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Two Partners Join CMS for Trunkline Conversion

Two Partners Join CMS for Trunkline Conversion

CMS Energy Corp., is pushing ahead with plans to convert part of CMS Trunkline's mainline from gas to liquids service. Last week the company was joined in the project by Marathon Ashland Petroleum LLC, and TEPPCO Partners LP.

The three are forming a limited liability company to own and operate part of Trunkline's mainline that would transport refined products from the Gulf Coast region to Illinois. Each company will own a one-third interest in the venture. CMS just filed to seek FERC approval to convert the 720-mile portion of its pipeline from gas to refined products service. Conversion is expected by the end of 2001.

"This project illustrates the CMS Energy North American strategy of maximizing the use of our existing assets by converting an underutilized gas line to liquids service," said Chris Helms, president of CMS Panhandle Pipe Line Cos. "The Panhandle Pipe Line Cos. serve as a building block for the company's growth and expansion into all forms of energy."

CMS spokesman John Barnett said the gas industry no longer needs the pipeline because of changes in gas service to the Midwest. "CMS Trunkline has been a key supplier of natural gas and natural gas transportation service into the Midwest since 1951 when this 26-inch pipeline was built, but a number of industry factors, such as increased natural gas availability in that Midwest region as well as additional storage capacity, have changed the long-haul transportation market. As a result, really since the mid-1980s, long-term firm demand for pipeline capacity has declined."

He said the project would have minimal effect on gas supply and transportation in the Midwest because of significant new capacity being added by the Alliance Pipeline project this fall. "We looked at this, looked at the market area and saw that there was a need, a growing need, for refined petroleum products and capacity..... jet fuel, diesel fuel and gasoline."

In October, Trunkline Gas Co. said it "entered into discussions with several parties" to either sell or spin down the gas pipeline for conversion to refined products transportation (see NGI Nov. 8). Trunkline first proposed spinning down this segment of its pipeline [Line 100-1] to an affiliate, Trunkline A.P. Pipeline Co., in July 1998.

Trunkline shippers have been opposed to the line conversion. Many consider Trunkline's system still to be a key link in the Midwest gas pipeline grid. CMS bought Trunkline, along with the Panhandle Eastern Pipeline and an LNG port, from Duke Energy in a deal announced November 1998.

The joint venture intends to build a 70-mile, 24-inch diameter pipeline connecting TEPPCO's facility in Beaumont, TX, with the start of the gas pipeline extending from Longville, LA, to Bourbon, IL. The line, called Centennial Pipeline, will pass through portions of seven states --- Texas, Louisiana, Arkansas, Mississippi, Tennessee, Kentucky and Illinois. The Centennial Pipeline will intersect TEPPCO's existing mainline near Lick Creek, IL, where a new two-million-barrel refined petroleum products storage terminal will be built.

Joe Fisher, Houston

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