Cheniere continues effort to promote Midship Pipeline
Houston-based natural gas giant Cheniere Energy this week continued its effort to gain support for its $1 billion Midship Pipeline, one of several planned projects designed to transport production from the state's booming fields to market. Midship is expected to move Oklahoma natural gas to a liquefied natural gas terminal in south Louisiana, where it will be exported to Asia and other markets worldwide.
“Being able to allow Oklahoma's natural gas to play a prominent role in the national energy discussion and global energy discussion is important for Oklahoma,” said Matt Barr, Cheniere's director of government and public affairs. “And it's important for those communities when you look at the investments and jobs and when you look at the ad valorem taxes that will be coming in as well.”
The planned 200-mile pipeline is expected to stretch from Kingfisher County to Bryan County, transporting natural gas from the STACK and SCOOP fields to Cheniere's existing pipeline infrastructure. From Bryan County, the natural gas will be sent to the Louisiana Gulf Coast, where Cheniere has the country's only operational liquefied natural gas export terminal.
“We feel strongly about the future of LNG exports,” Barr said. “When you look at where demand is going in China, India, Asia and Europe and when you have a low-cost source of natural gas in the United States, there's significant opportunity over the next several years for the United States to become a global energy player in LNG exports.”
Cheniere teams began work on Midship in November 2016 by holding four open houses in communities along the route and working with county commissioners and other community leaders in the area.
The company filed a formal application with the Federal Energy Regulatory Commission in May and is working through the permitting process. Construction is scheduled to begin in the second quarter of 2018, and the pipeline is expected to come online in late 2018 or early 2019, Cheniere said.
Until then, Cheniere executives have been meeting with community leaders along the project's route, which stretches across parts of eight Oklahoma counties.
"We've had positive feedback from stakeholders, and we hope to continue that," Barr said. "Over the course of the next year, we're having presentations in the eight counties the pipe is going through, continuing to talk to community groups, Native American tribes, informing them on the state of the pipeline and getting their feedback. It's been a great working relationship."
As part of the effort, Cheniere this week donated $200,000 to 64 rural fire departments along the pipeline's path.
The project is expected to create 1,300 jobs during peak construction and generate $200 million in ad valorem taxes over 10 years to local communities along the route, the company said.
Midship is expected to transport natural gas from several of the state's most active producers. Devon Energy Corp., Marathon Oil Corp., Cimarex Energy and Gulfport Corp. have pledged to use the line and are the four foundational shippers on the project.
Devon executives last week said the company's production in the STACK jumped 26 percent from the end of 2016. Devon has eight rigs active in the area and has announced plans to expand to 10 rigs by the end of the year.
Devon CEO Dave Hager last week said the company has identified more than 30,000 potential drilling locations between the top two fields in the STACK and the Delaware Basin in southeast New Mexico and west Texas.
"Not only are the STACK and Delaware basin assets two of the very best positioned plays on the North American cost curve, but Devon's large, contiguous stacked play acreage position in these basins provides us a multi-decade growth opportunity," Hager said in a conference call with analysts.
Booming oil fields
The STACK and SCOOP fields are part of the Cana Woodford Basin, which is the second most active oil and natural gas field in the country, according to Baker Hughes. The area had 66 active rigs last week, up from 41 one year ago.
The active drilling also has attracted interest from pipeline companies throughout the region.
Oklahoma City-based Enable Midstream Partners LP in May announced plans for Project Wildcat, which is designed to move up to 400 million cubic feet of natural gas per day from the STACK to a processing plant and pipeline hub in north Texas.
Enable in April announced the Cana and STACK Expansion pipeline project, which is expected to transport up to 205 million cubic feet of natural gas per day from the STACK to existing natural gas markets.
"We've put a lot of steel in the ground, especially in Oklahoma," Enable CEO Rod Sailor told The Oklahoman last month. "We're reaping the benefits of focusing on that capital efficiency. This year we're able to grow our volumes on the system and spend less money than we expected."
Tulsa-based SemGroup Corp.'s Canton Pipeline will connect the company's natural gas processing complex in northern Oklahoma to the STACK play, initially transporting up to 200 million cubic feet per day, with the ability of expanding to 400 million cubic feet per day.