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CenterPoint Files to Build Carthage-to-Perryville Line as Outlet for Growing TX, LA Production

CenterPoint Energy Gas Transmission (CEGT) has filed an abbreviated application at FERC seeking authorization to build a 172-mile pipeline from the Carthage Hub in Texas to the Perryville Hub in Louisiana, providing a market outlet for the burgeoning natural gas production in North-Central and East Texas and North Louisiana.

The proposed 42-inch pipeline would deliver up to 1.2 MMDth/d of supply to markets served through various pipelines interconnected with CEGT's Perryville Hub, including ANR Pipeline, Trunkline Gas, Columbia Gulf Transmission and Texas Gas Transmission, which collectively serve markets in Ohio, Michigan, Wisconsin, Illinois, Pennsylvania, Kentucky, West Virginia, Virginia, New York, New Jersey, Maryland, Tennessee and Indiana, according to the CenterPoint Energy pipeline subsidiary [CP06-85].

CEGT said the $403 million project, which would also include two new compressor stations with a combined 41,240 horsepower, would respond to the growing gas supplies from the Barnett Shale and Bossier Sand areas that are seeking outlets to markets. The East Texas/North Louisiana production areas to be accessed by the proposed pipeline are among the areas that have exhibited the strongest reserve growth; production in East Texas alone increased to 3.2 Bcf/d in January 2004 from 2.25 Bcf/d in January 2000, it noted.

"The project...will bring additional onshore gas supply to market at a time when there is a critical need following the offshore infrastructure devastation caused by Hurricanes Katrina and Rita" last summer, the pipeline told FERC in its application. For this reason, CEGT is seeking expedited approval of the proposed line by August.

Assuming FERC gives the go-ahead by then, CEGT said it expects the Carthage-to-Perryville Hub pipeline to be in service by the 2006-2007 winter heating season. The project would operate separately from CEGT's existing 8,100-mile system that transports about 1 Tcf a year to Midwest markets.

The pipeline said it has executed a precedent agreement to transport 600 MDth/d of East and North Texas production for XTO Energy under a 10-year contract term. This agreement alone accounts for 50% of the capacity to be created by the project. CEGT said it has executed precedent agreements with three other shippers for an additional 150 MDth/d under contract terms ranging from five to 10 years, and is in the process of negotiating precedent agreements with several other shippers to sell the remaining 487 MDth/d.

A number of similar pipeline projects are being eyed. CEGT has teamed up with Duke Energy Gas Transmission to propose a 250-mile pipeline downstream of Perryville to the Gulfstream Natural Gas System, which is jointly owned by Duke and Williams. Gulfstream serves the Florida peninsula and would provide market access to producers delivering gas to the Perryville Hub from fields in North and East Texas. The capacity of the envisioned project would be between 700 MMcf/d and 1 Bcf/d, and the new pipe is targeted for in-service as early as mid-2008, the companies said.

East and North Texas gas production growth has prompted Gulf South Pipeline to propose two complementary pipeline expansion projects to relieve existing capacity constraints. Both would create additional west-to-east firm transportation capacity and provide Gulf South additional flexibility in operating its system both now and in the future.

The East Texas Expansion Project would begin in the Carthage area and deliver up to 1 Bcf/d of gas to markets in North Louisiana, including connections with downstream pipelines such as Texas Gas at Lonewa, LA, and new proposed interconnects with Columbia Gulf, Tennessee and ANR in the Perryville area. The project would help relieve the capacity constraints that currently exist in East Texas. It would consist of 140 miles of 36-inch diameter pipeline looping, and 40 miles of 36-inch diameter pipeline replacement, compression and other ancillary facilities. The proposed in-service date for the East Texas project is June 2007.

The other project is a Mississippi expansion that would take gas from North Louisiana and deliver up to 1 Bcf/d to markets currently connected to Gulf South in Mississippi such as Transco Zone 4 and FGT Zone 3. It would provide an outlet for gas that is or will be constrained in and around Perryville. The project would consist of 40 miles of 36-inch or 42-inch diameter pipeline replacement and 46 miles of new pipeline construction. It is targeted for in-service in August 2007.

Kinder Morgan Inc. (KMI), through its Natural Gas Pipeline Company of America subsidiary, also is planning to move forward with an expansion of its Amarillo to Gulf Coast (A/G) line after receiving contract commitments from Barnett Shale gas producers interested in greater market access. The portion of the A/G line being expanded is downstream of Compressor Station 802 in Lamar County, TX, and extends 95 miles east, terminating at the Gulf Coast mainline.

In addition, Kinder Morgan Energy Partners LP is exploring plans to construct an entirely new 700,000 Dth/d interstate pipeline that would transport growing gas production from the Bossier Sand and Barnett Shale exploration plays in northeast Texas as well as imports from new LNG terminals along the Gulf Coast to pipelines in Louisiana. The proposed Kinder Morgan Carthage Pipeline would originate near Beckville, TX, and extend 38 miles to Stonewall, LA.

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