Report Volume XXI, Number 10, January 15th, 2010

INDUSTRY NEWS (Houston, TX) – Spectra Energy Corp has recently signed binding precedent agreements with Chesapeake Energy Corporation, Consolidated Edison and Statoil Natural Gas for an expansion of its existing Texas Eastern Transmission and Algonquin Gas Transmission pipeline systems to deliver new, critically needed natural gas supplies to the New Jersey and New York area.

These shippers’ commitment to this proposed project provides sufficient market support to proceed with the expansion.

The proposed pipeline would be capable of transporting up to 800 million cubic feet per day of new natural gas supplies to the region and is targeted to be in service in the fourth quarter 2013. Specific facilities design and related costs will be finalized following the results of the project’s open season, which will be announced shortly. However, aspects of the proposed expansion include:

• construction of a new, 16-mile pipeline extension that connects Texas Eastern’s existing pipeline in Staten Island, N.Y., to a new interconnect with Con Edison in New York City, NY;
• replacement of five miles of existing pipeline in New Jersey and New York with larger diameter pipeline, and
• additional facilities on Spectra Energy’s existing Algonquin pipeline system.

“We’re extremely pleased to be working with Chesapeake, Con Edison and Statoil on this important project. This is a project we have been pursuing for some time, which will enhance natural gas service reliability in the Greater New York City area and increase consumers’ access to diverse and abundant natural gas supplies,” said Greg Ebel, president and chief executive officer, Spectra Energy Corp. “With this expansion, we’ll be delivering cleanburning natural gas to heat homes and businesses, and fuel much needed gas-fired electric generation in these critical markets.”

“This project aligns with our strategy to develop and construct right-sized, well-timed expansion projects for our customers in the Northeast and further extends our ability to serve these key customers in New Jersey and New York, including Manhattan,” continued Ebel.

Aubrey K. McClendon, Chesapeake’s chief executive officer, commented, “Chesapeake is pleased to be a key shipper on Spectra Energy’s new service to the New York City area, an area of rapidly growing demand for clean-burning natural gas. Chesapeake’s industry-leading position in the Marcellus Shale provides the perfect supply source to help energy consumers in the New York City area reduce their dependence on expensive imported oil and carbon-heavy coal. With the newfound abundance of domestic natural gas through shale development unfolding in many areas of the U.S., American energy consumers can now more fully embrace the substantial economic and environmental benefits of natural gas.”

“The new pipeline will help us meet the growing energy needs of our area, strengthen the reliability of the natural gas system, and improve air quality for all New Yorkers. The Spectra Energy project will also help us achieve the goals of the Mayor’s and Governor’s long-term energy and environmental goals as outlined in PlaNYC and the state energy plan,” said Kevin Burke, president, chairman and chief executive officer, Con Edison.

The project will utilize existing utility corridors and rights-of-way where possible in order to minimize the effects on landowners and the environment.

INDUSTRY NEWS (Houston, TX) – Duke Energy is considering the construction of a 19-mile natural gas pipeline that would tunnel beneath the Ohio River and through Floyd and Harrison counties.

The line installation, which is still a proposal at this point, relates to a recently-announced air quality settlement between the company and the U.S. Environmental Protection Agency.

A decade ago, the EPA sued Cinergy — which became Duke Energy through a 2006 merger — for, among other things, adding two new coal burners its Gallagher Station power plant in New Albany without getting proper permits. That increased emissions at the power plant.

As a part of the settlement announced in late December, Duke can either can either shut the burners down or convert them to natural gas.

The company hasn’t decided which route to take, said Angeline Protogere, spokesperson for the company. However, she said, in order for Duke to keep its options open, the company is contacting affected landowners about the prospect of installing the line. Protogere said that as many as 100 parcels of land could be affected by the line, but was not sure how many property owners that adds up to.

The pipeline would begin at a new interconnection with Texas Gas near Kosmosdale, in far southwestern Jefferson County, Ky. It would run west, under the Ohio River, to Harrison County and follow the river northward to the power plant. Protogere said existing utility and roadway corridors would be used whenever possible.

The project is still in its early phases and the route would have to be approved by the Federal Energy Regulatory Commission. Public hearings would have to be held as a part of that approval but no dates have been set.