Regency Energy Partners LP (Regency Energy), Alinda Capital Partners LLC (Alinda) and GE Energy Financial Services announced plans to construct a $47 million pipeline extension of the Haynesville expansion project in North Louisiana to increase capacity on the regency intrastate gas system (RIGS). The extension, called the Red River Lateral, will add around 100,000 MMbtu/d of capacity to the current project, bringing the total project capacity to around 1.2 Bcf/d.
“The rapid development of the Haynesville Shale has accelerated our growth opportunities around the RIGS system,” said Byron Kelley, chairman, president and chief executive officer of Regency. “The Red River Lateral expands our reach deeper into the sweet spot of the Haynesville Shale and strategically positions the pipeline for further growth to meet rising producer needs. We believe this is the first of several opportunities to extend the Haynesville Expansion Project.”
The Red River Lateral will add approximately 12.5 miles of 36-inch pipe to the Haynesville expansion project and will reach further southwest to the west side of the Red River into Red River Parish, Louisiana, an area considered to be one of the richest and most active in the Haynesville shale.
All of the approximately 100,000 MMbtu/d of incremental capacity on the Red River Lateral has been contracted and 75,000 MMbtu/d of additional capacity on the existing Haynesville expansion project has been contracted as well. With the exception of a small amount of the capacity currently reserved for operational flexibility, the 1.2 Bcf/d of capacity is fully subscribed. The expansions are underwritten by firm transportation agreements with 10-year terms, and approximately 85% of projected revenues will come from reservation fees.
The $47 million Red River Lateral will be funded by each of the partners of the joint venture that owns RIGS in accordance with their ownership percentages. Regency has a 43% general partnership interest in the joint venture, while Alinda, and an affiliate of GE Energy Financial Services have a 50% and a 7% general partnership interest, respectively.
“Once the project is in service, the joint venture intends to pursue debt financing for future development around the RIGS system,” Kelley added.
Construction of the Haynesville Expansion Project began May 1, 2009, and is on budget and on schedule to meet the planned in-service date of December 31, 2009. Construction on the 46 miles of 36-inch pipeline is mechanically complete and is now being commissioned, and construction on the 75 miles of 42-inch pipeline began in late June 2009. Construction of the Red River Lateral is expected to begin this month, and is projected to be in service by the end of the year.