Buckeye, others pursue Marcellus NGL system growth

Buckeye Partners LP and Nova Chemicals Corp. last month signed a memorandum of understanding regarding evaluation and development of a mixed natural gas liquids pipeline running 400 miles from the Marcellus basin in Pennsylvania to the refining and petrochemical complex in the Sarnia-Lambton area of Ontario, Canada.

Christopher E. Smith
OGJ Pipeline Editor

HOUSTON, Mar. 11 -- Buckeye Partners LP and Nova Chemicals Corp. last month signed a memorandum of understanding regarding evaluation and development of a mixed natural gas liquids pipeline running 400 miles from the Marcellus basin in Pennsylvania to the refining and petrochemical complex in the Sarnia-Lambton area of Ontario, Canada. The Union Pipeline Project (UPP), subject to final agreements and regulatory approval, would ship the NGLs principally for use as petrochemical feedstock.

Buckeye describes UPP as a means to diversify refining and petrochemical feedstock supply to Nova and other potential users in the area and give producers in the Marcellus basin NGL takeaway capacity to the closest demand center. Initial UPP service would be between Pittsburgh, Pa., and the Nova Chemicals Corunna olefins cracker near Sarnia, a market with historically limited NGL feedstock flexibility, according to Buckeye.

Nova and Buckeye foresee UPP as providing a long-term competitive petrochemical feedstock supply. Buckeye would develop, construct, own, and operate UPP and plans to conduct an open season to solicit additional customer interest in Sarnia prior to executing definitive agreements.

Other NGL infrastructure advancing in the Marcellus region includes Inergy Services’ Watkins Glen storage expansion. The expansion will be as big as 5 million bbl and have pipeline, rail, and truck access. Inergy says it has already signed a long-term contract with an anchor tenet and is negotiating additional leases for the facility, which it expects to put in service summer 2010. Inergy already operates the nearby 1.7 million bbl Bath storage facility.

Cumberland Plateau Pipeline Co. LLC is developing plans for a 1,050-mile ethane pipeline extending from the Marcellus shale to near Baton Rouge, La. Cumberland Plateau plans to begin building the 14-16 in. OD, 75,000-125,000 b/d pipeline in 2013, pending regulatory approvals, to meet a 2014 in-service date.

The company is soliciting shipper interest in the project and says it will decide whether to proceed with regulatory applications following an open-season still to be scheduled.

Caiman Energy, meanwhile, plans to add 520 MMcfd of cryogenic processing capacity in the Marcellus region in three stages: 120 MMcfd by October 2010, 200 MMcfd by July 2011, and 200 MMcfd by July 2013. Caiman also plans to build an NGL pipeline from its Fort Beeler processing plant to the Ohio River by October 2010 and have a depropanizer with a barge, rail, and truck terminal in place by July 2011.

Among the Marcellus’ most active producers has been Chesapeake Energy, which plans to average 32 rigs in 2010 to drill 175 wells in the Marcellus shale, where it ran 24 rigs as of mid-February. Chesapeake’s land position is 1.6 million net acres in West Virginia, Pennsylvania, and New York with a further 590,000 net acres for its partner, Statoil ASA (OGJ, Mar. 1, 2010, p. 37).

Contact Christopher E. Smith at chriss@ogjonline.com.

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