Takeaway capacity out of the Marcellus/Utica shale producing region is about to get another significant boost. Tallgrass Energy’s Rockies Express Pipeline (REX) expects to bring the first 200 MMcf/d of its 800-MMcf/d Zone 3 Capacity Enhancement project (Z3CE) in service any day now, and ramp up to the full 800 MMcf/d by end of the year. Moreover, the pipeline operator has hinted that it may be able to eke out incremental Zone 3 operating capacity over and above the new design capacity in the near future. The Z3CE expansion will mark the third time in as many years that REX will increase westbound takeaway capacity out of the Marcellus/Utica region. With each capacity boost, Northeast production volumes have risen to the occasion and the capacity has filled up. Today we examine this latest expansion and what it will mean for U.S. gas production.
U.S. natural gas production growth in recent years has gone hand-in-hand with takeaway capacity additions out of the Northeast region, and the reversal of flows on REX—originally built for west-to-east flows out of the Rockies—has played no small part in that. REX began reversing flows on its eastern-most sections of its Zone 3 segment—from Clarington, OH in Monroe County west to Moultrie County, IL—back in mid-2014, initially providing small volumes (about 0.25 Bcf/d) of backhaul capacity to move production received from new interconnects in the Marcellus/Utica region, west along the pipe to interconnects with other long-haul pipes that were also in the process of reversing flows. By early 2015, that westbound capacity on REX was expanded to 0.6 Bcf/d, and later in 2015, that was followed up by the East-to-West (E2W) expansion, which allowed a full 1.8 Bcf/d in westbound forward-haul capacity starting in August 2015 (see Waiting For a REX Like You). At first, there wasn’t sufficient interconnect capacity to receive incremental production on the eastern end. But with each expansion, new receipt points were added near the eastern terminus and the new bidirectional capacity allowed Marcellus/Utica gas supply to move farther west along Zone 3—with that last expansion reaching as far west as Moultrie County, IL. As the graph in Figure 1 shows, since that last mainline expansion in August (2015), operating receipt capacity (blue line) has increased from about 1.4 Bcf/d to about 3.1 Bcf/d, allowing flows (green area) to ramp up to the mainline capacity of 1.8 Bcf/d (black line). The higher flows were facilitated by a combination of increased capacity available at several existing receipt points, as well as a new point brought online in January (2016)—the 842-MMcf/d Ohio River System Bearwallow point in Monroe County, OH.