Enterprise Products Partners L.P and Chesapeake Energy Corporation today November 2, 2011 announced they have entered into a long-term contract whereby Chesapeake would anchor Enterprise’s proposed long-haul ethane pipeline from the Marcellus and Utica shale regions in Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast.

“We have also built facilities to serve the petrochemical industry on the Gulf Coast as it continues to expand its demand for price-advantaged domestic ethane to displace more expensive imported crude oil derivatives.”
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The approximately 1,230-mile pipeline would have an initial capacity of 125,000 barrels per day of ethane and could be quickly expanded through a combination of additional pumping horsepower and pipeline looping. The committed shipper transportation rate would range between 14.5 cents per gallon and 15.5 cents per gallon. Through connections at the partnership’s natural gas liquids (“NGL”) storage complex in Mont Belvieu, Texas, ethane production from the Marcellus and Utica shales would ultimately have direct or indirect access to every ethylene plant in the U.S. The pipeline could begin commercial operations in the first quarter of 2014.

“The addition of this new pipeline would provide producers in the quickly expanding Marcellus Shale play, as well as the emerging Utica Shale, with much-needed midstream infrastructure to facilitate production of NGL-rich natural gas and provide shippers with access to the highest value markets on the U.S. Gulf Coast for their ethane,” said Michael A. Creel, president and chief executive officer of Enterprise’s general partner. “We have also built facilities to serve the petrochemical industry on the Gulf Coast as it continues to expand its demand for price-advantaged domestic ethane to displace more expensive imported crude oil derivatives.”

James C. Johnson, Senior Vice President – Marketing for Chesapeake Energy Corporation added, “As the most active driller and largest lease holder in the Marcellus and Utica Shale plays, Chesapeake has committed to 75,000 barrels per day over a five-year ramp-up period to anchor this critical infrastructure and has the ability to secure additional capacity in the project. We view providing a major commitment in support of this project as an important step toward obtaining premium pricing for the significant volumes Chesapeake will produce from this resource.”