DTE: Nexus pipeline on schedule for 4Q 2017

The 255-mile Nexus Gas Transmission pipeline has gained additional customer commitments and is on schedule to be in-service during the fourth quarter 2017.

The pipeline signed its first tap and interconnect agreement in Ohio with a local distribution company, DTE Energy senior vice president Peter Oleksiak said during an earnings call this week.

Spectra Energy and DTE Energy are developing the project to ship 1.5 Bcf/d (42mn m³/d) of Marcellus and Utica shale gas to Ohio, Michigan, Chicago, the US Gulf coast and Ontario, Canada.

Nexus is expected to provide an outlet for that gas and support future production growth. The US gas market is expected to be tight through much of 2017 as associated gas production will continue to fall and little incremental northeast infrastructure will be online until late in the year, according to investment bank Tudor Pickering Holt.

US gas prices have increased this year because of high demand from the power sector, increased exports and slight production declines. But key benchmark hub pricing is not seen in stranded production areas like the Marcellus and Utica.

Spot gas prices at Chicago Citygates averaged at $2.93/mmBtu in October, up 53pc from April. Prices on Transco zone 4 Marcellus fell 32pc to an average of 90¢/mmBtu in October.

Some pipeline projects that would ship northeast gas face high regulatory hurdles or have been cancelled because of a lack of interest. But interest on Nexus is growing and regulatory responses so far have been positive.

There are about 1.75 Bcf/d of possible interconnect customers along the Nexus pipeline. DTE expects to sign long-term contracts with some of them and "that is how we are expecting to help build out the pipe," Oleksiak said.

Nexus already had long term commitments of about 806mn cf/d signed by seven shippers for 15 years in precedent agreements, according to filings at US Federal Energy Regulatory Commission. DTE Gas is one of the companies, taking 150mn cf/d of capacity on the pipeline.

Nexus received a draft environmental impact statement (EIS) from FERC in July. DTE expects the final EIS from FERC in November and a certificate of construction during the first quarter of 2017.