Atlantic Sunrise a boon for National Fuel Gas

National Fuel Gas' producing subsidiary Seneca Resources is now shipping about 189mn cf/d (5.3mn m³/d), or 37pc of its total output, on the new Atlantic Sunrise pipeline project.

The 1.7 Bcf/d project is designed to connect production from northern Pennsylvania with Transco's mainline, allowing that gas to flow to demand markets on the Atlantic coast and to the new Cove Point LNG facility.

The project provides "important takeaway" for Seneca's Lycoming County assets in the state, serving multiple contracts priced at a premium to Nymex, Seneca chief operations officer John McGinnis said.

Seneca has also entered into a new firm transportation commitment of 330mn cf/d on the Transcontinental Gas pipeline (Transco) through two pipeline projects being developed by National Fuel and Transco. National Fuel's FM100 project and Transco's Leidy South project will help Seneca develop its western development area in the Marcellus shale and flow gas from that acreage through the company's existing gathering and compression lines. Both projects would boost the producer's flows to Transco's zone 6 and are scheduled to begin service in late 2021.

National Fuel's 500mn cf/d Northern Access pipeline project has been on the back burner since the state of New York in 2017 denied a key water permit for the line. The US Federal Energy Regulatory Commission in August overruled the state's action, a development that chief executive Ron Tanski today said was "a giant step in the right direction." Tanski said the project is "still a couple of years and likely still a few legal challenges" away from construction. National Fuel is now estimating a 2022 start-up for the line.

Seneca produced 514mn cf/d of natural gas equivalent (cfe/d) in the three months ended September, up by 17pc from a year earlier. Capital expenditures for Seneca in fiscal 2018 were $356mn, within guidance for the year. The producer increased its proven reserves by 17pc to more than 2.5 Tcfe.

Seneca in fiscal 2019 is budgeting up to $495mn in capital spending, with as much as $470mn earmarked for its Pennsylvania acreage. The producer forecasts its 2019 output to be 575mn-630mn cfe/d, up by 24pc on the year at the midpoint. Seneca expects it will sell about 74mn cfe/d in the local spot market, which means those volumes are at risk of curtailment depending on in-basin pricing.