Kinder Morgan Energy Partners LP (NYSE: KMP) reports that its subsidiary, Kinder Morgan Cochin LLC, has signed a letter of intent with NOVA Chemicals Corp. to develop a new products pipeline from the Utica shale play. Under the agreement, Kinder Morgan Cochin will develop, construct, own, and operate a 210-mile, 10-inch-diameter pipeline from multiple fractionation facilities in Harrison County, Ohio, to Kinder Morgan’s Cochin Pipeline near Riga, Michigan, where the company will then move product via Cochin east to Windsor, Ontario, Canada.
The proposed $300 million Kinder Morgan Utica To Ontario Pipeline Access (UTOPIA) would transport previously refined or fractionated natural gas liquids (NGLs), including ethane and propane. The pipeline is expected to have an initial 50,000 barrels per day (bpd) of capacity, which is expandable to more than 75,000 bpd. A mid-year 2017 in-service date is anticipated, pending NOVA’s execution of a definitive agreement during the binding open season process (which is expected in 2014) and timely receipt of necessary permitting and regulatory approvals.
This proposal will complement the company’s existing transportation solutions for NGLs produced in the Utica, allowing producers to choose between mixed NGLs to the Gulf Coast or previously fractionated NGLs to nearby demand centers. The project is expected to be immediately accretive to cash available to KMP unitholders upon completion.
The Cochin Pipeline is a multi-product pipeline consisting of approximately 1,900 miles of 12-inch pipeline operating between Fort Saskatchewan, Alberta, and Windsor, Ontario. Cochin currently transports propane and ethane-propane mix to petrochemical and fuel markets in Ontario. Construction continues on the Cochin Reversal project, which will move light condensate from Kankakee County, Illinois (west of Riga, Michigan) to existing terminal facilities near Fort Saskatchewan, Alberta, beginning in July 2014.