Frack­ing firms eye pipe­line to D.C. mar­ket

The Washington Times Daily - - Business - BY BEN WOLF­GANG

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.

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