Fracking firms eye pipeline to D.C. market
In another sign of the fracking boom that’s helped revitalize Pennsylvania’s economy, three major energy firms say they want to build a $1 billion naturalgas pipeline from the Keystone State as far south as the Washington, D.C., market.
The project, dubbed the Commonwealth Pipeline, would transport gas from the state’s Marcellus Shale region to major markets along the East Coast, including Philadelphia and Baltimore. An exact route hasn’t yet been determined, but the 200-mile line, if built, would begin in rural Lycoming County in north-central Pennsylvania and continue south near Harrisburg.
At maximum capacity, it would transport about 7.8 million cubic feet of natural gas each day — nearly four times what the entire country currently uses per month.
The companies involved — Pennsylvania’s UGI Energy Services and Capitol Energy Ventures Corp. and Kansas City, Mo.-based Inergy Midstream L.P. — hope to complete the project by 2015. Inergy would build and operate the pipeline, while UGI and Capitol would own equal equity interests in it, the companies said in a joint statement.
“Gas production in the region has been limited by . . . existing interstate pipelines, most of which currently serve markets outside Pennsylvania,” said Bradley C. Hall, UGI president. “Our goal in participating in this project is to bring gas produced in Pennsylvania directly to the major markets in central and eastern Pennsylvania.”
Since the Marcellus drilling boom began about five years ago, most of the fuel produced in gas-rich areas such as northern and western Pennsylvania has been shipped west to Ohio, Kentucky and other states.
The Commonwealth Pipeline would open up major new markets for the industry and also allow Pennsylvanians to take advantage of the gas extracted from their state. The fuel would be sold to both utility companies for home heating and transportation service companies that operate natural-gas fleets, according to UGI.
Later this month, the firm and its partners plan to hold an “open season,” during which gas providers can bid to acquire pipeline capacity. The bidding season will likely last 30 to 60 days and, if successful, would show state and federal regulators the project is necessary.
Despite the optimism generated by the announcement, the pipeline project has a long way to go before becoming a reality. Much like the massive Canadato-texas Keystone XL pipeline, recently rejected by President Obama, the Commonwealth project must first secure the necessary local and state permits and other regulatory approvals.
Environmental groups and other critics, who have for years attacked fracking — the shorthand term for hydraulic fracturing — as an unsafe process that pollutes drinking water supplies, will likely take aim at the proposed pipeline.
But industry insiders dismiss their complaints. They view the Commonwealth Pipeline plan as more evidence that natural gas is the lone bright spot in an otherwise struggling economy.
“This billion-dollar investment of private capital . . . demonstrates how the responsible development of jobcreating American natural gas continues to deliver enormous and far-reaching consumer benefits while strengthening our nation’s energy security,” said Travis Windle, spokesman for the Marcellus Shale Coalition, an association of drilling companies.
By reaching into new markets and finding more customers, Marcellus drilling companies also hope to reverse the recent trend of plummeting prices. The price per 1,000 cubic feet of natural gas dropped again Monday, hitting $2.35, just 3 cents short of a 10-year low. An increasing amount of the fuel is now being stored in underground facilities as supply continues to outpace demand by a wide margin.