NiSource Inc. (NYSE: NI) and UGI Corporation (NYSE: UGI) announced that NiSource’s NiSource Gas Transmission & Storage (NGT&S) unit and UGI’s UGI Energy Services, Inc. unit, are partnering to develop a new natural gas pipeline to provide Marcellus Shale producers in Pennsylvania improved access to high-value markets.
An estimated 500,000 Dth/day of transportation capacity will be made available for increased production along NiSource’s Columbia Gas Transmission pipeline system in Clearfield, Centre and Clinton counties to interconnections with Transcontinental Gas Pipeline Corp., Tennessee Gas Pipeline Company, Dominion Gas Transmission, Inc., and Millennium Pipeline Company in north central Pennsylvania and southern New York, as well as connections to UGI’s Tioga/Meeker natural gas storage facilities and extensive gas distribution network.
“With the significant increase in drilling and deliverability of natural gas in the Marcellus Shale, there is a growing need for capacity to facilitate the movement of producers’ gas to downstream markets,” said Christopher A. Helms, executive vice president and group CEO for NGT&S. “Providing solutions to deliver this exciting new supply source to high-value markets is a key focus area for NGT&S. With this and other projects, we are working diligently to advance the NGT&S strategic plan to meet customer needs through thoughtful infrastructure investment.”
The joint marketing and development agreement is the first step in the planned development, construction and operation of a natural gas transmission pipeline with multiple points of access for producers and customers. The collaboration of the two companies will leverage the considerable Marcellus development efforts of each company, along with their extensive asset bases in Pennsylvania.
Development and construction costs are expected to be shared equally by the partners. Based on extensive work completed to date, the parties expect to file preliminary plans with the Federal Energy Regulatory Commission (FERC), and to hold an open season for the project’s capacity, by the end of the year. The project is targeted to be in-service in the fourth quarter of 2012. The partners anticipate additional expansions in the future as producers carry out their drilling plans.