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Boardwalk Pipeline Partners Lines Up Shippers on $575M Pipeline Expansion

Looking to tap the prolific Barnett Shale and Bossier Sands producing regions of East Texas, Boardwalk Pipeline Partners LP said last week that its Gulf South Pipeline Co. LP subsidiary has signed long-term binding precedent agreements with customers for capacity on its East Texas and Mississippi expansion projects. The contracts provide firm commitments for the company's proposed $575 million, 1 Bcf/d pipeline expansion.

The new capacity is expected to be in-service during the second half of 2007. Boardwalk said it expects that the projects will contribute approximately $70 million of annual incremental earnings before interest, taxes, depreciation and amortization (EBITDA). The pipeline capacity may be further expanded depending on the results of ongoing customer discussions.

The East Texas Expansion capacity will extend from Carthage in East Texas to the Perryville area in Richland Parish, LA. Natural gas originating primarily from the Barnett Shale and Bossier Sands producing regions will be transported to interstate pipelines serving markets in the Midwest and Northeast, including Texas Gas (a Boardwalk subsidiary), MRT, Tennessee, ANR, Columbia Gulf and Southern Natural.

The Mississippi Expansion will continue eastward from the Perryville area to the Jackson, MS, area and will provide additional supplies to customers in the Northeast and Southeast, through interconnects with Texas Eastern, Transco, Southern Natural and Florida Gas, and to the Baton Rouge/New Orleans industrial complex.

"The response Gulf South received in the market demonstrates the strong support for these projects," said Rolf Gafvert, co-president of Boardwalk. "We will continue to work with customers to expand these projects and to extend these expansions to serve Southeast markets such as Florida. Access to prolific supply regions further reinforces the strong presence of Boardwalk Pipeline Partners."

Gulf South said it will submit two separate applications for authority to construct the expansion projects with the Federal Energy Regulatory Commission (FERC). In February 2006, FERC granted Gulf South's request to initiate the pre-filing process for the East Texas Expansion.

Tapping into the growing East Texas production plays is a crowded endeavor. CenterPoint Energy Gas Transmission (CEGT) and Duke Energy Gas Transmission (DEGT) said just last month that it has received a "significant response" from potential shippers during a recent open season on the proposed Southeast Supply Header pipeline, which 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 (see NGI, Nov. 21, 2005).

Kinder Morgan Inc. (KMI), through its Natural Gas Pipeline Company of America (NGPL) subsidiary, is also planning to move forward with an expansion of its Amarillo to Gulf Coast (A/G) line after receiving contract commitments from Barnett Shale gas producers interested in greater market access (see NGI, Dec. 12, 2005). The portion of the A/G line being expanded is downstream of Compressor Station 802 in Lamar County, TX and extends 95 miles east, terminating at the Gulf Coast mainline.

Kinder Morgan Energy Partners LP is also looking into building an entirely new 700,000 Dth/d interstate pipeline that would transport growing gas production from the Bossier Sand and Barnett Shale exploration plays in northeast Texas as well as imports from new LNG terminals along the Gulf Coast to pipelines in Louisiana (see NGI, May 30, 2005). The proposed Kinder Morgan Carthage Pipeline would originate near Beckville, TX, and extend 38 miles to Stonewall, LA.

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