Project will
carry natural gas from Rockies
Oct 19, 2005 - Houston Chronicle
Author(s): Tom Fowler
Oct. 19--Kinder Morgan Energy Partners and Sempra Energy have
customer commitments for at least half the capacity of their planned $3
billion, 1,500-mile natural gas pipeline out of the Rockies.
This puts the companies a step closer to being the first to build a
major pipeline connecting the natural gas-rich Rocky Mountains with
other U.S. markets clamoring for more supplies.
Two divisions of Calgary, Alberta-based EnCana Corp. have agreed to
negotiate for as much as 500 million cubic feet per day of capacity on
the pipeline.
The project will also incorporate a 330-mile pipeline that an EnCana
subsidiary, Entrega Gas Pipeline, recently started to build in Colorado.
Combined with commitments from Sempra for 200 million cubic feet of
capacity, the Wyoming Natural Gas Pipeline Authority for another 200
million cubic feet and a handful of other big users, the pipeline has
customers for about half its planned 2 billion cubic feet per day
capacity.
"Projects are proposed and open seasons are conducted frequently, but
pipelines don't get built without real shipper support," said Scott
Parker, president of Kinder Morgan's Natural Gas Pipelines Group. "Only
one major pipeline project will be built out of the Rockies in the short
term, so I think this commitment says ours is way in the lead and coming
down the homestretch."
The tentative commitments from customers have Kinder Morgan and
Sempra moving forward with a request to the Federal Energy Regulatory
Commission to begin the environmental review process for the project.
At least two other projects to build pipelines from the Rockies to
other markets have been announced. El Paso Corp. started soliciting bids
from potential customers this month for a planned 1,000-mile pipeline
project to move up to 2 billion cubic feet per day of natural gas from
the Rocky Mountains to the Midwest and East Coast.
And in March, Williams Cos. proposed an expansion of its system to
link Wyoming, Colorado and Utah fields with the Northwest.
The Kinder Morgan-Sempra project, called the Rockies Express
Pipeline, will be a 42-inch line running from the Wamsutter Hub in
southwest Wyoming to eastern Ohio. An open season for the pipeline - - a
time for companies to negotiate final commitments for capacity - - won't
be held until later this year.
The company considers the open season a formality, Parker said, as it
plans to get agreements from companies prior to conducting open season.
Kinder Morgan would own two-thirds of the project, which would likely
be financed with 60 percent equity and 40 percent debt.
The Wyoming Natural Gas Pipeline Authority said it may use its
ability to issue up to $1 billion in construction bonds to fund some of
the project.
"Having the state of Wyoming behind us on the project means we could
have a very low cost of financing," Parker said.
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