New Ethane Pipeline from Marcellus/Utica to TX Now Official

In October 2011, Enterprise Products Partners announced they were considering building a 1,230 mile pipeline to transport ethane from the Marcellus and Utica Shale regions in Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast (see this MDN story). Shortly after the announcement, Chesapeake Energy signed on to be the first customer for the new pipeline, if it’s built (see this MDN story).

Officials in WV were angry with Chesapeake because they were deep in discussions with Shell and another company to site ethane cracker plants in the state, and Chesapeake was part of those discussions but said nothing about their plans with Enterprise to ship ethane out of the region (see this MDN story). Those WV officials later changed their tune, saying there’s more than enough ethane in the Marcellus and Utica Shales to support a pipeline or two, plus a couple of cracker plants. Plenty for everyone.

Surveyors for Enterprise showed up in Ohio in November working on where the path for the new pipeline might go (see this MDN story). We now have official word from Enterprise of that we thought we already knew: The new ethane pipeline is a 100 percent “go” and will be built. The name of the new pipeline from Appalachia to Texas? ATEX Express. We also now know that those who have committed to using the pipeline (Chesapeake among them, presumably), have committed to a 15-year deal.

Enterprise Products Partners L.P. (NYSE:EPD) announced today that it has received sufficient transportation commitments to support development of its 1,230-mile Appalachia to Texas pipeline (“ATEX Express”) that will deliver growing ethane production from the Marcellus/Utica Shale areas of Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast. Demand for price-advantaged ethane feedstock over crude oil-based derivatives within the Gulf Coast petrochemical market is approximately 955,000 barrels per day (“BPD”) and continues to increase. ATEX Express will have the capacity to transport up to 190,000 BPD from the Appalachian production areas to the partnership’s storage and distribution assets in Texas. The committed shipper transportation rate will range between 14.5 cents per gallon and 15.5 cents per gallon.

“The willingness of shippers to commit to a term of at least 15 years reflects the long-term potential of shale development in the Appalachian region and provides us with the assurance necessary to build the midstream infrastructure that will facilitate further development of this important domestic resource,” said Michael A. Creel, president and chief executive officer of Enterprise’s general partner. “In addition to providing valuable takeaway capacity that gives producers access to the most attractive markets, the ATEX Express pipeline will also serve as an economic driver for the country and the communities in which it will be located. This project is expected to directly create approximately 4,000 jobs during and after construction, which will increase the need for local goods and services and generate incremental state and local tax revenue. This is in addition to the jobs related to increased production in the Marcellus and Utica basins and those resulting from new and expanded ethylene plants in the United States.

Originating in Washington County, Pennsylvania, the first leg of the system would involve construction of approximately 595 miles of new pipeline extending to Cape Girardeau, Missouri, closely paralleling an existing Enterprise pipeline. At Cape Girardeau, Enterprise will reverse a 16-inch diameter pipeline and place it into ethane service. By utilizing an existing pipeline and following an existing right-of-way for the section to be constructed, ATEX Express offers a cost-effective and timely solution that also minimizes the project’s environmental impact.

At the southern terminus of the ATEX Express pipeline, Enterprise will be constructing a 55-mile, 16-inch diameter pipeline to provide shippers with access to the partnership’s natural gas liquids storage complex at Mont Belvieu, Texas, giving them direct or indirect access to every ethylene plant in the United States.

Enterprise representatives are working with residents, landowners and community leaders along the proposed pipeline route, providing information about the project, conducting surveys and negotiating right-of-way agreements. ATEX Express is expected to begin commercial operations in the first quarter of 2014.*

*Enterprise Products Press Release (Jan 3, 2012) – Enterprise to Build Marcellus/Utica Shale Ethane Pipeline

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