More Details On The REX Natural Gas Pipeline Reversal From Marcellus/Utica To The Midwest -- March 28, 2016

Updates

March 30, 2016: update -- breaking today -- Tallgrass will buy Sempra's stake in REX for $440 million:

• Tallgrass Development agrees to acquire Sempra Energy's 25% membership interest in the Rockies Express Pipeline for $440M.
• The 1,712-mile natural gas transmission pipeline extending from Wyoming and Colorado to Ohio is one of the largest natural gas pipelines in North America; Tallgrass already holds a 50% stake, a Phillips 66 subsidiary owns a 25% stake, while Sempra U.S. Gas & Power holds the remaining 25%.
• SRE also says it will permanently release the remaining uncontracted capacity that it holds on the pipeline that it had been releasing on an interim basis, resulting in a $100M-$120M charge against Q2 earnings. 

Original Post

 

Back on March 18, 2016, RBN Energy provided an update on that huge pipeline moving natural gas from the east (Marcellus/Utica) to the midwest. Today RBN produced another update. For me to understand this massive pipeline here are the data points from today's update:

The US is in the midst of the "biggest infrastructure overhaul in many decades, designed to reverse traditional flow patterns out of the Northeast Region and allow Marcellus/Utica shale gas to target growing and new demand markets primarily in the Southeast US."

In addition to the REX, "there are several other pipelines looking to reverse flow out of the Northeast, but the REX is, by far, the most significant, not only volume-wise but also because it touches nearly every US region via interconnects with other major long-haul gas pipelines."

So far:

• build-out and expansion of the Seneca Lateral, near Clarington, OH, has been completed
• build-out of the East-to-West (E2W) expansion; has been completed
• last August, E2W came on-line, bringing capacity to 1.2 Bcf/d in Zone 3 of REX (between its eastern terminus point in Clarington, OH, and Moultrie County, IL; this brought total westbound capacity in the zone to 1.8 Bcf/D for that stretch of REX

Today, RBN focused on the next phase of expansion: Zone 3 Capacity Enhancement project (REX Z3CE)

Details of REX Z3CE:

• approval granted for adding 800 MMcf/d east-to-west capacity (Clarington, OH, west to Mexico, Missouri, just west of the Illinois state line)
• RBN Energy says that Tallgrass has begun construction; project should be completed by 4Q16
• the incremental 0.8 Bcf/d will bring the total westbound capacity to "a huge 2.6 Bcf/d"
• firm contracts to ship natural gas from six (sic -- I count seven) shippers
• Ascent Resources
• Gulfport Energy
• EQT Energy
• Jay-Bee
• Triad Hunter
• EdgeMarc Energy
• Vectren

There is more than enough natural gas "waiting" to get into this pipeline: the current recieipt point capacity is over 3.0 Bcf/d -- not only higher than the current mainline capacity of 1.8 Bcf/d but also well above capacity after current expansion is complete, i.e., 2.6 Bcf/d.

• incredibly, even more receipt capacity is on the way

Other inputs yet to come:

• Equitrans' Ohio Valley Connector project (Isaly interconnect): will start at 850 MMcf/d, 4Q16
• Dominion, 275 MMcf/d, also by 4Q16
• Energy Transfer's Rover project: 400 MMcf/d sometime in 2017

And to think Hillary Clinton plans to ban fracking.