Zacks_Analysts' Blog : El Paso to Expand TGP Gas Line - Analyst Blog

El Paso Corporation (EP) said that its wholly owned subsidiary, Tennessee Gas Pipeline Company (TGP), is working on expanding TGP's 300 Line in to Pennsylvania. The company has signed long-term agreements for the MPP natural gas pipeline project, which will expand TGP's 300 Line by 240,000 dekatherms per day (Dth/d).

The MPP project will include about 8 miles of the 30-inch pipeline looping and modifications to four existing compressor stations in Pennsylvania. The expansion will help bring natural gas supplies from the prolific Marcellus Shale to existing delivery points on the TGP system.

This is the fourth expansion project on the TGP Line since inception, bringing the company’s total investment in the Marcellus infrastructure to $1.3 billion and adding nearly 1.5 Bcf/d of capacity. Total capital spending for the project is anticipated to be under $100 million.

This project leverages TGP's strategic location and provides significant new firm transportation capacity for two prominent Marcellus Shale producers. Tennessee Gas Pipeline Company has subscribed for the full expanded capacity, under the project, with Chesapeake Energy Marketing Inc., a wholly-owned subsidiary of Chesapeake Energy Corporation (CHK), subscribing for 140,000 Dth/d and Southwestern Energy Services Company, a wholly-owned subsidiary of Southwestern Energy Company (SWN), for the remaining 100,000 Dth/d.

Tennessee Gas Pipeline Company plans to file a certificate application for the project with the Federal Energy Regulatory Commission in late 2011. Pending regulatory approvals, construction work on the project is expected to begin in 2013, with a November 1, 2013 in-service date.

Based in Houston, Texas, El Paso Corporation is involved in natural gas transmission and in the exploration and production sectors of the energy industry. The company primarily operates in the United States and has some exposure in Brazil and Egypt. El Paso Corporation currently retains a Zacks #3 Rank (short-term Hold rating), which supports our long term ‘Neutral’ rating on the stock.