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Colorado Lends Support to Ruby Pipeline Proposal

Colorado Gov. Bill Ritter has joined two other western governors to ask FERC to speed approval of El Paso Corp.'s Ruby Pipeline Project, which would carry natural gas from the Rockies to the West Coast.

In a speech last week, Ritter said Colorado had "become a national and worldwide leader with our new energy economy. And let me be clear -- Colorado's clean-burning natural gas sector is a key part of the new energy economy."

Several initiatives by Ritter's administration are under way to help the state's energy industry, including its push to ensure the Ruby Pipeline will be constructed to the benefit of all Rocky Mountain producers. Toward those goals, the state sent a "support" letter to the Federal Energy Regulatory Commission (FERC) "to speed up approval" of the pipeline project, Ritter said.

"In the absence of adequate takeaway capacity, the market for Colorado-produced natural gas will be artificially constrained and production will be reduced, to the detriment of the Colorado economy and our nation's energy independence," Ritter told FERC in a letter. "This has occurred in the past, and I am concerned that it will happen again in the near future if the Ruby Pipeline project is not constructed. I ask the FERC to proceed diligently with the processing of the Ruby Pipeline Certificate Application and to thoughtfully consider all approvals that may be required for Ruby to construct, own and operate the Ruby Pipeline."

Similar support letters to the Commission were sent by Wyoming Gov. Dave Freudenthal and Nevada Gov. Jim Gibbons, El Paso spokesman Richard Wheatley told NGI. El Paso early this year applied to FERC to construct and operate the estimated $3 billion pipe (see NGI, Feb. 2).

The Ruby Pipeline project remains on track to be in service by early 2011, Wheatley said. A draft environmental impact statement (DEIS) is being completed, and that should be ready by mid-year, he said. Following completion of the DEIS, a public comment period will get under way before the final EIS is written.

The proposed 42-inch diameter pipeline would stretch about 675 miles from the Opal Hub in Wyoming, through Utah and Nevada to the Malin, OR, interconnect near California's northern border. El Paso in late February said it had secured more than 1.1 Bcf/d in binding commitments from customers under 10- to 15-year contracts (see NGI, March 2).

"We have 12 customers already signed up for the project, and everything is looking good at this point," said Wheatley.

In March Williams reported that it had now drilled 3,000 wells in western Colorado, "and the company is spending hundreds of millions of dollars on capital projects," said Ritter. "Also last month, the state received a record 1,100 drilling permit applications, and companies already have 5,000 more permits in hand and ready to go in 2009. Clearly, they're planning for the future."

In his speech to Western Slope constituents, Ritter took aim at critics of the state's revised rules for the energy industry, which took effect beginning April 1 (see Daily GPI, April 2).

"Responsible and forward-thinking companies -- big companies like EnCana and Williams, and smaller operators like Gunnison Energy -- have already been true leaders in a best-practices approach to drilling and exploration," said the governor. "They embody the spirit of a sustainable Colorado these rules hope to achieve..."

The economic downturn, he said, has "not spared any industry, including oil and gas. We all know there are bigger forces at work on the industry, forces like global commodity prices, pipeline capacity and a tight credit market. These forces are impacting rig counts all across the country."

Along with its support of the Ruby Pipeline Project, Ritter is promoting legislation to extend a hybrid vehicle tax credit for compressed natural gas cars and trucks. The state also is working with the federal Bureau of Land management about "methane-capture opportunities for the proposed Red Cliff mine -- a mine that could generate 250 new jobs," the governor said.

"We're talking to a natural gas company called Clean Energy about filing a joint application with the Department of Energy for a $12.5 million grant," said Ritter. "The grant would help build six natural gas fueling stations around the state -- including one in Grand Junction and one in Edwards -- mainly for commercial vehicles such as trash trucks, buses and commercial fleets."

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