Tetco Gives Spectrum Project Another Try with Lower Rates
Hoping the second time is the charm, Duke Energy announced
Wednesday an open season for 300,000 Dth/d of firm capacity on its
proposed Spectrum Pipeline project. The open season will last from
May 7 to June 4.
This is Spectrum's second open season. In 1997, Tetco, a Duke
affiliate, offered capacity for the project, which would transport
gas from Chicago to the Northeast, but "no one signed up," said
Duke spokesman John Barnett.
This time around Tetco has lowered the transportation charge
from 70 to 54 cents/Dth. Randy Riha, a Tetco spokesman, said this
will be the lowest cost option for transporting gas in that
direction. Other proposed pipelines that are designed to carry gas
in the same direction as Spectrum are charging 70-80 cents/Dth.
Yet the question of transport cost justification still looms
over Spectrum and all the other Chicago to Northeast pipeline
projects. Using NGI's bidweek prices for 1998, the average Chicago
Citygate price was $2.19/MMBtu versus $2.43/MMBtu at the New York
Citygate, for a differential of 24 cents. With this low
differential, buying from the spot market in New York would still
be preferable to transporting gas from Chicago. Riha said the
Spectrum will become cost effective, however, when the Alliance
Pipeline goes into service.
"I think the market demand will start slowly, but once Alliance
comes on, differentials will warrant companies moving gas that way
through the lowest cost possible. We are offering 300,000 Dth/d and
I think there will be a very strong market for it."
Bobby Evans, president of Tetco, added "We believe that
customers seeking firm capacity with a 2000 in-service date to
coincide with the in-service date of Alliance Pipeline will be
particularly interested in Spectrum."
Tetco said it was able to achieve such a low transportation rate
because it is not planning to install new pipe. Spectrum will
reallocate capacity. This strategy also helps avoid environmental
hang-ups, Tetco said. Additionally, the low Spectrum rate was achieved
because of the implementation of Tetco's rate initiative that FERC
approved last September (See Daily GPI,
Up to 200,000 Dth/d of the capacity would be available in the
fall of 1999 to provide transportation access from Midcontinent and
Canadian natural gas sources via existing interconnects and from
Gulf Coast, offshore Gulf Coast and Appalachian natural gas supply
sources, Tetco said.
For details on the open season, call Randy Riha at (713)
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