NFG, Williams partnering on Transco expansion

National Fuel Gas (NFG) is partnering with Williams on a potential 290mn cf/d (8mn m³/d) pipeline expansion in order to find an outlet for its production subsidiary's Appalachian shale output.

The new project would relieve some of the natural gas stranded by NFG's sidelined 473mn cf/d Northern Access pipeline project, which was originally planned to begin flows this year. The New York Department of Environmental Conservation denied the project a key water permit last year, resulting in the project being tied up in the courts.

The Williams project would be an expansion of its Transcontinental Gas pipeline (Transco), allowing gas produced by NFG subsidiary Seneca Resources to flow into Transco zone 6 by way of the Leidy Line in northern Pennsylvania, NFG executives said on an earnings call today. NFG and Williams have signed agreements to develop the project, which is still in the early stages of planning. Transco is holding discussions with other shippers to see if the project could be expanded on certain portions into zone 6. The companies are planning for the expansion to begin service in late 2021.

NFG is considering modifying an existing modernization project in the pre-filing stages with the US Federal Energy Regulatory Commission (FERC) to build the first leg of transportation to connect with the Leidy Line.

NFG may pursue both the new Transco expansion and Northern Access, if the latter project becomes viable again, chief executive Ron Tanski said. The company expects long lead times for materials and equipment if Northern Access moves ahead, allowing Seneca to adjust its output ahead of start up, which could be as early as the fall of 2020, Tanski said.

"We believe both routes offer good value and access to different markets," and Seneca has "the acreage and well inventory to fill both pipes," Tanski said.

The 97-mile (156km) Northern Access line would transport gas from Pennsylvania to New York, the northeast US and into Canada.

NFG in February filed its 198mn cf/d Empire North pipeline expansion project with FERC. That project is fully subscribed and would add compression to an existing pipeline by way of a new compressor station in New York. The expansion is planned to begin service in mid- to late 2020.

Seneca produced 512mn cf/d of natural gas equivalent (cfe/d) during the first quarter, up by 1pc from a year earlier. The production subsidiary plans to add one rig this quarter ahead of a 190mn cf/d boost in takeaway capacity this summer once the 1.7 Bcf/d Atlantic Sunrise pipeline comes on line to shuttle gas to the Cove Point LNG export terminal.