Chesapeake Energy Marketing has entered into an agreement with Spectra Energy to transport its Marcellus Shale production into the natural gas market in the US.
The company said that by signing the agreement it will be the largest of three anchor shippers on a new Spectra Energy natural gas pipeline project to serve the New York City metropolitan area natural gas market.
Spectra Energy will construct facilities on its Algonquin Gas Transmission and Texas Eastern Transmission pipeline systems, including approximately 16 miles of 30-inch pipeline from Staten Island to Manhattan.
Once completed, the pipeline will provide a new interconnect with facilities of Consolidated Edison of New York, which will deliver up to 800 million cubic feet per day (mmcf/d) of additional natural gas to Con Edison’s service area.
Chesapeake is the largest capacity holder with a commitment of up to 425mmcf/d. The expansion is expected to be in service by year-end 2013.
Aubrey McClendon, CEO of Chesapeake, said: “Chesapeake is pleased to make the commitments necessary to transport our growing Marcellus Shale production into the best natural gas market in the US. The relative proximity of abundant Marcellus natural gas reserves to New York City will provide the public, utilities and businesses with a clean-burning alternative to existing dirtier fuel sources.
“Increased investment in natural gas production and distribution will create tens of thousands of well-paying American jobs in areas that have been suffering economically and will reduce our dependence on expensive foreign oil and other carbon-heavy fuels such as coal. Natural gas provides a cleaner alternative that will reduce greenhouse emissions and improve air quality in the New York City metropolitan area – a major goal of the city’s long-term clean-air initiative.”
Chesapeake claims that this is the first major pipeline expansion in the Northeast US that is designed to transport the company’s expanding Marcellus Shale natural gas production and will likely be followed by other pipeline expansion projects from the Marcellus to other high-value eastern US markets.
The New York City metropolitan area is the logical first expanded distribution delivery point for this production based on proximity to the Marcellus and the need for the New York City area to reduce its greenhouse gas emissions and improve air quality by burning less fuel oil in electricity-generating power plants and in building and home furnaces.