Spectra Energy Corp
) together have signed a Memorandum of Understanding (MoU) to
develop the NEXUS Gas Transmission (NGT) system. The development is
estimated to cost around $1.2 billion to $1.5 billion.
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The proposed pipeline system - NGT - will carry natural gas from
Ohio Utica shale to the markets in the U.S. Midwest, including Ohio
and Michigan as well as Ontario, Canada. Starting from northeastern
Ohio, the project will consist of about 250 miles of large diameter
pipe and have a capability of transporting one billion cubic feet
of natural gas daily.
The pipeline will utilize the existing Vector Pipeline system to
gain access to the Ontario market, trailing the existing utility
corridors to an interconnect in Michigan. Spectra Energy will
obtain a 20% interest in the Vector Pipeline - a joint venture
between DTE Energy and Enbridge - once the project is completed.
The new pipeline, scheduled to be commissioned by November 2015, is
expected to supply gas to local distribution companies, power
generators and industrial users in the Ohio, Michigan and Ontario
markets. It will include links with Michigan Consolidated Gas
Company, Consumers Energy and, via the Vector Pipeline, the
Enbridge Tecumseh Gas Storage facility and Union Gas' Dawn Hub,
both in Ontario.
The project has received an enormous level of interest for a
considerable level of firm capacity and the partners are intent on
holding an open season for the project in the fourth quarter of
Spectra Energy is one of North America's premier natural gas
infrastructure plays and has strong business positions in the
growth markets. Though we believe commodity price concerns remain
for the near term, the company's core fee-based businesses of
storage, transmission, distribution and Canadian gathering and
processing have the potential to move the needle toward solid
earnings and cash flow growth in the long run.
Spectra Energy holds a Zacks #3 Rank, which translates to a Hold
rating for a period of one to three months. Longer term, we
maintain our Neutral recommendation on the stock.