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New System Intensifies Powder River Activity

New System Intensifies Powder River Activity

Activity continues to pour from the Powder River Basin, as CMS Continental Natural Gas, a CMS Energy subsidiary, named Okemah Construction Inc. as the winning bidder to build the Northern Header Gas Gathering System. CMS Continental will be the operator of the new header, which will help increase the accessibility of the basin's coal bed methane gas to main market points. The cost was not disclosed. CMS said the gathering system will be operational November 1.

Starting from the area of the basin near Gillette and Sheridan, WY, the 256 MMcf/d system will gather gas from 580,000 acres owned evenly by CMS Oil and Gas, another CMS subsidiary, and Pennaco Energy. CMS Continental is currently seeking other third party gas supplies in the area to add to these existing dedications.

Pennaco is one of the regions largest producers. From January to June of 1999, the Denver-based producer exceeded its own expectations by increasing its reserve base of Powder River Basin gas from 18.1 Bcf to 42.7 Bcf.

The Northern Header system, which will have the ability to increase its capacity to 500 MMcf/d with added compression, represents one of three main segments in the transportation of coal bed methane gas from the Powder River to downstream markets.

Its main connection will be to the Fort Union Gathering system, a 106-mile gathering line owned by a group of interested parties including CMS (the managing member in the partnership), Enron Capital & Trade Resources Corp., Western Gas Resources and CIG Resources Co. The 450 MMcf/d system, which will run from Gillette to Glenrock, WY, and is scheduled to start up in September, will have interconnects with CIG's Powder River lateral and KN Interstate's system.

"The Powder River Basin is our Rocky Mountain Strategy," said William Haener, President of CMS Gas Transmission and Storage. "Even with the Northern Header announcement, we are not done expanding our presence in the area."

Fort Union will also have a main interconnect with Wyoming Interstate Company's (WIC) Medicine Bow Lateral at Glenrock for redelivery to the Cheyenne/Rockport Hub. The lateral just received clearance from FERC earlier this week (See Daily GPI, July 29).

"There are three main parts to our transmission strategy," said Lanny Waguespack, director of business development for CMS Energy's Denver Office, which was recently created with the sole purpose of supporting CMS' Powder River operations. "You've got the Medicine Bow Lateral, the Fort Union System, and this new header. All these things will make gas from the basin much more accessible."

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