PITTSBURGH ̶ The midstream has come a long way in the last five years or so in the Marcellus and Utica shales, but the prolific nature of the play is such that more infrastructure is needed to keep up with production. This is further exacerbated by the fact that supply growth is outstripping regional demand, according to Don Raikes, senior vice president of customer services and business development at Dominion Resources. He spoke at Hart Energy’s recent Marcellus-Utica Midstream conference.

“The lack of a regional market accelerates the downward pressure on pricing,” he said. In order to alleviate this situation the company’s Cove Point LNG export project and Atlantic Coast Project will provide the region with 2.3 Bcf/d of incremental burner tip demand once completed. Similarly, Spectra Energy is redirecting pipeline flows and building new systems to help get production to markets in the Northeast, Midwest, the Southeast, Gulf Coast and eastern Canada.

“Because of our pipeline system being attached to some of the biggest markets in North America, we feel we can manage the ‘last mile’ to make sure markets are connected to good supplies,” Brian McKerlie, vice president of business development at Spectra Energy, said at the conference.

Spectra’s focus has traditionally been on gas transmission, storage and distribution, along with NGL gathering and processing in the eastern portion of the U.S. and Canada. While its footprint has changed a bit in the past few years with acquisitions and projects, this remains the heart of the company’s footprint and will remain so as the Marcellus and Utica shales keep increasing. Current production form the region is 17-18 Bcf/d, but is estimated to increase to 39 Bcf/d by 2030.

“Demand is continuing to grow in this [ample supply-low cost] environment that the industry has created. This is leading to new opportunities to connect new demand with supplies,” McKerlie said. The company’s Texas Eastern pipeline system will play a major role in achieving this goal as it handles about 30% of the play’s current production. This figure increases to 40% of the play’s production when Spectra’s Algonquin pipeline is included.

However, in order to reach new markets, Spectra is building several new pipeline systems – the NEXUS Gas Transmission system and the PennEast pipeline. Plans call for other systems to be expanded.

The 250-mile NEXUS system is designed to bring 1.5 Bcf/d of Marcellus and Utica gas to LDCs, power generators and industrial users in Ohio, Michigan, Chicago and Ontario. This project is being developed with DTE Energy with Spectra’s CapEx portion being $700 million to $1 billion. It is expected to be in-service in the second-half of 2017.

“The PennEast pipeline will establish a new direct connection to Northeast Pennsylvania production, capitalizing on the opportunity to work with some of our biggest customers and leverage our existing assets,” McKerlie said. This 108-mile system will cost about $1 billion and transport up to 1 Bcf/d of production and connect with major interstate and gathering systems, including Texas Eastern and the Algonquin system.

Though smaller in size, Texas Eastern’s $15 million Philadelphia Lateral project is just as important in delivering Appalachian gas to a new market as it will deliver 150,000-300,000 dekatherms per day (Dth/d) of gas to the growing Philadelphia, Pa., power generation and industrial markets.

The New England market also remains both the most challenging and intriguing market for the midstream to crack based on the large premiums in the region. The $1 billion Algonquin Incremental Market (AIM) expansion will help deliver up to 342,000 Dth/d of gas into New England when it comes online in the second-half of 2016. Additionally, Spectra Energy is planning to bring the $900 million Atlantic Bridge pipeline into service in the second-half of 2017, which will have the capacity to deliver up to 150 million cubic feet per day of gas to LDCs and industrial users in New England and Canada. Lastly, the Access Northeast project can expand the Algonquin system’s capacity into New England by 1 Bcf/d and could have an in-service date as early as 2018.

The Northeast is not the only region representing new markets for Marcellus and Utica production. The 550-mile Atlantic Coast pipeline is scheduled to be placed in service in the fall of 2018 and will deliver up to 1.5 million Dth/d to West Virginia, Virginia and North Carolina. This project is expected to cost up to $5 billion and is being built as a joint venture between Dominion Resources, Duke Energy, Piedmont Natural Gas and AGL Resources.

This project is especially attractive as gas-fired power generation is quickly replacing coal-fired generation in the Southeast. “From 2008 to 2018, 13 gigawatts of new natural gas-fired generation will be placed in-service or be under construction in the Southeast, which will add about 2 Bcf/d of peak-day gas demand,” Raikes said.

Dominion’s Cove Point LNG export terminal will open up even more markets for gas produced in the Appalachian Basin as it has the potential to move production to virtually any market in the world. The project, which will cost up to $3.8 billion to complete, will have the capacity to export up to 5.25 million tonnes per annum of LNG when it is placed in-service in late 2017.

“Our business is not easy. When you build projects like these, you have challenges and opposition, but we’ve been through this before…and we know that natural gas is a great option. We are in a down period for prices, but that’s temporary. These projects will provide the energy needed going forward,” Raikes said.