Laclede Group to Tap Marcellus and Utica Shale Gas Supply

April 2016, Vol. 243, No. 4

Laclede Group plans to tap into a new natural gas supply with a pipeline connecting to the Marcellus and Utica shale formations in the eastern U.S. Laclede CEO Suzanne Sitherwood announced the project in an earnings call with investors and said it will help the natural gas distributor diversify its gas supplies.

“We are confident that adding this pipeline to our portfolio is the right choice,” she added.

The planned 60-mile pipeline would head north from the St. Louis area through southwest Illinois and connect into the Rockies Express and Panhandle Eastern Pipeline. That would give St. Louis-based Laclede’s Eastern Missouri utility, Laclede Gas, access to natural gas from shale formations in Pennsylvania, Ohio and West Virginia.

Sitherwood said the project should cost $170-200 million and is still several years away. It will require approval from FERC because it will cross Missouri and Illinois. She said it will go into service 30-36 months after FERC next solicits gas pipeline projects.

The ownership structure of the new pipeline, however, is still being worked out, Sitherwood said. The company has looked at a range of options.

“We want to make sure this project is solid under any scenario, and it is, quite frankly,” she said.

Should the project be approved, it would provide a new, large source of natural gas as electric utilities look to retire older coal power plants and generate more power with cleaner natural gas and renewables.

St. Louis utility Ameren Missouri has said it expects to build 600 MW of natural gas power to replace retiring coal plants in coming years, but the utility has warned the region will need a larger supply of gas to provide enough for power generation in addition to home heating.

Asked about partnering on the pipeline with an electric utility, Sitherwood said “there certainly could be some synergies between a gas company and an electric company” if the electric utility needs gas to replace coal.

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