U.S. federal energy regulators told Energy Transfer Partners LP (NYSE: ETP) to consider alternatives to get its Rover natural gas pipeline to cross the Tuscarawas River in Ohio, which an analyst said could delay completion of the project.
After a few weeks of drilling under the Tuscarawas, the U.S. Federal Energy Regulatory Commission (FERC) on Jan. 24 ordered ETP to cease work at the site.
ETP planned to run two pipes under the Tuscarawas. One is already in service and has over 1 billion cubic feet per day (Bcf/d) of natural gas flowing through it.
But ETP has run into a difficult rock formation on the drill for the second pipe and has reportedly already lost about 200,000 gallons of drilling fluid down the hole, according to a letter from the Ohio Environmental Protection Agency, which for weeks has been urging FERC to stop ETP’s work at the site.
That drilling fluid, which is a mix of clay and water, has not returned to the surface, according to the FERC filing.
FERC ordered Rover to provide information about the feasibility of completing the current drilling, finding another location to cross under the river or go with just one pipeline under the river.
The company has said it expects to finish Rover by the end of the current quarter.
“At this time, we do not anticipate a change to that in service date,” ETP spokeswoman Alexis Daniel said in an email after the company received the FERC order. She said ETP continues to work on the rest of the pipeline.
Analysts, however, think the project will likely be delayed.
“At this point, we don’t think it will be done at the end of the first quarter,” said Matt Lewis, director of financial analysis at energy research firm East Daley Capital in Centennial, Colo.
“I don’t see this as a huge delay. I figure they will find a way to solve this issue,” Lewis said, noting ETP would likely complete the project in the second or possibly the third quarter.
Once finished, the $4.2 billion Rover will carry up to 3.25 Bcf/d from the Marcellus and Utica shale fields in Pennsylvania, Ohio and West Virginia to the U.S. Midwest and Ontario in Canada.
One Bcf/d of natural gas can supply about 5 million U.S. homes.
Major producers signed up to use Rover include units of privately-held Ascent Resources, Antero Resources, Range Resources, Southwestern Energy, Eclipse Resources and EQT Corp.