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Panhandle Eastern Plans Greater Supply Access

Panhandle Energy's Panhandle Eastern Pipe Line will hold a non-binding open season for proposed expansion using pipeline looping and additional horsepower. Depending upon interest, the project could provide up to 750 MMcf/d of incremental capacity from the pipe's field zone through the Midwest to Michigan. In-service could be early 2008. The open season runs Dec. 15 to Jan. 31.

Gregg Russell, vice president of marketing for Panhandle Eastern and Trunkline Gas, says the company seeks to leverage its existing pipeline footprint and connectivity. He notes that Panhandle Eastern accesses supplies in the Anadarko, Permian and San Juan basins, as well as the Rocky Mountain producing region. He concedes that Panhandle Eastern touches some of the supplies that would be accessed by the mammoth Rockies Express, a project of Kinder Morgan Energy Partners LP and Sempra Pipelines & Storage. However, "ours is a multiple supply basin project. It's not just coming out of the Rockies." Rockies Express is a $3 billion project with pipe of up to 42 inches in diameter that would carry Rockies gas east to Ohio. It would be the largest pipeline built in the United States in more than 20 years.

"There seems to be this sort of feeling that because of high gas prices, gas demand seems to be down," Russell says. Not so, he adds. Panhandle Eastern industrial customers are "actually blowing and going." Interest in capacity also has been expressed by some producers as well as LDCs. Given that many of the major gas marketers have disappeared, utilities are stepping up and "wanting to be masters of their own destinies. [Utilities] sort of decided to take that yoke on themselves and started moving to more of a long-term contracting situation."

Russell cites recent calls by regulators, including the National Association of Regulatory Utility Commissioners (NARUC), for utilities to enter longer term contracts to support infrastructure development. "Knowing that the climate is right for longer terms, the market is right for terms, the market is right for demand..., it seemed like a logical time for us to put out our open season."

While an expansion of Panhandle Eastern wouldn't have a direct connection to existing or new LNG supplies, regasified LNG could find its way up Trunkline Gas, then into an expanded Panhandle on its way to eastern markets or back down into Missouri, Russell told NGI.

He would not speculate on what a Panhandle expansion could cost but said the cost would likely be recovered in a separate expansion rate.

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