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Gas pipeline developers to press build-out hopes in New York, New England

Opportunities exist for a further expansion of Millennium Pipeline andthe revival of Access Northeast despite regulatory and environmentalhurdles to adding more takeaway capacity designed to move AppalachianBasin gas to downstream markets, senior officials with the developerssaid Tuesday.

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The comments during the second day of the LDC Gas Forums Northeastconference in Boston reflect the confidence midstream operators have thatthe traditionally pipeline-constrained region can continue to be a growthdriver for the sector.

So long as demand pulls producers to boost drilling and industry leadersact collaboratively to counter opponents' concerns, building in New Yorkand New England is within reach, the officials said.

"We all need to take a more proactive approach to messaging," RichardGardner, senior vice president of business development for MillenniumPipeline, told attendees at the conference.

Millennium serves as a significant outlet for production from thelong-constrained Northeast Pennsylvania region, primarily delivering gasinto downstream markets in New York and Boston.

The pipeline receives approximately 1 Bcf/d of production from NortheastPennsylvania -- last winter more than 75% of that gas ultimately made itto an interconnect with Algonquin for final delivery into the New Englandmarkets, data compiled by S&P Global Platts Analytics shows.

Northeast Pennsylvania production receipts that exit the region viaMillennium have little additional optionality to make it to demandmarkets. A maintenance earlier this spring cut production receipts ontoMillennium to zero MMcf/d for several days, bringing down total NortheastPennsylvania production by nearly the same amount, Platts Analytics datashows.

Millennium, owned by TransCanada's Columbia Gas Transmission and byNational Grid and DTE Energy, is currently building its 223,000 Dt/dEastern System Upgrade in New York, where the project has been met withstrong opposition. The operator is targeting a November 1 startup, andGardner said at the conference "there is no reason for us to believe thatin-service date won't be met." As for the future, Gardner said there is no reason for Millennium to stopwith the ESU project.

"I think, yes, we can build something else," he said. "It will be amarket pull, not a supply push. I think that's out there. I think there'sopportunity. I think it will be small scale."

Gardner said the capacity of a potential further expansion could be150,000 Dt/d, and such a project could find shipper support by being built inconjunction with a wind farm. He wouldn't discuss a possible location, thoughhe suggested the operator wouldn't shy away from New York.

"If I went to New York regulators and say, 'I have a project concept andwe don't need to do a lot of looping ... I think it goes a long way toovercoming some of the challenges in New York," Gardner said.

Access Northeast, meanwhile, has stalled, but the developers aren'tgiving up on the project that would serve New England.

Erin Petkovich, director of Northeast business development for Enbridge,said at the conference that the pipeline operator, together with itspartners Eversource and National Grid, "remain committed to advance asolution for New England."

HOPE REMAINS FOR ACCESS NORTHEAST DEVELOPERS

Petkovich said she believes there are several potential paths forward forAccess Northeast.

"We're working on a policy level to see if we can develop a uniform NewEngland policy," she said. "We're also working with the market."

In a related move, Eversource on Monday notified the New Hampshire PublicUtilities Commission that it will submit an updated proposal to replacethe company's agreement to purchase capacity on Access Northeast. Thehigh court there recently reversed the PUC's 2016 dismissal of theoriginal agreement and remanded the issue to the PUC, Eversource said.

Despite the proximity of the Marcellus and Utica shale plays, New Englandimports significant volumes of gas from Canada via pipeline and othercountries via LNG tanker to meet peak demand. Market experts blameinsufficient west-to-east and south-to-north pipeline capacity totransport gas there from producers in Pennsylvania and West Virginia.

"We are actively developing there," Petkovich said of Access Northeast."We feel like the need is there. Hopefully, we will have some moretangible events to share at this event next year."

--Harry.Weber@spglobal.com

--Edited by Gail Roberts, newsdesk@spglobal.com