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US FERC approves two major TransCanada gas pipeline expansions

The US Federal Energy Regulatory Commission has granted certificate approval to the second-largest natural gas expansion project in the US Northeast, the 170-mile, 2.7 Bcf/d Mountaineer XPress project in West Virginia.

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The project, sponsored by TransCanada's Columbia Gas Transmission, was approved late Friday and is roughly 500 MMcf/d shy of Rover Pipeline's 3.25 Bcf/d capacity.

Like Rover, it is producer-backed and expected to boost production in the Marcellus shale and also increase deliveries from the Northeast to neighboring regions, particularly the US Gulf area.

In addition to the Mountaineer XPress, the commission late Friday granted certificate approval to Columbia Gulf Transmission's 860 MMcf/d Gulf XPress project, adding seven new compressor stations in Kentucky, Tennessee and Mississippi to allow for bidirectional flows on Columbia Gulf's Lines 200 and 300, as well as changes to an existing compressor station and one existing meter station.



Mountaineer XPress is the third major expansion of Columbia Gas' pipeline system to receive approval in 2017, following the January approval of the 1.5 Bcf/d Leach XPress project and the November approval of the 1.3 Bcf/d WB XPress project.

It is also the fourth project targeting West Virginia production takeaway capacity to receive FERC approval in fourth-quarter 2017 alone, following WB XPress, the 2 Bcf/d Mountain Valley Pipeline and the 1.5 Bcf/d Atlantic Coast Pipeline, bringing total capacity approvals targeting West Virginia production to 7.5 Bcf/d in the last three months of the year.

Mountaineer XPress, which includes 164.5 miles of greenfield pipe, will run from receipt points in West Virginia, Ohio and Pennsylvania to deliver points on Columbia Gas' TCO Pool and at the Leach Interconnect with Columbia Gulf. It also entails nearly 230,000 hp of added compression.

Once in service, the project will generally mimic the effects of the Leach XPress expansion, which began service Monday.

That project involved about 130 miles of new greenfield pipeline, mostly in Ohio, and transports incremental production from the Northeast to downstream markets at the TCO Pool and farther south into the US Southeast through the associated Rayne XPress expansion on Columbia Gulf.

Given the slate of projects designed to expand production outlets in West Virginia entering service in the late 2018-2019 time frame, the addition of Mountaineer XPress capacity to the mix will likely have minimal price impact for Northeast supply hub basis, according to Platts Analytics.

But given the project is designed to deliver up to 1.8 Bcf/d of incremental supply into the TCO Pool hub, without an offsetting outlet to reach markets farther afield, it may put pressure on TCO Pool basis, which has historically held a premium to nearby hubs like Dominion South.

TransCanada did not immediately comment on the timing of bringing the new facilities into service.

FERC's certificate order notes that construction of Mountaineer XPress cannot begin until commission staff completes the process of complying with the Endangered Species Act through consultation with the US Fish and Wildlife Service.

FWS had previously noted that route changes subsequent to the final environmental impact statement had made it difficult to start the formal consultation process, according to FERC's summary of a November 8 conference call.

In approving the projects, FERC found precedent agreements with project shippers to be an adequate demonstration of need, in spite of challenges from environmental groups who had warned of a potential overbuild.

It noted such contracts were in place for 98% of the Mountaineer XPress project and 100% of the Gulf XPress project.

"We also find that end-users will generally benefit from the projects because they will develop gas infrastructure that will serve to ensure future domestic energy supplies and enhance the pipeline grid by providing additional transportation capacity connecting sources of natural gas to markets in the Midwest, Northeast, Mid-Atlantic and Gulf Coast," the FERC order said.

--Maya Weber, maya.weber@spglobal.com
--Eric Brooks, ebrooks@spglobal.com
--Edited by Valarie Jackson, valarie.jackson@spglobal.com