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New Western Rockies Pipeline Draws Sempra's Attention

At least one new natural gas pipeline from the Rockies into the West will be built in the next five to seven years, according to senior executives at San Diego-based Sempra Energy, and while still on the sidelines, it is watching various project developments closely to decide what moves they will make as a potential owner/shipper on the new pipeline.

Sempra has no agreements with either of the two major proposals now active for moving added Rockies gas to West Coast markets -- TransCanada/Williams' Sunstone and El Paso Natural Gas's Ruby projects (The time limit on an earlier agreement with Sunstone expired, a company spokesperson told NGI Monday, although Sempra never made an announcement in that regard).

While in a "rational market", only one of pipelines would get built, the industry behavior sometimes can be irrational, said Sempra CEO Donald Felsinger. In either case, Sempra would like to be a potential shipper/owner in at least one of the lines, Felsinger told financial analysts in a 2008 year-end earnings conference call last Tuesday.

"We've been watching with a lot of interest the activities of both the Sunstone and Ruby projects," Felsinger said. "We don't currently have an active memorandum of understanding [MOU] with either party, so we are sitting on the sideline here to see if we have a position we would want to take with either one of these pipelines." Last June Sempra signed a MOU with TransCanada and Williams on the Sunstone project (see Daily GPI, June 17, 2008).

"I think a pipeline will get built because there is enough gas in the Rockies to support the needs in California. This next year should be very interesting to look at what takes place in the pipeline competition," Felsinger said.

He was asked whether one project has advantages in permitting or economic feasibility over the other.

"I think they both have strengths and weaknesses from the standpoint of their routes and their market opportunities," Felsinger said.

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