Vector to increase Dawn delivery ahead of new projects

OREANDA-NEWS. October 05, 2016. Vector pipeline plans to shut the interconnect with Dawn storage hub in Ontario, Canada, next year to increase capacity allowing more Appalachian gas to reach that region.

Vector, which runs from Illinois to Canada, will shut the 1.5 Bcf/d (1.4bn m?/d) interconnect with the Union Gas Dawn storage hub for 18 days in May to increase capacity to 2.3 Bcf/d. The additional capacity is needed to move gas from the proposed Nexus Gas Transmission and Rover pipeline projects through interconnects in Michigan into the Dawn hub.

Vector has commitments of about 1.4 Bcf/d from the proposed pipelines. Its capacity to Dawn is fully subscribed starting late 2017, once both projects are in-service, the company said.

Gas production from northeast US shale fields such as the Utica and Marcellus has been constrained because of a lack of pipeline infrastructure. Nexus could provide an outlet for some of that stranded gas. Pipeline constraints have contributed to low prices at northeast supply hubs, especially during periods of mild weather.

Spot natural gas prices at Tennessee Gas pipeline zone 4 Marcellus have averaged a \\$1.75/mmBtu discount to the Henry Hub in September widening from \\$1.52/mmBtu in August.

Argus forward curves show that discount will contract to \\$1.35/mmBtu during September 2018, indicating that proposed pipelines will help alleviate some of the the supply glut.

Spectra Energy and DTE Energy are the lead developers on the 1.5 Bcf/d Nexus project. The 256-mile (412km) greenfield project would connect markets in northern Ohio, southeastern Michigan and Ontario, Canada, with supplies from the growing Appalachian shale.

Nexus is awaiting a final environmental impact statement (EIS) from the US Federal Energy Regulatory Commission (FERC), which is expected to be issued in November. The pipeline is scheduled to come on line by November 2017.

Energy Transfer's 3.25 Bcf/d Rover pipeline is scheduled to startup in the second half of 2017. The 713-mile pipeline could serve the same markets as Nexus.

About 32pc Rover's capacity will be delivered to markets and storage fields in Michigan through Vector. Vector will ship volumes that are not delivered to Michigan to the Dawn hub, according to Rover.

The remaining capacity from Rover will be delivered to existing pipelines in Ohio and West Virginia for distribution across the US.