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Tetco expansions combine for nearly 1 Bcf/d boost

24 Aug 2017 20:20 (+01:00 GMT)
Tetco expansions combine for nearly 1 Bcf/d boost

Houston, 24 August (Argus) — Expansions on the Texas Eastern Transmission (Tetco) natural gas pipeline will combine to increase flows on that line by nearly 1 Bcf/d (28mn m³/d) by the end of this year, and are expected to support prices at Tetco M-2 in the coming months.

The pipeline's Gulf Markets Expansion Phase 2, Access South, Adair Southwest and Lebanon Extension projects will add more takeaway capacity for Marcellus shale gas in Tetco's M-2 zone, and should alleviate what has become a bottleneck at the Berne, Ohio, compressor station.

Tetco M-2 winter discounts to the Henry Hub have tightened over the course of the year amid expectations that removing the bottleneck will get more gas to higher-priced markets. Argus natural gas forwards at the beginning of the year showed winter 2017-18 prices at M-2 trading at a discount of nearly $1/mmBtu to the US benchmark. That same seasonal block yesterday traded at a 38¢/mmBtu discount.

Tetco has opened the door to higher southward flows with the completion of its full Gulf Markets expansion earlier this month. Phase 1 of the project, which included modifications at five compressor stations located in Ohio, Kentucky, Tennessee, Missouri and Louisiana, began flowing in October. Phase 2, which included modifications to two compressor stations in Louisiana and a new unit at a station in Texas, brought the project to its full capacity of 628mn cf/d on 1 August.

The project was designed to remove constraints in Louisiana and Texas by installing a new compressor station and unit there and allowing for bi-directional flow on the system. Gulf Markets subscribers include independent producers EQT and Range Resources.

A main driver behind the Gulf Markets expansion is increased demand for exports to Mexico and LNG demand from the Sabine Pass LNG terminal, located along the Sabine Pass river between Texas and Louisiana.

The lower leg of Tetco's mainline has had increasing flows to the Gulf with gas sourced from Appalachia since 2014, said Morningstar Commodities Research.

"Although the project involves no direct modifications to compressor stations or pipelines in the northeast, we expect the added capacity to increase takeaway from the Marcellus region by 400mn cf/d," the firm noted.

In November the pipeline's Access South project will bring an added 309mn cf/d of capacity from Uniontown, Pennsylvania, to Kosciusko, Mississippi. That project includes 16 miles (26km) of pipeline looping and additional compression at existing stations. Rice Energy is an anchor shipper on the project.

The 193mn cf/d Adair Southwest project will boost flows from Uniontown to Adair County, Kentucky, also in November. Tetco will install another 16 miles of looping and add compression at existing stations for this project. The anchor shipper for Adair Southwest is Range Resources.

Finally, the Lebanon Extension will add 99mn cf/d from Uniontown to Lebanon, Ohio, via 16 miles of pipeline looping and added compression. The project will add bi-directional flow to the Lebanon compressor station and will allow Marcellus gas to meet increased gas-fired power demand in the state of Ohio. The extension is also planned to be completed in November.