We’ve discussed recently how the regional production and availability of shale gas has led to dramatic changes in the historical flow of domestic natural gas – here and here. Recently, Iroquois Gas Transmission System (“Iroquois”) announced an open season on a South-to-North Project (“SoNo”) that would reverse the traditional southern flow of gas on the Iroquois system from south to north. Iroquois’ proposed project is another example of the reversal of gas flows due to the expanded production within the Marcellus Shale region.
Iroquois presently flows gas north to south starting from its receipt point off the TransCanada Pipeline (“TCPL”) at Waddington down to distribution systems servicing the Long Island, NY area. On TCPL, natural gas traditionally has flowed east from production areas in Western Canada. Now, with the availability of cheaper and geographically nearer gas in the Marcellus shale basin, shippers are looking for new ways to bring gas from PA into NY and New England. The natural gas flowing on TCPL across the US/Canadian border to Waddington incurs transportation costs that make the gas less competitive with Marcellus gas that may have a cheaper commodity price and a more economic transportation element. Consequently, real and impactful market dynamics are driving facility providers to adapt to the current situation. In its Open Season announcement, Iroquois highlighted the new proposals that will potentially bring Marcellus shale supplies to Iroquois:
- Constitution Pipeline on June 13, 2013 filed its FERC certificate application to construct a 650,000 Dt/day pipeline from Susquehanna County, PA to Iroquois at Wright, NY with an in-service date of March 2015. Constitution has requested certificate authorization that will allow it to being construction in June of 2014.
- Dominion Transmission recently concluded an open season for up to 250,000 Dt/day of capacity from Leidy to Iroquois at Canajoharie, NY with a proposed in-service date of November 2016.
- Algonquin Gas Transmission currently supplies up to 345,000 Dt/day to Iroquois shippers at Brookfield, CT. Algonquin recently submitted its FERC pre-filing application for the AIM Project to expand its capacity into New England by up to an additional 450,000 Dt/day with an in-service date of November 2016.
- TCPL currently has an open season under way that will enable receipt of natural gas from Iroquois and other eastern Canadian supply points beginning in 2016.
Iroquois’ proposal to reverse flow is targeted at exporting natural gas to eastern Canada and also to service Northern New England markets. Clearly, the aforementioned natural gas transportation entities have the same ideas in mind. Reversal of flow on a pipeline is not entirely uncommon in this day and age, but still it is a significant proposal. We anticipate that additional domestic pipelines will consider flow reversals and incremental facility projects to reap the benefits of regional gas supply from shale production facilities across the country.