The Star Beacon; Ashtabula, Ohio

World, nation, state

March 9, 2013

Major pipeline planned for Northeastern Ohio

YOUNGSTOWN — Oklahoma-based Williams and Houston-based Boardwalk Pipeline Partners announced Thursday a joint venture to develop a major pipeline to connect the Marcellus and Utica Shale plays to processing and export facilities on the U.S. Gulf Coast.

The proposed “Bluegrass Pipeline” design would provide producers with 200,000 barrels per day of mixed natural-gas liquids transportation capacity in Ohio, West Virginia and Pennsylvania. The proposed pipeline could be increased to 400,000 barrels per day to meet market demand, primarily by adding additional liquids-pumping capacity.

Thursday’s announcement is the latest in a string of plans for infrastructure development across the region, representing billions of dollars in investment as operators continue to produce more oil and gas with few options to transport the products in an economical way.

A slowdown has occurred in some parts of the Marcellus and Utica Shale plays as companies await pipeline expansions such as the Bluegrass project. At the same time, a drop in the wholesale price of dry natural gas has turned operators’ attention to liquid-rich portions of the formations, where they can extract energy-rich pockets of condensate, ethane, gas and oil that fetch higher prices in multiple markets.

Company officials at Williams estimate that current liquid systems and local outlets will be overwhelmed by 2016. Total natural-gas liquid volumes in the Northeast are expected to exceed 1.2 million barrels per day by 2020, said Alan Armstrong, president and chief executive of Williams.

The pipeline will deliver mixed liquids from producing areas in Ohio, West Virginia and Pennsylvania to proposed new fractionation and storage facilities, which would have connectivity to multiple petrochemical facilities and product pipelines along the coasts of Louisiana and Texas.

“We are designing Bluegrass Pipeline to provide these two world-class resource plays with access to one of the largest and most dynamic petrochemical markets in the world,” Armstrong said. “This will help producers in Ohio, Pennsylvania and West Virginia achieve an attractive value for their ethane and other liquids.”

Williams spokesman Tom Droege said that although no locations have been determined, the pipeline will originate at multiple points in Ohio and West Virginia.

The companies still are working out cost estimates. Droege added that “for some time, we’ve recognized the need to move these liquids out of the Northeast to markets where there is demand for them. This has been under consideration for some time now.”

By combining new construction with about 60 percent of existing pipeline, owned by Boardwalk and known as the Texas Gas Pipeline, the companies believe that Bluegrass Pipeline’s in-service date can be expedited to 2015 and significantly reduce the construction footprint.

Points of origin in Ohio and West Virginia would be hooked up to an interconnect in Kentucky, where a portion of the existing system would be converted to accommodate natural-gas liquids.

Also included in the project are plans for a large-scale fractionation plant and expanding natural-gas liquids storage facilities in Louisiana.

The project and the joint venture will be subject to board and regulatory approvals before it can move forward.

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