Hoping the second time is the charm, Duke subsidiary TexasEastern Transmission announced Wednesday an open season for 300,000Dth/d of firm capacity on its proposed Spectrum Pipeline project.The open season will last from May 7 to June 4.

In 1997, Tetco offered capacity for the project, which wouldtransport gas from Chicago to the Northeast, but nobody signed onthe dotted line. “We got nominations, but when it came time tocommit, nobody did. The timing wasn’t right for that first openseason,” said Tom O’Connor, vice president of Tetco’s East Coastmarketing. “People weren’t exactly sure about the gas being inChicago back then, so they were hesitant. Now, with the Allianceproject moving forward, gas in Chicago is much more certain.”

This time around Tetco has lowered the transportation chargefrom 70 to 54 cents/Dth. Randy Riha, a Tetco spokesman, said thiswill be the lowest cost option for transporting gas in from theMidcontinent to the Northeast. Other proposed pipelines that aredesigned to carry gas in the same direction as Spectrum arecharging 70-80 cents/Dth.

Tetco said it was able to achieve such a low transportation ratebecause it is not planning to install new pipe. Spectrum willreallocate capacity. This strategy also helps avoid environmentalhang-ups, Tetco said. Additionally, the low Spectrum rate wasachieved because of the implementation of Tetco’s rate initiativethat FERC approved last September (See NGI, Sept. 7).

O’Connor said because the program involves no pipelineconstruction, it can offer a more flexible service to shippers.”Because we don’t have any of the burdens associated with buildingnew pipe, we have the luxury of offering capacity with someflexibility,” said O’Connor. “The 300,000 Dth/d is real capacitythat is already available on the system. It is turnback capacity,which in our minds, is the most efficient use of capacityavailable.”

Yet the question of transport cost justification still loomsover Spectrum and all the other Chicago to Northeast pipelineprojects. Using NGI’s bidweek prices for 1998, the average ChicagoCitygate price was $2.19/MMBtu versus $2.43/MMBtu at the New YorkCitygate, for a differential of 24 cents. With this lowdifferential, buying from the spot market in New York would stillbe preferable to transporting gas from Chicago.

Bobby Evans, president of Tetco, said the Alliance Pipeline willhelp make the Spectrum program a viable and cost effective option.”We believe that customers seeking firm capacity with a 2000in-service date to coincide with the in-service date of AlliancePipeline will be particularly interested in Spectrum.”

Up to 200,000 Dth/d of the capacity would be available in thefall of 1999 to provide transportation access from mid-continentand Canadian natural gas sources via existing interconnects andfrom Gulf Coast, offshore Gulf Coast and Appalachian natural gassupply sources, Tetco said. Midwestern, ANR and Tennessee areoffering upstream services for this part of the program.

For open season details, call Randy Riha at (713) 627-4746 orvisit https://infopost.link.duke-energy.com/spectrum/

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