Lack of commitments halt Marcellus-US Gulf ethane pipeline

26 October 2011 21:23  [Source: ICIS news]

HOUSTON (ICIS)--A project to pipe Marcellus shale ethane to the US Gulf is on hold because of lack of interest by producers, a project spokesperson said on Wednesday.

“We have not received adequate commitments for MEPS [the Marcellus Ethane Pipeline System] to move forward with a 2014 in-service date,” said US-based El Paso spokesperson Gretchen Krueger. “The project is on hold at the present time.”

El Paso and US-based Spectra formed a joint venture to build the MEPS, a 60,000-90,000 bbl/day ethane pipeline running 1,100 miles (1,770 km) from the Marcellus shale formation to the US Gulf.

The project in-service date was initially November 2014.

The binding open season to secure contracts for the pipeline began on 27 June with a scheduled end date of 27 July, but the open season was extended to 15 September 2011.

Analyst Dan Lippe with Petral Worldwide said the takeover of El Paso by Kinder Morgan could be an important factor in the future of the MEPS project.

“I cannot speculate on whether it will be a positive or negative for MEPS, and it may have no impact at all,” he said.

The MEPS would use the existing Tennessee Gas Pipeline, which is configured to carry dry gas. The liquid ethane would need to be vapourised ahead of the Tennessee Gas Pipeline and then converted back to its liquid state after the pipeline ended.

“By the time [MEPS gets] through converting the liquid ethane to vapour then back to liquid, it would likely cost as much to use it as a new-build across western Pennsylvania,” said President Anne Keller of Midstream Energy Group.

By: Sheena Martin
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