TransColorado Seeks 3rd Party Operator
A legal battle between Kinder Morgan and Questar over their
TransColorado Gas Transmission partnership could lead to a third
party entering the picture to operate the 292-mile pipeline. In a
bulletin board notice last week, TransColorado invited third
parties interested in the job to provide statements of
qualification in order to receive requests for proposals.
"Because there is a lawsuit between the two companies and [the
partnership is being dissolved], we have decided to look for a
third party operator," said Kinder Morgan spokesman Larry Pierce.
The third party will perform, or engage others to perform,
administrative, legal, regulatory and marketing functions currently
performed by the partners, the bulletin board announcement said.
Candidates must provide a statement of qualifications by Jan. 24.
The RFP will be sent by Jan. 31.
KN TransColorado, a subsidiary of Kinder Morgan, Inc., filed a
lawsuit in Colorado District Court in Garfield County on June 15,
2000 against Questar and several of its affiliates for various
breaches of fiduciary duty, misrepresentation, dissolution of the
TransColorado partnership and other charges pertaining to the
operation of the TransColorado Pipeline. A trial date has been set
for February of 2002. The suit was filed after Questar announced
plans to build a competing pipeline extension off of its own system
to deliver natural gas from the Uinta/Piceance area to an
interconnection with Kern River Pipeline, which is TransColorado's
competitor. The gas would then be transported to California.
Questar filed an application with the FERC on Jan. 10, 2000 to
construct and operate the competing project.
"We are dismayed and disappointed that our own partner has made
a decision to build a pipeline that competes with TransColorado,"
Kinder Morgan said in a statement at the time. "Questar's plans to
build a competing pipeline project make it impossible for Questar
to fulfill its fiduciary obligations to TransColorado. Under the
circumstances, we don't feel that we have any choice except to seek
dissolution of the partnership.
"Questar's actions...discouraged third-party shippers from
entering into long or short-term transportation agreements with
TransColorado. In fact, Questar has entered into agreements with
TransColorado's principal competitor (CIG) to carry to California
the very same gas that Questar had agreed should be transported on
the TransColorado Pipeline," the company said.
Pierce noted that it would be a long time before this issue is
settled. Kinder Morgan has been operating the pipeline since the
legal scuffle began, but to avoid any additional conflict a third
party has to step in and perform day-to-day operations, he said.
The TransColorado system consists of 292 miles of 22-inch and
24-inch diameter pipe extending from Piceance Basin near Meeker,
CO, to San Juan Basin near Blanco, NM. Phase I was completed in
1996 and Phase II was completed in 1999.
To obtain details of the bulletin board notice, including an
organizational chart, call Dianne Barrett at (303) 763-3676 or
Evelyn Zimmerman at (801) 324-5564.
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