Wyoming Interstate’s proposed $78 million Medicine Bow Lateralin the Powder River Basin won preliminary approval from FERCyesterday. In a draft order, the Commission said the pipeline,which would provide 260,000 Dth/d of new firm take-awaytransportation capacity for Wyoming producers, would be in thepublic interest, subject to a final order following environmentalreview.

WIC submitted precedent agreements signed with sixnon-affiliated shippers for terms ranging from 10 to 13 years. Theagreements call for 143,000 Dth of firm transportation capacityinitially, increasing to 368,000 Dth/d in years four through 10 anddecreasing thereafter. WIC intends to file for an expansion of thelateral beyond 260,000 Dth/d at a later date.

The Commission approved WIC’s proposed negotiated rate, whichwould be $0.172/Dth, including reservation and commoditycomponents, on a 100% load factor basis. The proposed rate woulddecrease to $0.159/Dth plus surcharges once total contracted volumeon the line reaches 250,000 Dth/d.

The proposed pipeline would extend 150 miles off of WIC’smainline into the Powder River Basin in northeastern Wyoming. Itwould connect with a third party carbon dioxide extraction plantand a non-jurisdictional gathering system in the basin.

Coal-bed methane production in the Powder River is expected togrow rapidly over the next decade. The basin holds and estimated 15Tcf in recoverable gas reserves.

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