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Trio 'Volunteer'-ing to Supply Southeast With New Pipe

Trio 'Volunteer'-ing to Supply Southeast With New Pipe

Burgeoning gas demand in the southeastern United States and Chicago's supply hub status have spawned another pipeline project. The latest comes from Columbia Gulf Transmission, AGL Resources, and MCN Energy Group. The trio last week began a six-week open season offering up to 250,000 Dth/d of capacity on the proposed Volunteer Pipeline.

"The why is simply the fact that the southeastern market is a growing, booming area, and this is an effort to get into that area. The Northeast has been talked about a lot. The Southeast is another area," said Columbia Gulf spokesman Bob Kiser.

"Volunteer is targeting a growing market that needs additional capacity, so we're not competing against alternative proposals... We're providing an economic means to meet that growing need for gas," said MCN spokesman Stewart Lawrence. This is a very strategic link among existing pipeline systems. One of the key benefits here is it allows for the delivery of Canadian natural gas to southeastern markets by utilizing backhaul arrangements and other means. There are direct links into the Midcontinent area as well."

The 24-inch diameter Volunteer would run 160 miles from an interconnect with El Paso Energy's Midwestern Gas Transmission near Portland, TN, to an interconnect with recently unbundled Atlanta Gas Light near Chattanooga, TN. Interconnections with East Tennessee Natural Gas and Southern Natural Gas, as well as Columbia Gulf and Texas Eastern Transmission also will be available. Potentially expandable to 500,000 Dth/d, Volunteer expects to provide firm transportation at rates in the neighborhood of 22 to 24 cents/Dth.

The partners expect to garner commercial and industrial load behind the AGL system, said Jim Hart, Columbia Gulf vice president of commercial services. Because AGL is unbundled, in Georgia Volunteer will be seeking contracts among the marketers serving the area rather than just the LDC. Hart said Volunteer isn't expecting to secure 15-year contracts like it might have gotten from a bundled LDC. "What we're looking for is a minimum contract term of 10 years. That's what we've requested in the open season. We'll just have to wait and see what the market response to that contract term is.

"Obviously it's easier to sell to one customer than it is to sell to five, who may have five different views of the future.. It is more difficult from that standpoint, but what it has done is it has caused us as a pipeline company to become quicker, to become more flexible, to become more in touch with the needs of the market."

Hart said there are no Volunteer competitors on the horizon as yet. "I think [Tennessee] itself, at least from our preliminary indications, is pretty excited about the prospect of another pipeline coming through the state."

The equal partners in the project expect to file with the Federal Energy Regulatory Commission in 2000 and have the pipeline in service by November 2001. Columbia Gulf will operate the pipeline, which is expected to cost about $160 million

"I believe we've got strong support for this project," Lawrence said. "We've done a lot of leg work on it and believe the open season is going to be successful. We will see in about 45 days." The open season ends May 28, 1999.

East Tennessee last month announced an open season for incremental capacity along its mainline in Tennessee and Virginia. The expansion would entail construction of mainline, compression and related facilities with in service planned for Nov. 1, 2000. "East Tennessee is really a subset of the whole Southeast, which is just growing by leaps and bounds with a lot of industrial growth in the area," said Bryan Neskora, El Paso manager of business development.

The Volunteer Pipeline is not to be confused with Columbus, OH-based marketer Volunteer Energy of which Williams Energy Services recently acquired another 50%, increasing its stake to 100%.

Joe Fisher, Houston

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