Chesapeake Energy Signs Natural Gas Transport Package

First posted on 10-01-2008

Chesapeake Energy Corp. will be transporting 375 million cubic feet of natural gas from its Fayetteville Shale operations to a distribution site in Mississippi. Chesapeake signed a 10 year deal for a 187 mile long pipeline to be known as the Fayetteville Express Pipeline.

The deal is pending regulatory approval, but Chesapeake expects to begin using the 42 inch pipeline by late 2010 or early 2011, immediately after it is constructed.

The natural gas pipeline will originate in Conway County, Arkansas and extend to Quitman County, Mississippi.

In a statement issued by Chesapeake Chief Executive Officer Aubrey McClendon, the company said it was “pleased to announce that we have secured substantial new takeaway capacity for our Fayetteville Shale production,” and said the new pipeline would allow the company “improved access to more favorable natural gas markets at an attractive transportation rate.”

Chesapeake sees substantial growth in the Fayetteville Shale and, by signing the transportation agreement, significantly reduces its exposure to volatility in transport costs.

The Fayetteville Shale is a less conventional natural gas site, but one that geologists and other experts say holds great potential. In prior years, extracting the gas from the Shale would have been far too expensive. Recent improvements in technology make the area much more attractive to natural gas exploration companies.