Bat Out of Hell - Bat-related Delay in Rover Pipeline A Godsend for Canadian Gas?

The build-out of incremental natural gas takeaway capacity out of the Marcellus/Utica region has come in fits and starts, with new pipelines—as opposed to the reversal or expansion of existing pipes—proving to be the most troublesome. Energy Transfer Partners and Traverse Midstream Holdings’ long-planned 3.25-Bcf/d Rover Pipeline to southern Michigan is a case in point. The latest challenge for the $4.2 billion project is getting final federal approval in time to allow tree clearing along the pipeline’s 711-mile route to be completed before federally protected bats start roosting in early April. If that timeline’s not met, Rover’s planned completion later in 2017 may be delayed a full year, enabling Western Canadian gas producers to sell more gas to Ontario and the Upper Midwest. Today we assess what’s at stake for ETP, Traverse, and producer-shippers in the Marcellus/Utica and Western Canada.

The adjacent and over/under Marcellus and Utica shale plays in Pennsylvania, northern West Virginia and eastern Ohio have had a profound effect on the U.S. energy sector. Natural gas production in the Marcellus took off about seven years ago, rising from ~2 Bcf/d in early 2010 to ~18 Bcf/d now. Utica production’s meteoric ascent started in mid-2013; since then the play’s output has increased from ~300 MMcf/d to ~4.2 Bcf/d. In addition to giving the U.S. an entirely new gas-production epicenter, the development of the Marcellus/Utica is forcing a major reworking of the nation’s gas pipeline delivery network. That network was once geared to moving vast quantities of Gulf Coast gas to the Northeast and Midwest, but now it is focused on moving gas out of Pennsylvania, West Virginia and Ohio in just about every direction—to New England, the Mid-Atlantic states, the Southeast, the Gulf Coast, the Midwest and Ontario/Quebec. We discussed this extensive re-plumbing at length in our 50 Ways to Leave the Marcellus Drill Down Report, and more recently in I Saw Miles and Miles of Texas/Part 1, our series of Drill Down reports on transporting Marcellus/Utica and other gas to LNG export terminals along the Gulf Coast (and to Mexico) and in our Too Much Pipe On Our Hands? blog series.

Energy Transfer Partners (ETP) and Traverse Midstream Partners’ planned Rover Pipeline project (yellow and black dotted line in Figure 1) has been mentioned frequently in these reports and blogs. It is the largest single Northeast natural gas takeaway project on the radar screen. The numbers—$4.2 billion, 711 miles, and 3.25 Bcf/d—speak for themselves; the project represents almost 20% of the total takeaway capacity additions we are tracking. Rover also is critical to plans by ETP to make more of its Trunkline (purple line) and Panhandle Eastern Pipeline (red line) bi-directional to allow delivery of more Marcellus/Utica gas to the Gulf Coast and other markets.