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TransCanada Finds Partners on Proposed 1.2 Bcf/d Pathfinder Pipeline

In the race to build new takeaway natural gas pipeline infrastructure out of the Rockies, the proposed Pathfinder Pipeline project received a boost last week as TransCanada Corp., affiliates of Enterprise Products Partners LP and Quicksilver Gas Services LP signed a memorandum of understanding (MOU) under which Enterprise and Quicksilver Gas Services would acquire up to an aggregate 50% ownership in the project and commit to ship a total of 500 MMcf/d for a 10-year term.

The Pathfinder Pipeline project is designed to provide initial service from Meeker, CO, to the Northern Border Pipeline Co. system in North Dakota. A subsequent expansion would extend service from Northern Border to both the Great Lakes Gas Transmission System and TransCanada's Canadian Mainline system at Emerson, MB. The initial capacity of the pipeline would be 1.2 Bcf/d.

"TransCanada is very pleased to be working with Enterprise and Quicksilver Gas Services on the Pathfinder Pipeline Project," said TransCanada CEO Hal Kvisle. "Their commitment to the project is a significant milestone toward obtaining the necessary support for the project and demonstrates that Pathfinder is a cost-competitive solution to moving an increasing supply of natural gas from the Rocky Mountains to growing U.S. Midwest and Eastern markets using existing assets."

Enterprise and Quicksilver Gas Services would own up to 40% and 10%, respectively, of the Pathfinder Pipeline. The two companies anticipate forming a new entity that would contract for the 500 MMcf/d shipping position. Enterprise would own 80% of this new entity and Quicksilver Gas Services would own the remaining 20%. Upon execution of Enterprise's and Quicksilver Gas Services' option to acquire ownership, TransCanada's ownership in Pathfinder would be reduced from 100%. Under the terms of the deal, TransCanada said it will continue to be responsible for developing, constructing and operating Pathfinder.

Enterprise CEO Michael A. Creel said the pipeline project would "complement" Enterprise's integrated energy value chain, and provide valuable take-away capacity for ongoing expansion efforts at the company's Meeker natural gas processing plant.

TransCanada Corp. launched a binding open season on the 500-mile proposed pipeline in early April (see NGI, April 14). A segment of the Pathfinder Pipeline follows the same route as the proposed Bison Pipeline LLC project, in which TransCanada is partial owner through its interest in TC PipeLines LP. Bison launched a binding open season earlier this month for firm capacity on a proposed pipe that would extend from the Powder River Basin to an interconnect in Morton County, ND (see NGI, April 7). The two projects are coordinating preliminary field activities as they develop commercial support.

Quicksilver Gas Services CEO Toby Darden said, "The Pathfinder project is an innovative solution to match natural gas supply from the Rockies with demand from U.S. markets in a cost-effective manner that benefits consumers, producers and our unitholders."

According to the project's current timeline the first phase of the pipeline project, which would transport natural gas north from Meeker through Wamsutter, WY, to Northern Border, has an anticipated in-service date of late 2010. The second phase, extending the pipeline to Emerson, where gas can be shipped to eastern markets or storage facilities using the Great Lakes Gas Transmission system and TransCanada's Canadian Mainline system, could be in service as early as the fourth quarter of 2011.

The Pathfinder pipe project's major competition comes from the proposed Rockies Alliance Pipeline (RAP), a joint project from Alliance Pipeline Inc. and Questar Overthrust Pipeline that would extend from Wamsutter, WY, to the Minnesota/Canadian border at the Emerson trading hub (see NGI, March 31). The proposed 42-inch diameter pipe would extend about 800 miles on a northeasterly route through Wyoming, Montana and North Dakota, connecting Rockies production to markets in the Midwest and central Canada. RAP proposes interconnecting with downstream pipelines that include Alliance Pipeline, Northern Border, Great Lakes Gas Transmission and TransCanada PipeLines. The interconnects on the 1.2 Bcf/d pipe would offer direct access to the Chicago Hub, Michigan and Dawn storage, and Upper Midwest and Northeast markets.

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