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Kinder Morgan Energy Partners LLC believes its proposed Cochin Marcellus Lateral is the “faster, cheaper and most flexible” solution for Marcellus natural gas liquids (NGLs), especially ethane, said Karen Kabin, director of midstream development for Kinder Morgan Products Pipeline.
Kabin made her comments at Hart Energy’s recently held Marcellus Midstream Conference and Exhibition in Pittsburgh.
The 248-mile, 12- to 16-inch-diameter line will connect to the company’s existing Cochin pipeline and move some 25,000 barrels per day of ethane or NGLs to Sarnia or Windsor in Ontario, Canada, in 2012, if built.
Sarnia, Ontario, is the best bet for a healthy ethane market, said Kabin, although the pipeline could has access to multiple markets, including Sarnia, Windsor, Chicago, Conway and Edmonton.
She explained to the 1,400-plus delegates at the conference that, although the Northeast U.S. has premium-priced propane market demand, the demand is seasonal. The area has a limited local ethane, normal butane and other liquids demand.
The U.S. Gulf Coast has virtually no demand for incremental mixed NGL barrels due to limited fractionation capacity. Although the area does sport major ethane demand, about 800,000 barrels per day, the demand is price sensitive and already has access to multiple supply sources.
Elsewhere, the Chicago, Illinois, market is an option, but already has under-utilized fractionation capacity. Meanwhile, Sarnia has the potential for better netback due to lower per-barrel transportation costs and limited supply options, compared to the U.S. Gulf Coast.
Kinder Morgan has already completed a front-end engineering and design study, and is actively engaged with local communities and permitting agencies, said Kabin. It has hosted nine open houses across Ohio for local landowners and communities and has been granted access to more than 90% of the proposed pipeline route.
Also, the pipeline company has completed about 75% of the required stream and wetlands surveys and some 50% of the endangered species surveys as required. After submitting an application to the Ohio Power Siting Board and negotiating precedent agreements with shippers, Kinder Morgan plans to begin construction this year.
Contact the author, Jeannie Stell, at jstell@hartenergy.com.
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