline projects will be one of the first to move Marcellus production to gas-hungry Canadian markets. These projects are expected to cost $105 million.

The Northern Access pipeline expansion is fully subscribed for 20 years with Statoil and will use NFG’s existing infrastructure to move 320,000 Dth/d of Marcellus Shale gas originating in Ellisburg, PA to the TransCanada pipeline system near Niagara, NY. NFG would add bi-directional metering and incremental compression to its system at an estimated cost of $60 million.

The Tioga County Extension, which has proposed capacity of at least 300,000 Dth/d, signed a 10-year firm precedent agreement with East Resources earlier for 200,000 Dth/d of firm capacity. NFG is in advanced negotiations with a second shipper for 150,000 Dth/d of capacity on the line. This project would add 16 miles of 24-inch pipe to connect Tioga County supply with Millennium Pipeline at Corning where it is expected to reverse flow to Canada. The project is estimated to cost $45 million and be in service by September 2011.

The two expansion projects expand NFG’s incumbent Marcellus gas infrastructure and alleviate producers’ constraints. NFG expects it will capture additional Marcellus infrastructure expansion opportunities as its open season was roughly 5x oversubscribed which reflects a positive indicator that many Marcellus producers are clamoring for solutions to midstream supply constraints.

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