Although supply concerns forced the 1.3 Bcf/d Viking Voyageur toclose up shop earlier this year, it became clear last week Voyageurdiscovered an area of market growth begging to be served. Anunlikely coalition of El Paso Energy, Enron, Peoples Energy andNorthern Border Pipeline has jumped in to claim that territory.They are proposing a new pipeline system that would extend intoWisconsin from a connection with Northern Border at Joliet, IL.

The venture partners plan to build a $220-$280 million 36-inchdiameter pipeline, called the Illinois Wisconsin Express Project,which would stretch 150-200 miles to Fond du Lac, WI, about 50miles north of Milwaukee from Joliet, IL. The pipeline would bedesigned initially to carry 650 MMcf/d of gas.

“Each of the different partners are bringing their own areaexpertise to this. It kind of made sense for the four of us tobring this together,” said Peoples’ spokesman Rod Sierra. “We havea considerable storage and wheeling capability here in the Chicagoarea. That is going to help turn this project around and get thatgas back out into Illinois and Wisconsin. The others have the keyexperience on the pipelines, the access to the Canadian supply.Enron has the market knowledge on these kinds of projects.”

And there’s plenty of market available, particularly because ofthe need for new gas-fired generation. “I’m sure you’ve beenfollowing the woes of the electric generation companies this weekacross the country but especially in the Midwest. And a week ago,we announced our own electric generation plant (potentially 600 MW)to serve the region,” Sierra noted. “So there’s a big need for anample supply of gas to fuel these plants. We think they all will befueled by natural gas.”

“Viking was a little early and probably did not see as muchopportunity on the power generation side as I think we are going toencounter,” said Mike Stokdyk, coordinator of the project at ElPaso subsidiary Tennessee Gas Pipeline. The companies plan to filean application for the project by summer 1999 with servicebeginning in November 2001. The size of the project will determinethe rates, but sponsors are projecting reservation rates to bebetween 10 and 20 cents/Dth/d.

Stokdyk said the plan should avoid the pitfalls encountered byViking Voyageur because it would not be competing for Canadiansupply with the Alliance Pipeline and Northern Border projects.Instead it would provide downstream transportation for gas enteringthe region on those upstream pipeline expansions.

Meanwhile, Voyageur and the existing transportation monopoly inthe region, ANR Pipeline, said last week they aren’t about to stepaside and watch others raid their territory. ANR announced planslast week to hold an open season starting July 1 for anotherincremental expansion that would be in place Nov. 1, 2000. Thepipeline already captured some of the incremental growth in theregion with its 1997 project, dubbed the “10-cent solution,” whichreceived preliminary approval from FERC in May. That $24 millionproject would provide 118 MMcf/d of new firm transportation atdiscounted rates (67% of ANR’s max rate) to eight shippers.

Viking Voyageur sponsors said last week they’re still not out ofthe picture. A TransCanada spokesman said Voyageur has kept marketsinformed of its plans to file a revised project that would serveWisconsin markets.

“What’s happening is people are finally catching on to what goodmarket potential there is in Wisconsin,” said TransCanada spokesmanGary Davis. “We’re right there. We were the first in. We know themarkets very well. There’s no need for us to be makingpronouncements until we have some solid information for people. Atthis point, we have no intention to drop out [and] relinquish ourlead.”

Rocco Canonica

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