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Duke, CenterPoint Ink Deal to Develop West Texas-to-Pittsburgh Pipe

Duke Energy Gas Transmission (DEGT) and CenterPoint Energy Gas Transmission (CEGT) signed a memorandum of understanding last Thursday to develop a massive natural gas pipeline system that would stretch from the supply basins in West Texas to the metropolitan Pittsburgh, PA, area, providing western producers greater access to midwestern and eastern markets.

The two gas pipeline subsidiaries of Houston-based Duke Energy and CenterPoint Energy are proposing to build a 1,600-mile, 42- and 36-inch diameter pipeline that would transport up to 1.75 Bcf/d of onshore gas supplies from the Waha market center in West Texas to the Oakford/Delmont area in southwestern Pennsylvania. The project would serve customers along the way in Indiana, Ohio, western Pennsylvania and, through multiple paths, markets in eastern Pennsylvania, New Jersey, New York and New England, offering gas supply from producing basins in the Mid-Continent, Rockies and West Texas.

The Mid-Continent Crossing (MCX) project initially was expected to extend from Dumas, TX, to Barton, AL. But an open season, which ended in mid-May, revealed there was significant interest in a more direct delivery system to transport Southwest and Mid-Continent region gas supplies to market centers in the Northeast, according to DEGT and CEGT.

The two pipeline companies are conducting a new 60-day open season to solicit interest from producers seeking to deliver gas to premium markets farther north, as well as end-use markets looking to diversify their supply portfolios to include a greater share of gas from western basins. The non-binding open season will run through July 31.

The proposed MCX system would interconnect with Mississippi River Transmission, CEGT, Trunkline Gas, ANR Pipeline, Texas Gas, Columbia Gas, Tennessee Gas Pipeline, National Fuel, Equitrans, Dominion and Texas Eastern Transmission, DEGT and CEGT said. Moreover, producers who currently are delivering gas from the Rockies via El Paso's Cheyenne Plains pipeline and the Southern Star system into the Greensburg, KS, area would be able to access the MCX pipeline via backhaul on Transwestern Pipeline, Panhandle Eastern, ANR, Northern Natural and Southern Star, they noted.

The MCX pipeline could be in service as early as the fourth quarter of 2008, DEGT and CEGT said. Producing basins that would benefit from this market access include the Rockies, San Juan, Permian, Delaware, Granite Wash, Raton, Palo Duro, Anadarko, Arkoma and Fayetteville Shale.

"The new pipeline system will provide customers in energy-hungry markets in the East with a competitive supply alternative for accessing growing, reliable onshore supply sources," said DEGT President Martha Wrysch.

This marks the second pipeline project that the two companies have teamed up on this year. DEGT and CEGT signed an agreement earlier this year to explore plans to jointly develop a proposed pipeline header system that would cross portions of Louisiana, Mississippi and Alabama, linking the onshore natural gas supply basins in East Texas and northern Louisiana with growing markets in the Southeast that are now predominantly served by offshore gas from the Gulf of Mexico.

FERC last Tuesday initiated the pre-filing process for the so-called Southeast Supply Header Project, a 270-mile, 36-inch diameter gas line from the Perryville Hub in northern Louisiana to the Gulfstream Natural Gas System in or near southern Mobile County, AL (see related story). The planned pipeline header system would provide customers with an alternative to offshore gas supplies, which are vulnerable to weather-related service disruptions.

For more information on the MCX project, shippers should contact Brian McKerlie at bmckerlie@duke-energy.com or (713) 627-4582, or John Haynes at john.haynes@CenterPointEnergy or (713) 207-5130.

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