Enbridge Energy Partners LP on Monday said it has received customer commitments to support the construction of a $530 million expansion and extension of its East Texas natural gas system.

The project, which includes new intrastate pipeline, treating and gathering capacity, is intended to handle the strong growth in East Texas gas production, particularly from the Bossier Sands and other regional producing formations, the Houston-based company said.

The project calls for the construction of a 36-inch diameter intrastate pipeline with a capacity of approximately 700 MMcf/d that will be completed in stages throughout 2007. The proposed line, which would extend from Bethel to Orange, TX, would provide service to a number of major industrial and power companies in Southeast Texas and would interconnect with several interstate gas pipelines.

The company also proposes to build a 250 MMcf/d treating facility near Marquez, TX, that would be connected to the 36-inch diameter pipeline via a new 24-inch diameter line to be completed in early 2007, Enbridge Energy said. In addition, it plans to build a number of upstream facilities, including gathering lines that would tie existing facilities into the proposed intrastate pipeline.

“This strategic project results from extensive coordination with our customers to develop and enhance access for growing Texas production to major markets in Southeast Texas,” said Dan. C. Tutcher, president of Enbridge Energy Partners’ management company and general partner. “The extension and expansion of our East Texas System is a significant step towards avoiding shut-in of gas production that would result from insufficient capacity.” He noted the project is designed to be expandable and is positioned for potential upstream and downstream extension.

Since 2002, throughput on Enbridge Energy’s East Texas System has grown to 900 MMcf/d from 550 MMcf/d, due primarily to the growth in Bossier Sands, a tight sands formation that has become economic to produce in recent years, according to the company. Other regional plays, such as the Deep Bossier zone, also are expected to yield continued production growth over the next decade.

In response to expanding East Texas production, Enbridge Energy noted it completed a 500 MMcf/d transmission pipeline in mid-2005 to provide increased access from Bethel to the Carthage hub. It said the service is expected to be at full capacity by the middle of the year.

When fully operational in late 2007, the proposed assets will be an additional source of stable cash flow for Enbridge Energy, the company said. Volume and reserve commitments from shippers are expected to have an average term of at least five years and an estimated two-thirds of revenue will derive from fee-based services, it noted. The other one-third of revenue will come from the sale of natural gas retained in lieu of fees.

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