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FERC OKs REX East-to-West Capacity Enhancement Project

February 29, 2016
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FERC has issued a certificate for Rockies Express Pipeline LLC's (REX) Zone 3 Capacity Enhancement Project, which is expected to create an additional 800,000 Dth/d of capacity within the pipeline's Zone 3.

Once completed, the project will increase Zone 3's east-to-west firm capability by 800,000 Dth/d for receipts at the Clarington Hub to corresponding deliveries of 520,000 Dth/d and 280,000 Dth/d at Lebanon, OH, and Moultrie County, IL, respectively. The project is expected to be in service during the fourth quarter of this year.

REX, a Tallgrass Energy Partners pipeline, plans to construct a 49,428 hp compressor station in Pickaway County, OH; a 31,791 hp compressor station in Fayette County, OH; a 37,038 hp compressor station in Decatur County, IN; an additional 38,400 hp of compression, gas cooling facilities and a new power distribution building at the existing Chandlersville Compressor Station in Muskingum County, OH; and gas cooling facilities and a new power distribution building at the existing Hamilton Compressor Station in Warren County, OH.

The pipeline filed for the project on March 31, 2015. A binding open season was held earlier that month and resulted in precedent agreements with six shippers for a total firm transportation commitment of 700,000 Dth/d. The shippers have signed precedent agreements under Rockies Express's existing Rate Schedule FTS at negotiated rates for 15-year terms.

Shippers are American Energy-Utica, LLC (150,000 Dth/d), EdgeMarc Energy Holdings LLC (50,000 Dth/d), EQT Energy LLC (200,000 Dth/d), Gulfport Energy Corp. (50,000 Dth/d), Jay-Bee Oil & Gas Inc. (150,000 Dth/d), and Triad Hunter LLC (100,000 Dth/d). Triad Hunter parent Magnum Hunter Resources Corp. has since filed for bankruptcy protection (see Shale DailyDec. 15, 2015).

" ...[T]he revenues from Rockies Express's negotiated reservation rates with the expansion shippers are expected to exceed the project's associated cost of service," the Federal Energy Regulatory Commission said in its order [CP15-137]. "Further, Rockies Express will establish separately-stated fuel and electric rates that will apply exclusively to shippers receiving firm service using the proposed expansion capacity in order to ensure existing customers will not subsidize the cost of fuel or power associated with the proposed project...

"We also find that the proposal will not have any other adverse impacts on Rockies Express's services for its existing shippers..."Rockies Express proposes to provide a new service that is not intended to replace firm transportation service on any other existing pipeline. No pipeline company or customer of any other pipeline company has protested the application. Thus, there will be no adverse impact on other existing pipelines or their captive customers."

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