Hoping the second time is the charm, Duke Energy announcedWednesday an open season for 300,000 Dth/d of firm capacity on itsproposed Spectrum Pipeline project. The open season will last fromMay 7 to June 4.

This is Spectrum’s second open season. In 1997, Tetco, a Dukeaffiliate, offered capacity for the project, which would transportgas from Chicago to the Northeast, but “no one signed up,” saidDuke spokesman John Barnett.

This time around Tetco has lowered the transportation chargefrom 70 to 54 cents/Dth. Randy Riha, a Tetco spokesman, said thiswill be the lowest cost option for transporting gas in thatdirection. Other proposed pipelines that are designed to carry gasin the same direction as Spectrum are charging 70-80 cents/Dth.

Yet the question of transport cost justification still loomsover Spectrum and all the other Chicago to Northeast pipelineprojects. Using NGI’s bidweek prices for 1998, the average ChicagoCitygate price was $2.19/MMBtu versus $2.43/MMBtu at the New YorkCitygate, for a differential of 24 cents. With this lowdifferential, buying from the spot market in New York would stillbe preferable to transporting gas from Chicago. Riha said theSpectrum will become cost effective, however, when the AlliancePipeline goes into service.

“I think the market demand will start slowly, but once Alliancecomes on, differentials will warrant companies moving gas that waythrough the lowest cost possible. We are offering 300,000 Dth/d andI think there will be a very strong market for it.”

Bobby Evans, president of Tetco, added “We believe thatcustomers seeking firm capacity with a 2000 in-service date tocoincide with the in-service date of Alliance Pipeline will beparticularly interested in Spectrum.”

Tetco said it was able to achieve such a low transportation ratebecause it is not planning to install new pipe. Spectrum willreallocate capacity. This strategy also helps avoid environmentalhang-ups, Tetco said. Additionally, the low Spectrum rate was achievedbecause of the implementation of Tetco’s rate initiative that FERCapproved last September (See Daily GPI,Sept. 3)

Up to 200,000 Dth/d of the capacity would be available in thefall of 1999 to provide transportation access from Midcontinent andCanadian natural gas sources via existing interconnects and fromGulf Coast, offshore Gulf Coast and Appalachian natural gas supplysources, Tetco said.

For details on the open season, call Randy Riha at (713)627-4746.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.