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REX-West Construction Costs 20% More than Estimated

The actual cost to build the western leg of the Rockies Express Pipeline (REX-West) exceeded estimated costs by 20%, REX told the Federal Energy Regulatory Commission last Monday.

The actual cost to build the REX-West leg was $1.93 billion, $324.4 million more than the $1.6 billion that was projected largely due to ballooning labor costs, according to the pipeline [CP06-354].

Labor costs to build the REX-West facilities, which went in service last May, were nearly double what the sponsors had estimated. REX had projected that labor would cost $416 million, but it wound up paying $812 million -- a difference of $395.6 million.

Surprisingly, material costs came in under budget. The sponsors had projected that material costs would be $822 million, but the actual costs for REX-West were $808 million, or $13.82 million below budget.

REX spent nearly three times more than it budgeted on right-of-way damages. The actual cost was $27.75 million, up $17 million from the $10.6 million that it had estimated.

The cost for surveying came in at $23.9 million, more than double the $9 million that REX had projected. Engineering and inspection costs went over budget as well, totaling $75 million compared to a projected $43 million.

And the actual cost for legal/other services was more than four times the amount that had been budgeted. Actual costs were $35.9 million, $27.7 million more than the $8.2 million that was initially estimated.

REX-West, a 713-mile, 42-inch diameter pipeline running from the Cheyenne Hub in Weld County, CO, to Audrain County, MO, went into operation in late May (see NGI, May 26). Now under construction is the REX-East leg, a 638-mile, 42-inch diameter pipeline that extends from an interconnection with the eastern terminus of REX-West in Audrain County through Illinois and Indiana, terminating at an interconnection with three pipelines at the Clarington Hub in Monroe County, OH.

Service on REX-East to Lebanon, OH is expected to begin June 15, 2009 with a capacity of 1.6 Bcf/d, and the line should be fully in service to Clarington, OH, by Nov. 1, 2009 with a capacity of 1.8 Bcf/d, REX said (see NGI, Oct. 13).

REX is a joint venture of Kinder Morgan Energy Partners LP, Sempra Pipelines and Storage and ConocoPhillips.

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