The Rockies Express Pipeline (REX) has been transformative. Originally built as a west-to-east pipeline, its main job was to give Rockies natural gas a way to reach premium markets in the Midwest and the Northeast. But by the time it was constructed, surging production in the Marcellus and Utica shales had overwhelmed the need for Rockies gas in the East, and REX evolved to become a major outlet for Appalachian gas to the Midcontinent. Now, REX has moved beyond its first two incarnations, and its owner, Tallgrass Energy, has announced plans to build a greenfield pipeline that would connect REX and the markets it serves with the prolific Permian Basin, 900 miles south of the existing mainline. In today’s RBN blog, we’ll discuss REX’s history, where it stands today, and how a new pipeline connection with the Permian might fit into its evolving strategy.
REX has been a frequent topic in the RBN blogosphere over the years. REX was built in phases from 2006-09 and was a critical outlet that allowed Rockies gas to access markets in the Midwest and Northeast — which at the time had little local supply and high demand. The Rockies had the gas, and production was ramping up quickly, but there was not enough pipeline capacity out of the region. Enter REX, which in the late 2000s was the largest pipeline project developed in 20 years. As shown in Figure 1 below, REX (red line) stretches nearly 1,700 miles from the Rocky Mountains in Colorado to eastern Ohio, crossing Wyoming, Nebraska, Kansas, Missouri, Illinois and Indiana along the way. REX also connects with Tallgrass’s Ruby Pipeline (brown line) in Wyoming via its lease on the Overthrust Pipeline (dashed gold line), giving it the ability to move volumes to the West Coast (more on that in a bit).
Figure 1. The Rockies Express and Ruby Pipelines. Source: RBN
As our series from more than a decade ago (The Marcellus Changes Everything) detailed, REX was an ideal solution at the time of its completion in 2009 because it filled a gas-supply void created by declining Gulf Coast production and falling gas imports from Canada. By 2010, REX was running near its eastbound capacity of 1.8 Bcf/d. Unfortunately, REX’s operational in-service coincided with the Shale Revolution in the Appalachian Basin. The Marcellus and Utica regions in Pennsylvania, Ohio and West Virginia experienced massive growth in natural gas production just as REX was coming into service, quickly replacing much of the gas that had been flowing into the Northeast and shifting pipeline economics. As we noted in One Step Closer, by 2015 the Northeast produced more gas on an annualized basis than it consumed, flipping the region into a net exporter. As this historic transformation was occurring, midstream companies scrambled to provide pipeline takeaway capacity out of the Appalachian Basin.
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