Source: Buckeye Partners
Buckeye Partners, L.P. previously announced a Memorandum of Understanding with NOVA Chemicals Ltd. to build a y-grade NGL pipeline system from the Marcellus basin in Pennsylvania to the NOVA petrochemical plant in Sarnia, Ontario. The y-grade pipeline system will be named the Union Pipeline (UPL) and has a planned pipeline capacity of 90,000 barrels per day to 170,000 barrels per day.
UPL is willing to provide up to 100% of the capacity pursuant to contracts to the entities that commit to ship or pay for a minimum volume of 5,000 barrels per day annually over a 15 year period from eligible origin points on the UPL system to the Sarnia, Ontario area. This pipeline opportunity creates the option for the Marcellus producer to sell directly to the market in Sarnia, Ontario. UPL is therefore conducting a non-binding open season during which entities may indicate their willingness to enter into firm capacity throughput and deficiency agreements with UPL from the expected origination points to the Sarnia-Lambton refining and petrochemical area in Ontario Canada.
The intent of this open season is to solicit interest to better define the engineering estimate, desired origination points, and project scope. Interested entities will then be provided with the opportunity, at a future date, to participate in a binding open season and obtain contract y-grade rights on UPL’s system. Shipper commitments are necessary for Buckeye to undertake the financial obligations necessary to construct the pipeline. If this solicitation of interest is successful and Buckeye undertakes the construction of the Union Pipeline System, the final scope will be set, additional engineering estimates will be completed, a binding open season will be issued, and throughput and deficiency agreements will be executed for the contract rights.
If Buckeye receives qualifying Capacity Requests totaling sufficient volumes to construct the pipeline, in Buckeye’s sole judgment, Buckeye will notify each entity of the amount of total firm capacity available in the binding open season. Buckeye expects to issue a binding open season May 2010. The Requests for Capacity in the binding open season will result in the execution of firm capacity throughput and deficiency agreements with UPL.
Submission of the Capacity Request form is non-binding on either Buckeye or the submitting entity. Buckeye makes no commitment to construct the proposed UPL y-grade system by reason of conducting this open season. Buckeye will make the decision whether to construct the Union Pipeline system in its sole discretion based, among other considerations, upon the Capacity Requests it receives, and Buckeye’s assessment of whether it will conduct a binding open season and execute the corresponding firm capacity throughput and deficiency agreements.