Activity continues to pour from the Powder River Basin, as CMSContinental Natural Gas, a CMS Energy subsidiary, named OkemahConstruction Inc. as the winning bidder to build the NorthernHeader Gas Gathering System. CMS Continental will be the operatorof the new header, which will help increase the accessibility ofthe basin’s coal bed methane gas to main market points. The costwas not disclosed. CMS said the gathering system will beoperational 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 ownedevenly by CMS Oil and Gas, another CMS subsidiary, and PennacoEnergy. CMS Continental is currently seeking other third party gassupplies in the area to add to these existing dedications.

Pennaco is one of the regions largest producers. From January toJune of 1999, the Denver-based producer exceeded its ownexpectations by increasing its reserve base of Powder River Basingas from 18.1 Bcf to 42.7 Bcf.

The Northern Header system, which will have the ability toincrease its capacity to 500 MMcf/d with added compression,represents one of three main segments in the transportation of coalbed 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 partiesincluding CMS (the managing member in the partnership), EnronCapital & Trade Resources Corp., Western Gas Resources and CIGResources Co. The 450 MMcf/d system, which will run from Gilletteto Glenrock, WY, and is scheduled to start up in September, willhave interconnects with CIG’s Powder River lateral and KNInterstate’s system.

“The Powder River Basin is our Rocky Mountain Strategy,” saidWilliam Haener, President of CMS Gas Transmission and Storage.”Even with the Northern Header announcement, we are not doneexpanding our presence in the area.”

Fort Union will also have a main interconnect with WyomingInterstate Company’s (WIC) Medicine Bow Lateral at Glenrock forredelivery to the Cheyenne/Rockport Hub. The lateral just receivedclearance from FERC earlier this week (See Daily GPI, July 29).

“There are three main parts to our transmission strategy,” saidLanny Waguespack, director of business development for CMS Energy’sDenver Office, which was recently created with the sole purpose ofsupporting CMS’ Powder River operations. “You’ve got the MedicineBow Lateral, the Fort Union System, and this new header. All thesethings will make gas from the basin much more accessible.”

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