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Trunkline Expects OK to Convert Gas Pipeline

Trunkline Gas Co. officials said they expect FERC to approve before the middle of next year plans to convert a multi-state natural gas pipeline to crude oil service.

In July Trunkline requested approval from the Federal Energy Regulatory Commission to abandon nearly 770 miles of looped mainline for conversion to oil service [CP12-491]. Trunkline wants to abandon gas pipeline that runs through Illinois, Kentucky, Tennessee, Mississippi, Arkansas, Louisiana and Texas. About 45 miles of 24-inch diameter gas pipeline would be abandoned from Buna, TX, to Longville, LA, and another 725 miles of 30-inch pipe would be abandoned from Longville to Tuscola, IL. The 770 miles of looped mainline transmission pipeline would be sold to an affiliate of parent company Energy Transfer LP.

The proposal has triggered protests from end-users, including Michigan customers, because it would reduce Trunkline's service into the state to a single natural gas pipeline from two lines. Trunkline maintains its single line will serve all firm customers (see NGI, Sept. 3).

In a presentation to investors earlier this month, Energy Transfer officials said they expect to obtain FERC approval to abandon the gas pipeline by 3Q2013. The converted oil pipeline, expected to cost about $1.5 billion, could be in service by the middle of 2014.

During a conference call to discuss 3Q2012 operations earlier this month, Energy Transfer Partners LLC COO Marshall S. McCrea told analysts that "some concerns that were brought up from some shippers" had been "alleviated...and we are confident that we'll receive the approval to abandon it sometime second to third quarter of 2013.

"We continue to talk to some large players and have different sources of supply for that pipeline..." If everything goes as planned, "we expect to bring it on by the second quarter or the middle of 2014. Depending on the shippers that sign up, it could range anywhere from 400,000 b/d to 600,000 b/d, whether it's light crude or heavy crude. But we do anticipate that because of early conversations, it will probably be more around the 400,000-420,000 b/d starting mid-2014."

According to the investor presentation, Trunkline sees a big market for crude products along the Gulf Coast once its gas pipeline is converted. The potential market with the oil conversion includes a 2.05 million b/d refinery market in the Beaumont and Port Arthur, TX, areas, as well around the Lake Charles, LA, area. Potential also exists in the 2.1 million b/d-plus refinery market in the St. James/Baton Rouge, LA, area, as well as the 1.3 million b/d-plus refinery market in the Houston area.

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