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TriState Files to Build 650 MMcf/d Gas Line

TriState Files to Build 650 MMcf/d Gas Line

CMS Energy and Westcoast Energy filed an application with FERC last week for the U.S portion of their TriState Pipeline project, a 650 MMcf/d gas pipeline that would extend to the Dawn Hub in Ontario from Joliet, IL, near Chicago.

TriState sponsors have signed definitive agreements with six shippers for 435 MMcf/d, or 67% of the proposed capacity. Affiliate Consumers Energy signed up to utilize 100 MMcf/d of the firm space on the project. More than half of the gas is expected to flow to Dawn, while 46% will be dropped off at Consumers Energy in White Pigeon, MI.

The project is slated to be in service in November 2000, a year later than the competing Vector pipeline project sponsored by MCN Energy and IPL Energy. TriState also enters the regulatory race significantly behind Vector. The 1 Bcf/d Vector project, which would run along a route similar to that of TriState, won preliminary FERC approval on non-environmental grounds last month. But TriState sponsors aren't worried about being behind.

"One of the main supply drivers of both projects is [the 1.3 Bcf/d upstream] Alliance [project], and Alliance isn't going to be there until the end of 2000," noted George C. Haas, executive director of business development for CMS Enterprises. "Vector has a slight regulatory lead but the markets aren't going to develop until 2000." Haas said there won't be enough gas available at Chicago to flow on either pipeline until Alliance is built and Chicago prices fall enough to make the trip to Dawn more economic.

"We also can be competitive at much smaller volumes and we can grow with the market," he added. "We don't need to guess or hope the market will be there." He said TriState will cost about $120 million less to build than Vector. TriState, like Vector, will lease an existing pipeline. It will utilize an expansion of a line previously owned by Consumers in Michigan. That aspect of the project enables developers to avoid 123 miles of new pipeline construction and capture $179 million in cost savings compared to building a new pipeline, CMS said. The cost of the project is estimated to be $400 million. It will be designed to support an inexpensive expansion to 1 Bcf/d of capacity upon market request.

CMS Gas Transmission and Storage CEO William J. Haener said TriState will be "the most efficient system for moving Canadian gas coming into Chicago east and will also facilitate the sale of Michigan storage services in Chicago."

TriState has filed for zoned rates. Its recourse rate from Joliet to Dawn is about $0.279/Dth, compared to Vector's $0.267/Dth (revised by FERC). At 10-15 cents, Chicago-Dawn basis currently doesn't support either pipeline project. "There needs to be a big influx of supply to bring the Chicago side of it down," said Haas, noting the 700 MMcf/d increase expected from Northern Border's expansion/extension project to Chicago this winter probably will not bring in enough new supply to lower Chicago prices another 12 cents.

Rocco Canonica

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