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CEGT, DEGT Move Forward on 1 Bcf/d Pipeline from Perryville Hub to Gulfstream

After a "significant response" from potential shippers during a recent open season on the proposed Southeast Supply Header pipeline, CenterPoint Energy Gas Transmission (CEGT) and Duke Energy Gas Transmission (DEGT) said late last week that they plan to move ahead with the project.

First announced in November 2005 (see NGI, Nov. 21, 2005), the Southeast Supply Header would link supply from East Texas basins, such as the Barnett Shale and Bossier Sands, and North Louisiana basins to growing southeastern and northeastern markets. It would extend 250 miles from CEGT's Perryville Hub in northeastern Louisiana to DEGT's partially owned pipeline affiliate, Gulfstream Natural Gas System. The proposed route would cross and interconnect with major interstate pipelines serving the eastern United States that are not currently served at the Perryville Hub.

As a result of the successful open season, the Houston-based companies are projecting capacity of the new pipeline will be 1 Bcf/d with an in-service date in mid-2008.

With the open season out of the way, the companies said they will now proceed with negotiating definitive agreements with prospective shippers. CEGT, an indirect, wholly owned interstate natural gas pipeline subsidiary of CenterPoint Energy Inc., and DEGT, a subsidiary of Duke Energy, said they are forming a joint venture to complete the project.

The Southeast Supply Header would allow customers to access the growing production from natural gas basins in East Texas and North Louisiana, which will provide an important alternative onshore supply source for markets in the U.S. Southeast and Northeast. The pipeline also will serve as an important link for traditional Gulf supply and developing regasified liquefied natural gas (LNG) volumes.

"We are pleased at the exceptional response to our open season," said Guy Buckley, group vice president, southeast transportation and storage, DEGT. "The Southeast Supply Header will provide a critical link between expanding southeast and eastern markets and growing supply basins. Connecting expanding domestic onshore resources to serve these markets provides an opportunity for both DEGT and CEGT to grow our businesses with existing and new customers."

Cy Zebot, senior vice president and chief commercial officer of CEGT, added, "The strong support of this open season is a clear indication of the superior value proposition represented by our highly liquid Perryville Hub. We're excited about working with DEGT to provide producers and shippers on our system access to the expanding markets in the Southeast, particularly Florida."

The Southeast Supply Header is not alone. Several other projects are also planned to transport gas out of East and North Texas, including one by Energy Transfer, Gulf South and Texas Gas (see NGI, June 6, 2005), and a venture by Kinder Morgan and Crosstex (see NGI, May 30, 2005).

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