Three leading energy companies announced they will invest between $1.2 billion and $1.5 billion to construct a natural-gas pipeline that will start in Northeast Ohio and run through parts of the Midwest into Ontario, Canada.
The announcement Tuesday signifies a growing demand for natural gas among both consumers and manufacturers across the region, and it represents the third major investment in less than a month in Northeast Ohio, with General Motors’ $200 million investment at Lordstown and the White House’s bid to establish a $70 million advanced manufacturing hub in Youngstown.
“We’ve seen a large uptick in shale development lately,” said Dan Alfaro, spokesman for industry outreach group Energy In Depth. “Combined with the efforts of other companies, this is going to re-establish Ohio’s ability to handle what’s going to be coming out as far as production is concerned. This is an indication of what sorts of returns some of these companies like Chesapeake expect on some of their wells in Ohio.”
Known as the NEXUS Gas Transmission System, Detroit-based DTE Energy, a utility and diversified energy company, and two major pipeline corporations, Calgary, Alberta-based Enbridge Inc. and Houston-based Spectra Energy, announced the memorandum of understanding to establish the 250-mile pipeline.
Each company will have a 33-percent controlling stake in the line, which will be between 30 and 36 inches in diameter and capable of transporting up to 1 billion cubic feet of natural gas per day.
The line will follow current utility corridors to an interconnect or junction in Michigan and use another pipeline, known as the Vector system, to deliver Ohio Utica Shale gas to markets in the Midwest and Ontario.
It is unclear where in Northeast Ohio the pipeline will originate, but company officials said they tentatively expect the pipeline to be in service by November 2015.
“This is a cheap commodity, and there’s new supplies being explored across the region right now,” said Scott Simons, a spokesman for DTE Energy. “There are other pipelines in Ohio, but this one will essentially expand the state’s existing capacity and transmission capability.”
Alfaro said the new transmission system will mean jobs for the area when it comes time for construction.
The new pipeline will serve local distribution companies, power generators and industrial users throughout Ohio, Michigan and Ontario.
Although no Ohio utilities or manufacturers have been announced as project participants, Spectra Energy spokeswoman Wendy Olson said the company will begin conducting market research at the end of this year.
The project would have to be approved by the Federal Energy Regulatory Commission, which also would approve the customer rates.