Tuesday, March 3, 2009

Regency Announces Haynesville Pipeline

At the end of last week, Regency Energy Partners announced that it has secured financing for a project to double the size of its north Louisiana pipeline and specifically serve the Haynesville Shale area.

The $653 million expansion to the Regency Interstate Gas System ("RIGS") will be a 1.1 Bcf/day, 128 mile link of 36" and 42" pipe across north Louisiana with four major interconnections along the way. The pipeline should be in service by the end of 2009. Regency indicated that the company has received commitments for 84% of the capacity and is in negotiation for the rest.

This new pipeline is good news for many reasons. First, it's nice to see something get funded in this economy! I think that speaks to the promise that the Haynesville Play offers. Second, adding "takeaway capacity" to the play is very good news. It validates the concept that one of the advantages of the Haynesville Play is that it there was already existing E&P infrastructure in place. This project is an extension of an existing pipeline and not an entirely new structure. It is going to get built in less than one year, which would not be possible in other parts of the country that don't have the infrastructure Louisiana has.

Below is a good image from Regency's quarterly presentation showing the course of the proposed pipeline (three segments) and activity in the Haynesville Play. In spot checking the map, I noticed that some of the well locations are not perfect, but it is a good summary.

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