Wyoming Gov. Dave Freudenthal and four other top state officials on Thursday gave the go-ahead to the state treasurer to negotiate a $300 million investment in El Paso Corp.'s Ruby Pipeline.
El Paso is developing the $3 billion pipeline to carry gas from Wyoming to Malin, OR. The final environmental impact statement is due Jan. 8, spokesman Richard Wheatley told NGI. The 42-inch diameter pipeline is expected to receive approval from the Federal Energy Regulatory Commission in February, he said.
"If approved by FERC, construction would start in early spring and in-service still is anticipated by March 2011," Wheatley said Friday. There are "seven spreads," and all of the work is to be carried out at the same time, he added.
Freudenthal in September had hinted that the state was working on a plan to possibly use its fixed-income portfolio of investments to invest in Ruby to ensure that it would be built (see Daily GPI, Sept. 21). "I think that's an incredibly important line to Wyoming," Freudenthal said then. "I think there's room in here to work out something for both sides."
The five-member State Loan and Investment Board of Wyoming, on which the governor sits, voted unanimously to approve the corporate bond purchase using the state's permanent savings funds. The state treasurer would purchase the corporate bond for the state's internal bond portfolio and offset funds otherwise sent to contracted external bond managers.
The board approval gave the Wyoming Treasurer's Office approval to purchase the bond if contract terms are "completed to the treasurer's satisfaction," the board said. Also approving the plan were Wyoming Secretary of State Max Maxfield, State Auditor Rita Meyer, State Treasurer Joe Meyer and Superintendent of Public Education Jim McBride.
Freudenthal said the investment "would be consistent...with the responsibility to invest state funds prudently," with "a great kicker, which is added natural gas production and revenues that come from that."
The Rockies Express Pipeline, noted Freudenthal, is now fully operational, carrying gas from Wyoming and Colorado to the eastern edge of Ohio.
"The real key is that we just finished the opening of another access route into the Midwestern markets," said the governor. "This would give us another access to the West Coast markets."
Gas prices at Wyoming hubs have traditionally been below prices paid elsewhere because of limited pipeline capacity, said the governor. The Ruby Pipeline would help to change that, he said.
"We hope over time that, as the economy comes back, it will help us capture the true value of those gas resources and help us eliminate the differential," he said.
For the state to invest in the pipeline, the bond would have to be investment grade, said Wyoming Chief Investment Officer Michael Walden-Newman. If negotiations are successful, the Treasurer's Office could purchase the bond from El Paso, he told NGI.
"If ultimately approved by the state treasurer, it would not be until after Ruby is actually in service," Wheatley said of the bond purchase.
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