A total of 20 planned eastern interconnects could help the Rockies Express Pipeline (REX) project reach its goal of bringing low-priced western gas to eastern customers beginning next year, said Ultra Petroleum Corp. Vice President Stuart Nance.
On the final day of the LDC Forum Mid-Continent in suburban Chicago last Wednesday, Nance said a portion of the REX East project, which will push the pipeline east from its original terminus in Missouri to Clarington, OH, could go into service some time in 2008. Capacity of 1.6 million Dth is anticipated by the end of 2008, with 1.8 million Dth capacity scheduled by July 1, 2009.
Primary point interconnects will be at Lebanon, OH with Columbia Gas Transmission (Columbia), Dominion, Texas Eastern and Vectron; at Clarington with Columbia, Dominion East Ohio and Texas Eastern; and in-path with Columbia Gas of Ohio, Columbia, Cincinnati Gas & Electric and Tennessee Gas Transmission. Nine secondary point interconnects are planned at points in Illinois, Indiana and Ohio with NGPL, Illinois Power, Trunkline, Panhandle Eastern Pipeline (PEPL), Midwestern Gas Transmission, Citizens Gas, Indiana Gas, ANR and Texas Gas Transmission.
The initial 713-mile REX West segment of 42-inch pipe connecting Cheyenne, WY to an interconnection with PEPL in Audrain County, MO will be operating at capacity soon after its scheduled opening on January 1, Nance said.
"People keep asking me if we'll be full, and I keep telling them 'yes, we will,'" Nance said.
The REX West project includes five mainline compression stations, two hub stations (Meeker and Cheyenne) and two lateral stations. Taps for proposed interconnects with Overthrust near Wamsutter, with the Lost Creek Lateral and with the Echo Springs Lateral were recently installed. A total of seven contractors are each working on approximately 100 miles of construction on the REX West segment, which parallels two other pipelines owned by Kinder Morgan.
The 1,678-mile, $4 billion REX pipeline is a joint venture of Kinder Morgan Energy Partners, Sempra Pipelines & Storage and ConocoPhillips. The project was planned to bring Rocky Mountain natural gas east to markets across the Midwest and Northeast. Gas demand in those regions is expected to grow by approximately 25% to more than 13 Bcf/d by 2015.
Nance said the REX project and the Rockies gas it will carry will change the face of eastern markets, providing "significant gas-on-gas sales" and lowering gas prices across much of the country. Echoing comments previously made by Kinder Morgan CEO Richard Kinder and others involved in the REX project, Nance said gas consumers across the country could see lower gas prices once the pipeline is built and begins providing eastern markets greater access to 200 Tcf of potentially recoverable Rocky Mountain gas resources.
The new pipeline will help raise prices paid to producers in the Rockies who have been collecting substantially lower prices because of the limited outlets for their gas. By the same token, the additional Rockies gas showing up in eastern markets will compete with supplies from the Gulf Coast and other producing areas, forcing those prices down.
In a recent report, Bentek Energy LLC pointed out the need for additional capacity to move gas supplies eastward from the REX terminus at Clarington (see NGI, Aug. 13). Texas Eastern Transmission is in the midst of an open season for incremental pipeline capacity on a proposed "Northern Bridge" expansion involving new facilities that will extend from the REX termination at Clarington to Oakford, PA, in the Philadelphia-Camden metropolitan area (see NGI, Sept. 10).
REX was a recurring topic of discussion during the three days of the LDC Forum, with SGRM vice president Mark Cook summing up the most often heard REX-related remark: "The Rockies Express will displace Gulf Coast supplies by capturing market share and storage injection demand."
Last year REX owners announced that they had secured commitments for the entire 1.8 Bcf/d of planned firm transportation capacity on the REX project (see NGI, March 6, 2006). The initial 136-mile segment of the pipeline from the Meeker Hub in Rio Blanco County, CO to the Wamsutter Hub in Sweetwater County, WY was approved for service in early 2006 (see NGI, Jan. 30, 2006). Construction on the 191-mile portion from Wamsutter to the Cheyenne Hub in Weld County, CO was placed in service in February (see NGI, Feb 19).
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