We’ve come across information about Kinder Morgan’s Natural Gas Pipeline Company of America LLC (NGPL) that intrigues us and makes us think that Marcellus/Utica gas either already is, or soon will be, traveling along NGPL from the Midwest all the way to the Gulf Coast to feed just about any of the existing or under construction LNG export plants in the region.
What caught our attention was an article appearing in the always-excellent NGI Daily Gas Price Index publication. The article talks about NGPL’s Gulf Coast Southbound Expansion Project, a project we’ve written about in the past (see Open Season to Expand 2 Midwest Pipelines for More Marc/Utica Gas). NGPL has been on a multi-year mission to expand its pipeline in the Midwest–mainly in Illinois–to flow more gas both north into the Chicago market and south to the Gulf Coast.
Phase-1 of the Southbound Expansion project was placed in service in October 2018, and now provides an extra 460,000 Dth/d (460 million cubic feet per day, MMcf/d) of gas from NGPL’s interstate pipeline interconnects in Illinois, Arkansas and Texas to markets in NGPL’s South Texas zone. One of those interconnects (Illinois) is the Rockies Express Pipeline (REX). As you may recall, REX reversed its flow a number of years ago and now flow Utica/Marcellus gas to Illinois and the connection with NGPL.
Phase-2 of the Southbound project is “under contract with a third party” and will provide an additional 300,000 Dth/d (300 MMcf/d) of southbound gas flows. According to Kinder Morgan’s website, this phase is anticipated to be placed into service in mid-2021 pending appropriate regulatory approvals.
According to the NGI article, Kinder officially filed for that approval yesterday. In the NGI article we learn that Cheniere Energy is the third party and has contracted for the full 300 MMcf/d to feed it’s new and under construction LNG export facility in Corpus Christi, Texas.
Cheniere Energy Inc. subsidiary Corpus Christi Liquefaction LLC has signed a precedent agreement for the full 300,000 Dth/d of incremental firm capacity from the expansion, which is designed to allow additional volumes to move south from an existing interconnect with the Alliance Pipeline in Grundy County, IL, to a delivery point with the Cheniere Corpus Christi Pipeline LP in San Patricio County, TX. The additional capacity will supply Train 3 at the Corpus Christi LNG terminal, according to NGPL’s filing.
The Cheniere Corpus Christi Pipeline is a 23-mile, 48-inch diameter line that supplies the Houston-based exporter’s LNG terminal. During a recent earnings conference call, Cheniere management said they expect substantial completion on Train 1 at the Corpus Christi LNG export project “in the next few days” following a successful performance test. The developer is set to bring a total of three trains into commercial operations this year — the fifth train at Sabine Pass and the first two trains at Corpus Christi.*
At that point we located a map showing where the NGPL pipeline runs, and where the interconnections are located:
Wow! Look at that map! NGPL essentially reaches all of the existing, under construction, and planned LNG export plants along the Gulf Coast with the exception of maybe one or two on the outer fringes.
NGPL is investigating a Phase-3 for the project, which would flow another 260 MMcf/d from Illinois south.
It makes us wonder, does (and how much) Marcellus/Utica gas already flows to points along the Gulf Coast? And how much more will flow to the Gulf after NGPL further expands and LNG export facilities get built? Exciting to ponder.
Not all of the gas will come from the M-U. As mentioned in the NGI article, Phase-2 is “designed to allow additional volumes to move south from an existing interconnect with the Alliance Pipeline in Grundy County, IL.” Does that mean the gas can possibly come from as far north as that interconnect (which is above REX)? Or does it mean all of the 300 MMcf/d of gas will come from that interconnect? The Alliance Pipeline flows gas all the way from Western Canada. So it may be the case that Cheniere will feed its Train 3 LNG facility in Corpus Christi using Canadian gas. We’re not sure.
Regardless of whether Phase-2 is flowing only Canadian gas or not, the fact remains with the existing expansion of Phase-1, and a potential expansion of Phase-3, there’s plenty of capacity to send more of our gas straight to the Gulf Coast. We find that exciting.
*NGI’s Daily Gas Price Index (Feb 28, 2019) – NGPL Seeks FERC Sign-Off For Next Phase of LNG-Focused Gulf Coast Southbound
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