HOUSTON - Sometime in the next two years, ethane recovered from natural gas liquids in the shale fields of Western Pennsylvania, Northern West Virginia and Eastern Ohio will be on its way to the Gulf Coast via Enterprises's 1,230-mile Appalachia-to-Texas Express Pipeline.
The pipeline, slated for completion in the first quarter of 2014, will transport ethane, a natural gas liquid, from the Tri-State Area to the Texas Gulf Coast petrochemical market. Ethane is used as a feedstock to produce ethylene, which is used in a variety of plastic products.
Its initial capacity will be 125,000 barrels a day, though they'll gradually build up to that. Chesapeake Energy will transport up to 75,000 barrels of ethane a day through the pipeline; Enterprise's Rick Rainey said the remaining capacity - 50,000 barrels - is fully committed, though he's not saying to whom.
"That's just the ones we've announced," Rainey said. "I don't have an exact number as to how many other commitments we have, but we have the potential to expand this to 190,000 barrels a day. Based on the support seen for this so far, there's an opportunity for us to actually expand this line - that doesn't mean building another pipeline, it means adding more pumping horsepower.
Only about 350 miles of the 1,230-mile pipeline will be new; for the rest, Rainey said they'll be able to use their existing pipeline network merely by reversing the flow.
The 350 miles of new pipeline will start in Washington, Pa., and tie into Enterprise's existing line in Indiana.
"That's one of the things we try to do, we try to leverage existing infrastructure whenever possible," he said. "It makes more economic sense, and it also allows us to bring (it) online faster and reduces our environmental footprint."
Rainey said they're currently getting landowner permission to survey properties and negotiating right-of-way agreements with landowners along the proposed route where the new gas line will be installed.
He said the proposed route is essentially just a line on a map until crews can get in and see what they'll be dealing with in terms of topography, infrastructure and vegetation.
"We have the flexibility to change a route as needed," he said. "For instance, we don't want to put the pipeline close to a house or across a pond, something like that. If there's going to be a dramatic change, it's got to be planned out."
He said there's rarely any need to invoke eminent domain.
"The first step is to ask landowners for survey position," Rainey said. "Once they've selected the route they'd like to follow, we contact the individual landowners and negotiate a right-of-way agreement. Because the gas line is buried, no permanent structures can be built or planted above the line."
"It's not like we go in and say 'take it or leave it.' It's a negotiating process and, for the most part, probably 95 to 99 percent of the time we're able to reach agreement with the landowners without having to go through legal proceedings. And even in cases where it ends up in court, the vast majority of those are simply trying to find out who is the rightful owner. All of the parcels may be part of a trust, or may be handed down and we need to find out who the rightful owner is."
How much the company will pay for that right-of-way depends on a variety of factors, including how it's currently being used, the kind of infrastructure or vegetation that's already in place. "If it's going to be used for farming, we have to take that into account and bury the pipeline, take extra precautions to make sure it's protected," he said.
The point is to make sure the pipeline is built to suit the area in which it is going to be located, he said.
"It's a significant investment, absolutely," he said. "We hire a pipeline contractor to build it. We have our own crews, but we typically do hire locally for certain positions. They use local goods/services, get equipment locally, they need lodging, equipment and dining facilities, and those businesses, typically, need additional employment help."
Rainey said they estimate the pipeline will create about 4,000 temporary full-time jobs, directly and indirectly.
"And on a more permanent basis, once the pipeline is in service, the state and county benefit from taxes generated by the pipeline and economic development activities," he said. "And the landowners are financially compensated."
He said the pipeline provides take-away capacity that allows producers to continue to develop shale areas and continue providing jobs.
"It trickles down to other companies," he said. "It facilitates more development. Right now, there's no way to deliver that ethane down south so it limits the opportunity for producers to develop those resources. As a byproduct of that, it translates into increased economic activity for the region."