With more than 1.1 Bcf/d in binding commitments from customers under 10- to 15-year contracts, El Paso Corp. subsidiary Ruby Pipeline LLC is moving ahead with its proposed pipeline to carry natural gas from Rocky Mountain basins to the West Coast.
The $3 billion Ruby Pipeline would be about 670 miles long, extending from the Opal Hub in Wyoming to a pipeline interconnect at Malin, OR, near California's northern border. The 42-inch diameter pipeline would have an initial design capacity of between 1.3 Bcf/d and 1.5 Bcf/d, depending on the final level of customer commitments. Service is scheduled to begin by March 2011.
"Now that we have sufficient capacity commitments from customers, we in turn have committed to go forward with the Ruby Pipeline Project," said Jim Cleary, president of El Paso's Western Pipeline Group. "Ruby has proven itself as an attractive project for producers and end-users in western states, and we are on track to have this much-needed pipeline capacity ready in less than three years."
El Paso said it is in discussions to obtain additional commitments for Ruby and plans to file a certificate application with the Federal Energy Regulatory Commission in January.
The Houston-based company has taken "two significant steps" to manage the project costs, it said. First, it signed purchase contracts with two steel mills for all of the pipe required for the project. In addition, it executed incentive-based contracts with a consortium of three construction companies.
The pipeline is to be financed with a combination of free cash flow, project financing and other forms of capital, and no equity is expected to be issued for this project. However, El Paso said it may elect to bring in equity partners.
Including the Ruby Pipeline, El Paso's committed backlog of new pipeline growth projects is now about $7 billion. All of the committed projects, said El Paso, are nearly all fully contracted with customers and are expected to be placed in service over the next five years.
El Paso launched an open season for Ruby in February (see NGI, Feb. 25). Less than a month later Williams and TransCanada Corp. proposed another east-to-west Rockies project, Sunstone Pipeline (see NGI, March 17. Sempra Pipelines & Storage earlier this month signed a memorandum of understanding to acquire a 25% stake in the project (see NGI, June 23).
Another Rockies pipeline proposal by Spectra Energy Corp., which would have carried gas to the West Coast, apparently has been canceled. Spectra proposed the Bronco Pipeline late last year to move more than 1 Bcf/d of gas 650 miles from Wyoming to a terminus on the California-Oregon border near Malin, and in January it launched an open season to test support (see NGI, Jan. 14). However, Spectra CEO Fred Fowler told Bloomberg in an interview last week that the project was off the table.
For "the project as we proposed it, we will not build that project, but we're trying to figure out what is the project to go" with, Fowler told Bloomberg. "We would like to have a better position in the Rockies because it is one of the faster growing supply areas."
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