Transcontinental Gas Pipe Line Co. LLC (Transco) has asked FERC to start service on the last phase of its 829,400 Dth/d Regional Energy Access (REA) expansion project by the end of this month.
The request came slightly ahead of schedule for the expansion, which is designed to boost supplies for Transco customers from Pennsylvania to New Jersey and Maryland. The project had been expected to be fully in-service by the end of the year.
About 450,000 Dth/d of the capacity boost was added in late 2023 along Transco’s Leidy Line in Pennsylvania. Another 160,000 Dth/d came online earlier this month in the eastern tip of the state and in New Jersey.
The firm was “in the final stages of construction activities” and an update on the project was expected during parent company Williams’ second quarter earnings call next month, a Williams spokesperson told NGI.
The final leg of the expansion – which includes additional compressor horsepower and upgrades to meter stations in New Jersey and Maryland – “are fully backfilled and mechanically complete,” Transco said in a filing to the Federal Energy Regulatory Commission in mid-July.
“Transco seeks Commission authorization to place the … remaining facilities into service as early as July 30, 2024, and commence the full project service of 829,400 Dth/d,” the company said.
Dampened Premiums?
REA was designed to loosen pipeline constraints into densely populated areas in the Northeast that rely on natural gas for heating and cooling. The project’s completed phases have added capacity along Transco’s system that ships natural gas from the Marcellus and Utica shale fields of northeastern Pennsylvania eastward to New Jersey and Maryland.
Analysts have told NGI they expected REA capacity to narrow the usual gas price premiums in Transco Zone 6 non-NY compared with upstream Transco-Leidy Line hub prices.
The spread can widen dramatically during severe winter weather.
For example, the cash price spread jumped above $27.000/MMBtu in December 2022 as Winter Storm Elliott both spiked demand and caused freeze-offs that cut gas flows to the region. The spread also jumped to about $14.000 in February 2023.
This past winter, with the partial in-service of the REA, the difference between the two hubs maxed out above $14.000 during a mid-January freeze.
Year to date, Transco Zone 6 non-NY has priced at an average premium of 39.9 cents to Transco-Leidy Line, up from 28.9 cents during the same period in 2023.
However, a difference in weather could be a factor in that year/year increase. January’s cold spell-driven price spike lasted longer than a similar event in February 2023. Comparing prices starting from March 1, the spread this year has averaged 5.6 cents compared with 10.4 cents over the same period last year.
This summer, gas flows through Leidy Line’s Compressor Station 515 in Bucks County, PA, topped out above 2.6 Bcf/d in July, outpacing maximum flows around 2.3 Bcf/d a year earlier.
Court Fights
Transco’s request to FERC came the same week a federal appeals court ruled that a Pennsylvania agency could review water permit approvals for REA.
The U.S. Court of Appeals for the Third Circuit turned down Transco’s request to block a state agency from hearing appeals of REA’s water quality certification issued by the Pennsylvania Department of Environmental Protection (No. 1-23-cv-00463).
Williams said it does not expect the ruling to block completion of REA.
“We continue to expect the Regional Energy Access project to be completed on schedule,” the Williams spokesperson said.
Environmental groups asked the state to review the permits after Transco received them and began expansion work. Transco took them to court, arguing the federal Natural Gas Act preempted a state law from allowing administrative appeals. The Third Circuit disagreed and upheld a district court’s decision against Transco.
The case is the latest in a series of legal fights over the project. Several states and environmental groups challenged FERC’s approval of the REA, arguing it would increase greenhouse gas emissions at a time when the states were pursuing policies in the opposite direction.
