CMS Gathering Powder River Coal-bed Methane
CMS Energy Corp. subsidiary CMS Continental Natural Gas Inc.
agreed with Pennaco Energy Inc., and CMS corporate affiliate CMS
Oil and Gas to gather coal-bed methane gas from the Powder River
Basin in Wyoming and Montana. CMS Continental is to provide
long-term, low-pressure gathering. The deal includes an acreage
dedication of more than 580,000 acres in the Powder River Basin
within the previously announced CMS Oil and Gas/Pennaco Energy Area
of Mutual Interest.
CMS Continental also announced plans to construct a $190 million
high-pressure gathering header from southwest of Gillette, WY,
north to Montana and west to Sheridan, WY. The plan initially calls
for about 110 miles of 24-inch, 20-inch and 16-inch high-pressure
pipeline and about 40 miles of six- and eight-inch gathering
laterals, with more than 14,000 horsepower of compression. The
first phase of the project is expected to be in service by Nov. 1.
Construction of the system will begin in July at its southern
terminus where it will connect with the previously announced Fort
Union Gas Gathering system.
"Initially, the CMS system will gather coal-bed methane from as
far north as Township 56 North Range 75 West and as far west as
Township 55 North, Range 83 West, near the northern portions of
Campbell County and Sheridan County, WY. Further expansion is
anticipated, which would extend the northern terminus of the system
into Montana," said Dave Presley, president of CMS Continental. "We
intend to offer quality low-pressure gathering and marketing
services to third parties in the basin, particularly the northern
CMS Oil and Gas and Pennaco Energy formed a 50/50 joint venture
and area of mutual interest last October to develop and produce
coal-bed methane on 492,000 net acres in the Powder River Basin of
northeastern Wyoming and southeastern Montana. Since October, the
parties' acreage position has grown to more than 580,000 net acres
in the area of mutual interest through additional acreage
purchases. The parties will each operate about 50% of the wells.
Pennaco Energy is headquartered in Denver and is primarily
engaged in the exploration, development and production of gas from
coal-bed methane properties in the Powder River Basin Coal-bed
Methane Play in northeastern Wyoming and southeastern Montana.
Pennaco is one of the largest leaseholders in the play with
approximately 311,800 net acres. This lease position includes about
290,000 net acres held by Pennaco in its previously announced joint
venture with CMS Oil and Gas. Gas production is dedicated to a CMS
Several pipeline companies and producers are planning major
pipeline expansions to serve the Powder River Basin. KN Energy and
Devon Energy are planning to build a $110 million, 126-mile gas
gathering system that would extend between Gillette and Glenrock,
WY, bringing up to 450 MMcf/d of new production to connections with
multiple downstream pipelines during the first half of 1999. And
Western Gas Resources and an affiliate of Colorado Interstate Gas
have proposed a 90-mile, 20-inch diameter gathering system and a
treating facility to bring 200 MMcf/d out of the basin. KN, CIG and
Questar also are planning new downstream interstate pipelines and
expansions that could increase access to the basin by 1.3 Bcf/d.
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