Southern Trails Throws in Towel on West Zone Portion of Pipeline

Questar Corp.'s Southern Trails Pipeline has asked FERC to vacate its certificate authority to activate the 209-mile West Zone portion of the converted pipeline that extends from Essex, CA, to Long Beach.

"Questar Southern Trails explains that it no longer intends to activate the...segment. [It] further explains that following receipt of abandonment authority requested [in a related docket], it intends to sell the entire West Zone of the Southern Trails pipeline from North Needles to Long Beach," according to a FERC notice of Southern Trails' motion to vacate [CP99-163-003].

"Questar Southern Trails maintains that its decision to sell the West Zone of its pipeline will not alter the operation of or service provided through the East Zone of its pipeline from Blanco, NM, to North Needles, CA," it said.

The East Zone, which went into operation in late June 2002, covers 490 miles of the entire 700-mile, 16-inch diameter Southern Trails system, a converted crude oil pipeline that Questar purchased from Arco in late 1998 for $38 million. The East Zone segment ships 80,000 Dth/d of natural gas supplies from the Rocky Mountains and New Mexico's San Juan Basin to multiple delivery points at the California border.

But the 120,000 Dth/d West Zone, which would run through the heart of industrial and commercial areas in Southern California, has been met with opposition from California regulators from the very start. "California is not interested in opening up its lines to outside companies," a spokesman for the pipeline said at the time.

Questar originally proposed Southern Trails as a competitive alternative to Southern California Gas, which has had a lock on the Southern California natural gas market for years. FERC issued a certificate to convert and activate the Southern Trails pipeline in late July 2000.

The company indicated more than two years that a sale of the West Zone portion was possible in the wake of unfavorable regulatory decisions in California.

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