FERC issues positive final EIS for Nexus and TEAL

The US Federal Energy Regulatory Commission (FERC) has prepared a positive final environmental impact statement (FEIS) for a major Marcellus and Utica shale natural gas pipeline project.

FERC issued the FEIS for the Nexus Gas Transmission and Texas Eastern Appalachian Lease (TEAL) project this week, saying adverse impacts from the pipelines could be reduced to less-than-significant with certain measures.

Spectra Energy and DTE Energy are the lead developers of the 256-mile (412km) greenfield pipeline system. The Nexus project, in conjunction with the TEAL project, would provide 1.5 Bcf/d (42mn m³/d) of take away capacity from the growing Marcellus and Utica shale regions to markets in northern Ohio, southeastern Michigan and Dawn, Ontario, and down to the US Gulf coast.

The TEAL project will provide delivery capacity of 918mn cf/d from the Texas Eastern pipeline system to the proposed Nexus pipeline in Columbiana county, Ohio. The capacity is essential to Nexus operation.

"The issuance of the FEIS is another timely, major project milestone that keeps Nexus on track to receive its certificate in the first quarter of 2017," Spectra Energy said.

The pipeline is on schedule to be in-service during the fourth quarter 2017, DTE Energy chief financial officer Peter Oleksiak said during the third quarter earnings call.

The projects will also require numerous approvals from other federal and state agencies and from regulators in Canada for sections of pipeline operating in that country. The expected in-service date is contingent to all approvals.

The FEIS moves the Nexus project forward as other projects have face continued regulatory hurdles and cancellation because of a lack of interest.

Kinder Morgan in April suspended the market portion its 1.3 Bcf/d (37mn m³/d), $3.1bn Northeast Energy Direct, or NED, because of a lack of customer commitments. Williams was recently denied a key water permit by the New York state regulators for the 628mn cf/d, $748mn Constitution pipeline.

TransCanada last month cancelled its plan to lower the toll on its Canadian Mainline natural gas pipeline from the Empress receipt point in Alberta, Canada, to the Dawn storage for lack of interest. The lower toll was proposed to help Canadian producers retain market share in eastern Canada, US northeast and the midcontinent, so the cancellation is viewed as beneficial to US northeast producers planning to deliver to those markets.

US gas prices are on the rise because of high demand from the power sector, rising exports and production declines. But the lack of takeaway capacity has depressed key benchmark hub pricing in stranded production areas like the Marcellus and Utica.

Spot gas prices on Transco zone 4 Marcellus averaged at 85¢/mmBtu in October, about $2.01/mmBtu below the prices at Chicago Citygates. Prices on Transco zone 4 Marcellus averaged $1.40/mmBtu lower than Chicago in the year earlier.