By Jamison Cocklin
Oil and gas infrastructure projects announced throughout the region in the past six months have been slow to materialize, as midstream companies continue finalizing their plans for the billions expected to be spent on them.
Since September, several projects have been announced for Northeast and Southeast Ohio, with the companies detailing when those projects might get under way and where some will be located.
In a daily energy update last week, the U.S. Energy Information Administration said more than half of the country’s new gas transmission pipelines are in the Northeast. The industry has added about 200 miles of transmission pipe, which delivers products to processing facilities, in this part of the country.
The trend is not expected to abate any time soon, according to the EIA report. Analysts project that more than 7 billion cubic feet of pipeline capacity will come online this year, a 16-year high, to accommodate the shale-gas boom in Ohio and Pennsylvania. That’s because drillers are awaiting infrastructure expansions to move their product and avoid costly transportation bottlenecks.
In September, DTE Energy, a Detroit-based utility company, and two major pipeline corporations — Calgary, Alberta-based Enbridge Inc. and Houston-based Spectra energy — announced a joint venture with a 33 percent controlling stake each in a 250-mile interstate transmission line.
The pipeline, called the NEXUS Gas Transmission System, will have the capability to transport 1 billion cubic feet of natural gas per day.
Andrea Grover, a spokeswoman for Spectra, said the project is still in its early stages, but nearing a reality. The companies conducted an “open season,” which allows stakeholders to gauge market demand on the other end of the pipeline, in the fourth quarter of 2012. The line is expected to originate in Northeast Ohio, wind through Michigan and end in Ontario, Canada.
“There was a good mix of local distribution companies, power generators, industrials and producers that submitted bids on the project,” Grover said. “We will continue to communicate with these potential customers and move our conversations toward contracting formal agreements.”
Grover said the companies are working with Utica and Marcellus shale producers to determine the full scope and location for the project in Ohio. The NEXUS project is expected to begin in spring 2016 with a completion date sometime in November that year.
Spectra also is pursuing the development of 70 miles of transmission line in Southeast Ohio. That project, called OPEN, is running smoothly, Grover said. The company is in contact with landowners along the proposed route in Belmont, Jefferson, Columbiana and Monroe counties. The in-service date is slated for November 2015.
Other projects are nearing completion such as the Pennant Midstream LLC pipeline in New Middletown along the state’s border with Pennsylvania. The pipeline is nearly finished and an accompanying cryogenic gas-processing facility will be located on the East Middletown Road there. Construction has not yet started.
Dan Donovan, a spokesman for Dominion East Ohio, which recently formed a $1.5 billion joint-venture with Caiman Energy II LLC to provide midstream services to natural-gas producers in the state, said its project, Blue Racer Midstream, is already partially online.
The project uses Dominion pipelines, converted to accommodate more of the wet gas being extracted in the Marcellus and Utica Shale plays. About 125 miles of dry gas lines have been converted, with 300 more miles identified for conversion. The company will continue upgrades through 2014.
Those lines will be tied into the new processing facility in West Virginia known as Natrium as well as Dominion’s Hastings processing facility. Donovan added that it is likely the company will announce between three and four new processing facilities throughout the region in the near future, citing more demand for such services.
Processing facilities essentially separate natural- gas liquids into industrial quality propane, butane, ethane and other refined energy products that can be delivered to the marketplace.
Another project, the Bluegrass pipeline, announced in March, is still in the very early stages. That transmission line, like the NEXUS line, will have to be approved by federal regulators. It will run from Northeast Ohio to the Gulf Coast. A proposed route and cost estimates are still being worked out on that project.
In Trumbull County, too, a host of companies are seeking easements for smaller pipelines, as drilling there has been slower to materialize with exploration and production companies only recently making plays, beginning last year.
Drilling in Ohio is not expected to slow down anytime soon. The Ohio Oil and Gas Association reported last week that 669 miles of vertical and horizontal wells were drilled in the state last year. The organization predicts the number will be even higher in 2013.