Phoenix-based Pacific Texas Pipeline Corp. is rapidly moving toward a FERC certificate filing in the second quarter for its proposed $1 billion, 800-mile Picacho Pipeline system, which would extend from the Permian Basin in Texas to rapidly growing power generation, industrial and local utility markets in Arizona.

The 36-inch diameter pipeline would carry 1 Bcf/d of gas from West Texas through the same transportation corridor that holds El Paso Natural Gas to the California border at Blythe.

Pacific Texas already has made filings under the National Environmental Policy Act at FERC and expects to hold an open season for the proposed firm transportation capacity in the next couple months, said Pacific Texas President Michael Owens. The project also would include 160,000 hp of compression and the installation of a significant fiber-optic backbone that will serve both pipeline operating communications and Internet market needs.

Picacho, which was announced last spring, would bring significant new pipeline competition to a rapidly growing region that is served currently by El Paso Natural Gas, Transwestern Pipeline and Questar’s Southern Trails system.

“The problem with a lot of [the proposed power plants in Arizona] was that they couldn’t be guaranteed constant gas flow because of either El Paso’s commitments or the northern pipeline commitments,” said Pacific Texas spokesman Tom Franklin. “So they didn’t know if they would have enough supply because of California’s demands on the system. But all we are designed to do is ship gas to Arizona and the east-of-California markets. That allowed the Arizona Corporation Commission to give some of these plants their licenses because now they know that we will be supplying them their gas.”

Owens also noted that the capacity recontracting FERC required on El Paso’s system prompted significant interest in the Picacho project. “The California Public Utility Commission recently voted to take more capacity back in 2005 so I know that has a lot of people in Arizona concerned, and that’s why we are trying to get this up and running by the first quarter of 2005.” Owens said it’s really a matter getting through the regulatory process now. The market is there and the pipeline route is clear, he said.

The company already has letters of non-binding interest for about 650 MMcf/d of the proposed capacity. “That’s what really got us interested and behind the whole thing,” said Franklin. “And then we got letters of support from the governor of Arizona and the secretary of commerce.” This will be a new pipeline with “all the safety features, and all the environmental concerns and security factors worked out,” he said.

In its Aug. 8, 2002 letter, the Arizona Department of Commerce told FERC that to avoid future gas shortages like those in 2000-2001 and maintain adequate deliverability, a new pipeline is needed. The rapidly growing markets in Arizona and the West cannot be served by “dividing up the existing static, aging pipeline infrastructure.”

“We’ve got such an explosive market out here right now,” said Franklin. “We have 120,000 new homes being permitted in the southern part of the state. The growth is really unique and that is going to drive our project.” For more information on Pacific Texas or the Picacho Pipeline, go to www.pacifictexas.com.

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