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El Paso Signs Chesapeake Energy as Anchor on Continental Connector Line

Oklahoma City-based Chesapeake Energy Corp., the second largest independent natural gas producer in the U.S., has made a major commitment for transportation capacity on El Paso Corp.'s mammoth Continental Connector pipeline project, said El Paso CEO Douglas Foshee Friday.

Chesapeake Energy has signed a binding agreement to transport its burgeoning Midcontinent natural gas production from western Oklahoma to the Perryville Hub in North Louisiana. Foshee said the producer "[has] committed to 175 MMDth/d, and it could be more than that. It's a substantial anchor for [the] project."

The Continental Connector project would connect El Paso's Rocky Mountain region pipelines, including Colorado Interstate, Wyoming Interstate and Cheyenne Plains, with its three lines in the eastern half of the country, ANR Pipeline, Tennessee Gas Pipeline and Southern Natural Gas. Based on its commitments to date, El Paso expects to secure support for a 1 Bcf/d pipeline.

In a related development, FERC last Monday granted El Paso's request to begin the pre-filing process for the Continental Connector pipeline project. El Paso signaled that it plans to file its project application within six months. It asked the Federal Energy Regulatory Commission to act on its application by August 2007 so that it can begin construction the following month and place the Continental Connector pipeline in service by no later than April 1, 2008.

"We believe that beginning the Commission's review of this proposal prior to the receipt of your application will greatly improve our ability to identify issues early and address them in our environmental impact statement (EIS)," FERC staff said [PF06-27]. "Once we determine that your application is ready for processing, we will establish a schedule for completion of the draft and final EIS and for the issuance of all other federal authorizations."

More pipelines are participating in the pre-filing process under the National Environmental Policy Act at FERC, which allows them to resolve environmental and landowner concerns prior to filing their application. This paves the way for speedier approval of projects.

El Paso announced the Continental Connector project last October as a competing project to Kinder Morgan's and Sempra Energy's Rockies Express pipeline, which would extend from Cheyenne Hub in northern Colorado to connections with Dominion Transmission and Texas Eastern Transmission (see NGI, Oct. 10, 2005). Both systems would be designed to bring growing Rocky Mountain gas production to premium markets in the East. The 1-2 Bcf/d Continental Connector project also would tap production in the Midcontinent and in North and East Texas, eventually terminating in northern Mississippi.

The Continental Connector would span some 650 miles and involve more than 300 miles of new construction of up to 42-inch diameter pipeline to connect El Paso's three western pipelines with its three southern and eastern pipelines, which offer access to markets from Florida to New England as well as the Midwest, according to El Paso.

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