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El Paso Gets FERC Nod to Add 502 MMcf/d

FERC last Wednesday approved an application of El Paso Natural Gas to expand its system by 502 MMcf/d through an integrated project that would involve the use of existing pipeline facilities, the acquisition of transportation capacity on other pipelines, the construction of a new interconnect and the conversion to gas service of a crude oil pipeline.

The so-called Line No. 1903 project would essentially provide a needed crossover between El Paso's North System and South System mainlines, similar to the already existing Havasu Crossover [CP05-2].

In approving the project, the FERC order said it would "enhance the flexibility and reliability of El Paso's system" and would not adversely affect existing customers, other pipelines, landowners or communities.

The core of the project is the conversion of an 88-mile segment of a former crude oil pipeline to natural gas transportation. In early 2000, parent El Paso Corp. purchased from Plains All American Pipeline LP a 1,088-mile crude oil transmission line that extends from Bakersfield, CA, to McCamey, TX. El Paso placed the portion of the crude oil line extending from McCamey to the Arizona/California border into gas service in late 2002. The latest project would involve a segment of the line that is primarily located within the state of California.

The Line No. 1903 project would include the following: combine existing facilities owned and operated by El Paso, affiliate Mojave Pipeline and Kern River Gas Transmission; the acquisition by El Paso of firm capacity on Mojave; the construction of a new interconnect at a point between Mojave and Line No. 1903 (the Cadiz Crossover); the modification of facilities at Kern River's existing compressor station at Daggett, CA, to permit gas to flow east from Daggett to Mojave; and the conversion to gas service of Line No. 1903.

The cost of converting 88 miles of the crude line and construction of 6.4 miles of interconnecting pipelines is expected to be $73.6 million, El Paso said. It estimated that the annual cost of capacity on the Mojave and Kern River systems will be about $17.9 million. FERC last Wednesday approved rolled-in rates for the project costs.

When it filed its application in October 2004, the interstate pipeline asked the Federal Energy Regulatory Commission to issue a certificate for the project by July 2005 in order for the expansion to go into service by no later than Dec. 31, 2005.

El Paso has acquired rights to up to 312.4 MMcf/d of transportation capacity on Mojave's system. This capacity will permit it to deliver gas to Mojave at the existing Topock point, transport on the Mojave system, and then deliver to Line No. 1903 at a proposed point of interconnection between Mojave and El Paso's Line No. 1903 in San Bernardino County, CA.

In Bernardino County, El Paso plans to build a 6.4-mile, 30-inch diameter crossover connecting the Mojave system to Line No. 1903. When combined with the El Paso receipts from the Mojave system at the Daggett point, made possible by the use of Kern River's existing compression at the Daggett point, El Paso will be able to transport up to 502 MMcf/d through Line No. 1903 for deliveries to Ehrenberg, North Baja and east to Phoenix markets, the pipeline said. Additionally, the Line No. 1903 project will allow El Paso to reduce its current dependence on displacement to provide firm transportation service for the North-to-South capacity prompted by El Paso's allocation of firm rights at receipt points to its shippers.

The project will clear the way for deliveries of up to 189,438 Mcf/d of Rocky Mountain supplies received from Kern River at Daggett via the Mojave system to Line No. 1903; the receipt of up to 182,106 Mcf/d of San Juan Basin supplies via the North System through acquired capacity on Mojave; and 130,456 Mcf/d of average annual capacity available to mitigate North-to-South displacement concerns, according to El Paso.

As a result of an open season conducted in March 2004, El Paso has executed precedent agreements for the project capacity with five customers, including Salt River Project Agricultural Improvement and Power District (42,510 Mcf/d), Arizona Public Service and Pinnacle West (65,747 Mcf/d), Southwest Gas ((73,849 Mcf/d), California Department of Water Resources (15,000 Mcf/d) and Coral Energy Resources (150,000 Mcf/d). The terms of the agreements range from five years to 10 years.

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