Two Texas-based pipeline operators, El Paso Midstream Group Inc. and Spectra Energy Corp. have agreed in principle to develop a pipeline that will link existing natural-gas pipeline networks in Ohio with gas treatment and storage facilities in the Gulf Coast region. El Paso Midstream, a subsidiary of El Paso Corp., and Spectra would each own 50 percent of the Marcellus Ethane Pipeline System (MEPS), according to their memorandum of understanding.

"This is an exciting opportunity to bring together two of the leading pipeline infrastructure companies in the industry to provide an attractive alternative for producers in the growing Marcellus development," stated Mark Leland, president, El Paso Midstream Group. "Our two organizations have been operating in the region for decades and together we look forward to providing additional resources to help meet our country's growing energy needs."

The Marcellus Shale deposit covers much of Western Pennsylvania and the territory of contiguous states with an extensive formation of shale that the U.S. Dept. of Energy estimated in 2009 may contain up to 262 trillion cubic feet of recoverable natural gas.

El Paso had previously proposed the MEPS as a solitary venture to transport up to 60,000 barrels per day of ethane from fractionation plants in the Marcellus Shale production region to interconnect points with third-party ethane pipelines and storage facilities in the Gulf Coast area.

Ethane is a stabilized hydrocarbon product that is isolated from methane gas.

Now, the partners expect MEPS to be complete by 2013, using existing facilities, rights-of-way and utility corridors, including Spectra Energy's Texas Eastern pipeline system in Pennsylvania and Ohio, and portions of El Paso's Tennessee Gas Pipeline system from Ohio to the Gulf Coast. This is expected to minimize capital cost and impact to the environment and landowners significantly, and speed the project’s timeframe.

New construction will include approximately 200 miles of pipeline and compression facilities, as well as vaporization and liquefaction facilities, they stated.

The forecast cost of the project was not reported.

"We're very pleased to be working with El Paso Midstream on this important project," stated Guy Buckley, group vice president, Corporate Development and Strategy, Spectra Energy. "The MEPS project offers Marcellus producers a cost-effective, long-term solution for moving their ethane production to multiple high-demand markets, and provides the market with an attractive opportunity to access ethane supplies from this growing supply region. In addition, the combined footprints and resources of both companies further enhance the project's overall development, execution and market breadth," he continued.