YOUNGSTOWN, Ohio — Two companies have announced plans to develop a major natural gas pipeline that would run through Kentucky and other states to connect natural gas fields to export centers on the Gulf Coast.
The proposed Bluegrass Pipeline announced by Oklahoma-based Williams and Houston-based Boardwalk Pipeline Partners would provide producers in Pennsylvania, West Virginia and Ohio with a capacity of as much as 200,000 barrels a day of mixed natural-gas liquids.
The proposed pipeline could be increased to 400,000 barrels a day to meet market demand, primarily by adding additional liquids-pumping capacity.
Points of origin in Ohio and West Virginia would be hooked up to an interconnect in Kentucky, where part of the existing system would be converted to accommodate natural-gas liquids.
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The companies said they have not finalized the planned route for the pipeline.
Boardwalk already has 1,420 miles of natural gas pipeline in Western Kentucky, and it has offices in Owensboro. It has 315 employees in the state, roughly a quarter of its 1,200 workers overall, spokeswoman Molly Ladd Whitaker said.
She said the companies are looking to confirm that there is enough interest to move forward with the project. After that, "we'll be in a better position to talk about the route of the pipeline."
The announcement is the latest in a string of plans for infrastructure development across that natural gas-rich region, representing billions of dollars in investment as operators continue to produce more oil and gas with few economical options to transport the products.
A slowdown has occurred in some parts of the Marcellus and Utica Shale as companies await pipeline expansions. At the same time, a drop in the wholesale price of dry natural gas has turned operators' attention to liquid-rich portions of the formations, where they can extract energy-rich pockets of condensate, ethane, gas and oil that fetch higher prices in multiple markets.
Company leaders at Williams estimate that current liquid systems and local outlets will be overwhelmed by 2016. Total natural-gas liquid volumes in the Northeast are expected to exceed 1.2 million barrels a day by 2020, said Alan Armstrong, president and CEO of Williams.
The pipeline will deliver mixed liquids from producing areas in Ohio, West Virginia and Pennsylvania to proposed new fractionation plants and storage centers, which would connect to multiple petrochemical plants and product pipelines along the coasts of Louisiana and Texas.
Fractionation is the process of separating the various types of natural gas liquids.
"We are designing Bluegrass Pipeline to provide these two world-class resource plays with access to one of the largest and most dynamic petrochemical markets in the world," Armstrong said. "This will help producers in Ohio, Pennsylvania and West Virginia achieve an attractive value for their ethane and other liquids."
Williams spokesman Tom Droege said that no route has been determined, but the pipeline will originate at multiple points in Ohio and West Virginia.
The companies are working out cost estimates. Droege said that "for some time, we've recognized the need to move these liquids out of the Northeast to markets where there is demand for them. This has been under consideration for some time now."
The companies said that by combining new construction with about 60 percent of existing pipeline, owned by Boardwalk and known as the Texas Gas Pipeline, Bluegrass Pipeline's in-service date can be expedited to 2015 and significantly reduce the construction footprint.
Included in the project are plans for a large-scale fractionation plant and expanding natural-gas liquids storage sites in Louisiana.
The project will be subject to board and federal regulatory approvals before it can move forward.