Chesapeake Investing in New 70-Mile Ohio Pipeline
Chesapeake Energy, American Electric Power and Spectra Energy are joining forces to build 70 miles of new pipeline in Ohio that will connect Utica and Marcellus gas wells in eastern Ohio to Spectra’s Texas Eastern pipeline system, which runs from Texas to New York. The new joint project is called the Ohio Pipeline Energy Network (OPEN). The estimated cost for the project is $500 million according to Spectra Energy.
The Texas Eastern pipeline already goes through Ohio from east to west. This new addition will create a connection between the pipeline and the northeastern Ohio counties that are expected to have the most shale-gas resources, though the specific path is still being determined, said Wendy Olson, spokeswoman for Houston-based Spectra.
“It will likely originate in Carroll County and head south,” she said. “That could take any number of routes” to reach the existing pipeline.(1)
From the press release:
Spectra Energy Corp’s Texas Eastern Transmission, LP, American Electric Power and Chesapeake Energy Marketing, Inc., a wholly owned subsidiary of Chesapeake Energy Corporation, today announced their intention to advance the development of the Ohio Pipeline Energy Network (OPEN) project, a proposed expansion of the Texas Eastern pipeline system that will connect Ohio’s Utica and Marcellus shale gas supplies with the fast-growing markets attached to the Texas Eastern system, in particular natural gas-fired power generation.
The OPEN project brings together the largest producer and leaseholder in the Utica shale play, the largest power generator in the region and the premier pipeline company with over 60 years of safe and reliable operational history in the state of Ohio. The project will involve approximately 70 miles of new pipeline and create an additional 1 billion cubic feet per day (Bcf/d) of transportation capacity to serve local distribution companies, industrial users and gas-fired power generators in the Ohio market, as well as markets along the Texas Eastern system.
The project is anticipated to deliver substantial investment in energy infrastructure in the state through mineral leasing and development and construction of pipeline gathering and transportation infrastructure, as well as create significant jobs and lasting tax revenue for the state.
As part of the project, American Electric Power continues to invest in Ohio and will pursue transportation capacity that would enable the company to connect Ohio gas supplies with its gas-fired power plants in the Midwest. Chesapeake, which holds 1.5 million net acres, by far the largest acreage position in the Utica play, is pursuing capacity to access the substantial Texas Eastern markets spanning from the Gulf of Mexico to the Northeast U.S.
"We are excited about the production potential of the Utica and Marcellus shale in Ohio and the ability to serve communities with clean-burning and domestically abundant natural gas," said Bill Yardley, group vice president, Spectra Energy Transmission, Northeast. "At a time when there is growing environmental need for cleaner power generation, this new infrastructure will deliver clean, affordable and much-needed energy to Ohio, the Midwest and South."
A binding open season for the OPEN project is planned for the first quarter 2012 with the projected in-service slated for November 2014.(2)
(1) The Columbus Dispatch (Dec 23, 2011) – New pipeline to carry Ohio gas
(2) Spectra Energy Press Release (Dec 21, 2011) – Leading Players Spectra Energy, American Electric Power and Chesapeake Energy Announce an Agreement of Intent to Develop Ohio Infrastructure Project