Statoil inks agreement with National Fuel to deliver Marcellus Shale gas to Canada via Niagara

Source: Statoil

Statoil has concluded an agreement for the transportation of gas through a pipeline from the Northern Marcellus shale gas area in Pennsylvania (PA) to Niagara at the US-Canadian border. 

Statoil Natural Gas (SNG), a US subsidiary, has concluded a transportation agreement with National Fuel Gas Supply Corporation, securing Statoil the right to transport up to 3.2 billion cubic meters (bcm) per year/320 000 mcf/day of gas through an interstate pipeline. 

“This is a further reinforcement of Statoil’s gas marketing position in the US,” says Rune Bjørnson, executive vice president for Natural Gas. 

“This agreement will secure access to a main interstate pipeline system and is an important move to maximize the value of Statoil’s gas produced in the Marcellus shale. The capacity will create sales opportunities at Niagara into Ontario, Canada and along the path,” he continues. 

National Fuel’s pipeline system has historically been used to import gas into the US from Canada, but as Canadian production declines combined with increased Canadian gas demand, signals from the market suggest that the eastern part of Canada will need imports from the US.

The Marcellus play is ideally situated to meet this demand. Statoil has now agreed with National Fuel to facilitate reversal of the flow of the pipeline. This will require some additional compression and other minor modifications. 

The pipeline lands at the Niagara delivery point which is directly connected through existing infrastructure to the Greater Toronto metropolitan area and Union Dawn market hub, which is the second largest traded gas market in Canada. 

The expected in-service date is mid 2012 and Statoil has booked the capacity for a 20 year period. The starting point for the pipeline will be Ellisburg, Pennsylvania.

In March 2010 Statoil entered into a transportation agreement ensuring the right to transport and deliver gas from Northern Marcellus to the New Jersey and New York City areas.

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