Atmos Energy Corp. said Tuesday that it has agreed to transport 100,000 MMBtu/d of gas through its Texas intrastate pipeline system for Enbridge Energy Partners LP starting in April 2006. The gas would flow from producers in the Fort Worth Basin through Atmos' 36-inch diameter X line to an interconnection with Enbridge's new Bethel-to-Carthage pipeline.
Atmos said it will install compression equipment near Howard, TX, and other pipeline infrastructure, costing $20 million, to handle the additional gas throughput. Atmos said the system improvements will benefit its utility customers by increasing reliability and capacity on its pipeline system that serves the southern portion of the Dallas-Fort Worth Metroplex.
"Improvements to our pipeline system will help us increase our capability to deliver natural gas to our customers," said Atmos CEO Robert W. Best. "These improvements also will benefit Texas gas producers and shippers by transporting Fort Worth Basin natural gas in the Texas intrastate wholesale gas market and should enable us to secure dedicated gas supplies for our utility customers."
The agreement with Enbridge will run for five years effective from the date of first deliveries, which are expected in April 2006. Enbridge Partners also plans to invest $19 million in facilities upstream and downstream of the Atmos system to complete a new link from North Texas to the head of Enbridge's new natural gas transmission line at Bethel, TX.
The Bethel line in East Texas has capacity of 500 MMcf/d and currently offers delivery service to two large interconnected pipeline systems, Houston Pipe Line Co. and Natural Gas Pipe Line Co. of America. Construction of the final leg of the new Enbridge transmission line is scheduled to be completed by the end of June, which will significantly increase access to the major pipeline and market hub at Carthage, TX.
"This transportation agreement with Atmos Energy allows us to rapidly move ahead with our plan to increase market optionality for gas producers in North Texas," said Dan C. Tutcher, president of Enbridge Partners' management company and general partner.
"Production is growing strongly in this region due to increasing exploitation of the Barnett Shale zone. Therefore, our customers require additional and expanded market outlets to avoid saturating existing, mostly local, markets. The Partnership's East Texas transmission line was designed with a link from North Texas in mind. In the future, this line can be very economically expanded to a capacity of 1 Bcf/d to accommodate continuing growth in natural gas supply that we anticipate in both North and East Texas."
In January, Atmos also announced a joint expansion project with Energy Transfer Partners LP that includes building 45 miles of new 30-inch diameter pipeline in the northern portion of the Dallas-Fort Worth Metroplex. The project, which is planned to be in service in fiscal 2006, will enhance Atmos' ability to serve its Texas gas utility customers and will provide an added capacity of 200,000 MMBtu/d for shippers to transport Texas natural gas to market.
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