Coastal's Wisconsin Motives Questioned
Coastal says it has joined Peoples Energy to build a 130-mile
pipeline from Indiana to Wisconsin because the market needs the
pipe. Others, especially backers of the proposed Guardian Pipeline,
say the parent of ANR Pipeline is merely trying to protect its lock
on the Wisconsin market.
Coastal said last week that growing power generation and LDC
demand make necessary a pipe to serve incremental growth markets in
northern Illinois, northwestern Indiana and Wisconsin beginning in
late 2001. Initial capacity of the Coastal-Peoples pipe would be
1.4 Bcf/d. According to the North American Electric Reliability
Council, the region will need more than 8,200 megawatts of
additional generating capacity by 2005.
Coastal spokesman Joe Martucci said the pipeline is not in
competition with the Guardian Pipeline, which is a challenge to
ANR's service territory backed by CMS Energy of Dearborn, MI; WICOR
of Milwaukee, WI; and Viking Gas, a wholly owned subsidiary of
Northern States Power Co. of St. Paul, MN. Two weeks ago, Guardian
filed its project at the FERC. "About 60% of our projected market
area would include northern Illinois, Chicago and northern
Indiana," and the remaining 40% would be in southeastern Wisconsin.
The Coastal-Peoples project also would not compete with the
announced Horizon Pipeline, Martucci said, which is backed by
Kinder-Morgan, formerly KN Energy. "I have not heard much at all
about Horizon lately," Martucci said. "I don't think that project
is aimed at this particular market area that we've identified."
Kinder-Morgan did not return calls for comment by press time.
Guardian backers and a Wisconsin consumer group disagree
"We've been saying all along that the Wisconsin market is
historically dominated by ANR, which is a subsidiary of Coastal, so
it's hard to see how a new Coastal pipeline coming into Wisconsin
does anything to increase competition," said Kelly Farr, CMW
spokesman. "Guardian is the only option that provides competition,
choice, lower prices. Guardian opens up a host of choices at the
Chicago Hub." Further, he said Coastal's proposed pipe only
connects with the ANR system while Guardian accesses the Chicago
"It's interesting that when Guardian was first announced that
ANR went to great lengths to say that no new pipeline project was
needed coming into Wisconsin, that they could simply expand and
everything would be fine. Now they seem to be agreeing with
Guardian that a new pipeline project is necessary. It appears to be
a distraction to the competitive situation between ANR and
Guardian. I'm not sure that it is in the same geographic area, but
it seems to be a distraction into the marketplace."
Noting ANR's monopoly position in Wisconsin, Steve Hiniker,
executive director of the Wisconsin Citizens' Utility Board, said,
"All along ANR has been fighting Guardian, and they have told me
personally on many occasions... 'We don't need new pipeline in
Wisconsin.' That's the tactic that ANR has been taking for some
time, for over a year now. Last week, lo and behold, it was
revealed they changed their mind.
"Given the fact that there are no specific diagrams, routes,
plans, customers in Wisconsin. And given the fact that this would
be an entirely new type of development in the great lakes. We view
the proposal as a sham and preposterous." The Utilities Board will
fight it from a consumer advocacy standpoint, Hiniker said.
ANR has been a sharp critic of the Guardian project. "I guess
I'm surprised from the standpoint it's a complete reversal of what
they [ANR] had been saying just a few days before [the
announcement], which was there wasn't a market need" for a new
pipeline into Wisconsin, said Greg Palmer, president of Viking Gas
Transmission, co-sponsor of Guardian.
"They seem to have done a complete 180-degree turn." Palmer said
Guardian is ahead in the race anyway since it already has been
filed at the FERC.
The Coastal-Peoples pipeline would begin at St. John, IN, where
Coastal's ANR Pipeline has a compressor station, and extend north
for 26 miles to Lake Michigan near the Illinois-Indiana border
where a new 50,000 hp compressor station will be built. More than
90% of the route is located along existing rights-of-way. From
there, the pipeline will continue north under Lake Michigan for
about 104 miles, running about three to 10 miles from the western
shore. Plans call for the pipeline to be installed with a minimum
of three feet of cover in the lakebed and deeper in shipping
Guardian proposes to transport gas from interconnections with
Alliance, Northern Border, Midwestern Gas Transmission, and Natural
Gas Pipeline of America at the Chicago hub near Joliet, IL, to
northern Illinois and southern Wisconsin markets. The project
consists of about 140 miles of 36-inch pipe extending from Joliet
to the Ixonia area, with an additional 8.5 miles of 16-inch lateral
pipe extending from the main Guardian line to Eagle, WI.
ANR spokesman Joe Martucci said ANR's lake route would be less
expensive than a purely land-based route as the pipeline would have
to go through heavily populated areas of Michigan. "The water route
may seem a bit novel. If people keep an open mind... I think they
will come away with a favorable impression of the project" which is
expected to cost $300 million.
Additional equity partners are anticipated; however, Martucci
would not comment on how many are possible or who they might be.
Since the system is designed to serve the incremental needs of
multiple electric and gas customers, plans call for project
management to be structured with multiple owners, with no one party
having a controlling interest.
Laterals are planned to serve generation and other markets along
the pipeline route. The proposed under water route is intended to
minimize the project's impact on landowners. Using horizontal
drilling techniques developed in the Gulf of Mexico, laterals will
be completed without trenching or otherwise disturbing shoreline or
adjacent shallow lakebed areas. Following environmental review, the
partnership plans to file with the FERC later next year.
Joe Fisher, Houston