Waiting on the World to Change, Part 2 - NEXUS Pipeline Set to Join Natural Gas Traffic Jam at Dawn Hub

Enbridge/DTE Energy’s 1.5-Bcf/d NEXUS Gas Transmission pipeline saw its first natural gas flows this week, as the Federal Energy Regulatory Commission (FERC) approved partial service on the project, opening another nearly 1 Bcf/d of capacity from Appalachia’s Marcellus/Utica producing region to the Midwest. NEXUS marks the last big westbound takeaway project from the Northeast, except for the remaining pieces of Energy Transfer’s (ETP) Rover Pipeline. It also marks the escalation of gas-on-gas competition in the Midwest market, where U.S. Midcontinent and Canadian gas supplies are also battling it out for market share. Today, we take a closer look at the NEXUS project and its potential implications for the Northeast and Midwest gas markets.

The Northeast natural gas market’s fall expansion season is well under way. Earlier this month, Williams/Transco’s Atlantic Sunrise achieved full completion by launching service for its design capacity of 1.7 Bcf/d starting gas day October 6 (see Part 1 of Waiting on the World to Change for a look at early flows on Atlantic Sunrise). That same week, TransCanada/Columbia Gas Transmission was given the nod by FERC for partial service on both its Mountaineer Xpress and WB Xpress projects. Since then, FERC also gave the greenlight to NEXUS to begin service on the greenfield portions of the pipeline, and over the past weekend, the new line began to post its first flows. There is a lot more to come with NEXUS, as the project reaches full completion and capacity commitments kick in. Today, we provide an update on the project and its potential market effects, including what early flows look like.

The NEXUS project as shown in orange in Figure 1 below is a joint venture of Enbridge and DTE Energy that involves a combination of 255 miles of greenfield mainline pipeline and leased capacity on existing third-party systems to move Appalachian gas supply to consuming markets in northern Ohio, southeastern Michigan, as well as the Dawn Hub in Ontario.

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