NGPL, TETCO Target Eastern Markets
The landscape of projects and programs to move Canadian gas
arriving in Chicago on to the East changed again last week. Kinder
Morgan's Natural Gas Pipeline Co. of America (NGPL) and Texas
Eastern Transmission (TETCO) are targeting the market with a
reciprocal capacity lease arrangement.
NGPL says the transportation service can be provided with only
one additional interconnect, so it is far more cost effective than
the greenfield projects already proposed, which require massive
construction. "With the growth of Canadian imports via the Northern
Border and Alliance pipelines, Chicago will become a major supply
source for natural gas," said Kinder Morgan CEO Richard D. Kinder.
"HubAmerica will utilize NGPL's strategic location, wide variety of
interconnects and flexible transportation and storage services to
enable shippers to move natural gas from the Chicago area
efficiently and cost effectively to other geographical markets
throughout America. We believe this program will benefit our
customers and significantly increase throughput on NGPL."
NGPL signed a letter of intent with Duke Energy's Texas Eastern
for a long-term reciprocal gas pipeline capacity lease. Under the
agreement, TETCO and NGPL will lease capacity on each other's
pipeline systems to offer seamless transportation services of
natural gas from the Chicago area to eastern markets.
An NGPL interconnect to TETCO is planned at Bald Knob, AR, said
NGPL President Deb Macdonald. "This is the first of many kinds of
alliances with other interstate pipelines that we're going to enter
into." NGPL also is in discussions to enhance its interconnect with
Transwestern, she said.
Macdonald said NGPL will file with the FERC following an open
season. She said any challenges to the pipeline's plan can be
overcome by the fact that, besides the interconnect, it does not
include any new facilities, unlike competing projects.
TETCO is labeling its part of the plan the "Enhanced Spectrum "
program, following on its earlier eastbound "Spectrum" project. The
plan is to use capacity turnback on TETCO and back-haul capacity on
NGPL. Service under Enhanced Spectrum is designed to be available
beginning Nov. 1, 2000, coinciding with the start-up of Alliance
Pipeline, said Robert B. Evans, president of Duke Energy
The proposed capacity-lease arrangement between the two
pipelines appears to be a new, and seemingly improved, twist to a
proposal that TETCO had been pushing at FERC for months as an
alternative to the greenfield Independence Pipeline and SupplyLink
and MarketLink expansions, which still are pending. TETCO has
argued all along that it has or will have enough unsubscribed firm
capacity on its system to meet most of the needs of the customers
that would be served by the Chicago-to-East Coast pipeline
projects. Therefore, it reasoned that construction of the pipelines
was not necessary. The Commission staff, however, flatly rejected
TETCO's proposal as a viable alternative in its final environmental
review of the three projects.
Several companies have proposed projects to move gas east of
Chicago by constructing new pipelines that would cost millions of
dollars. "Through this agreement, NGPL and TETCO will be able to
move gas to eastern markets on our existing systems simply by
adding an interconnection between our pipelines. This is a superb
example of two companies partnering to provide the marketplace and
customers with important natural gas transportation solutions,"
Kinder said. Over time, NGPL intends to expand the reach of
HubAmerica by entering into similar strategic arrangements with
other transporters. These alliances will enhance the value of
HubAmerica by providing direct access to markets not directly
connected to NGPL's system.
In addition to natural gas from Canada, NGPL has access to Rocky
Mountain supplies through interconnects with Kinder Morgan's
Trailblazer and Pony Express pipelines. HubAmerica will provide
direct access to major markets in Illinois, Indiana, Iowa and
Wisconsin; and indirect access to Dallas, Houston, St. Louis,
Kansas City and to markets on the West Coast, East Coast and
Southeastern states through numerous downstream interstate and
HubAmerica will offer firm and interruptible transportation
services in conjunction with other NGPL services, such as parking
and loaning transactions and other storage and balancing services.
Daily rates for transportation service will be conveniently posted
on NGPL's bulletin board.
Enhanced Spectrum will be accepting capacity commitments of
three years or more. Both companies will hold their open seasons
from May 15 through June 15 to determine the level of customer
interest. Information meetings have been scheduled for May 9 in
Houston and May 11 in Calgary. Contacts are Bruce Page, director of
HubAmerica, (877) 482-2637 and Randy Riha for Enhanced Spectrum,
(713) 627-4746 or firstname.lastname@example.org.
Joe Fisher, Houston