Questar Plans WY Storage Project, Pipeline Hub

Questar Pipeline launched a major pipeline expansion initiative last week in conjunction with plans announced recently to move forward with the eastern portion of its Southern Trails Pipeline to California (see Daily GPI, April 10) and in response to strong demand for capacity on several other downstream pipelines, particularly Kern River. Questar also said it is moving forward with plans to build the Rocky Mountain region's first high deliverability salt cavern storage operation, and will attempt to turn its existing pipeline system into a market hub.

The company is holding three open seasons, including one for the southwest Wyoming storage project, another for a northern pipeline expansion and a third for a southern mainline expansion.

"We're moving forward with plans to make Questar Pipeline a major trading hub," said Questar President Keith O. Rattie during a conference call on the company's strong first quarter financial results. "Our system already has many of the attributes of a major hub: abundant supply, multiple pipeline interconnections and abundant storage. We're moving ahead with plans to provide parking and loaning, no-notice balancing, wheeling and exchange, etc., which together will increase liquidity and facilitate trading and transportation on and between Questar and the other Rockies export pipes." In addition, the company is expecting to add large amounts of receipt and delivery capacity at multiple points along its system.

An expansion of its northern system would provide additional deliveries to LDC affiliate Questar Gas at Wasatch Front (up to 180,000 Dth/d is expected), Kern River at Muddy Creek or Painter (potentially 110,000 Dth/d), Northwest Pipeline at South Lake (30,000 Dth/d), and Wyoming Interstate Company, Overthrust Pipeline, Colorado Interstate Gas Company and Williams Central (50,000 Dth/d deliveries and up to 200,000 Dth/d of receipts at Wamsutter). The exact size of the project will be determined after the open season, which closes May 18.

The southern system expansion will provide additional capacity from northern and southern receipt points to Kern River (ML104) at Elberta (potentially 300,000-400,000 Dth/d), TransColorado at Greasewood (40,000-60,000 Dth/d), Northwest Pipeline at Red Wash (80,000 Dth/d) and Questar Gas at the Wasatch Front. The transportation charges are as follows: reservation charge is $5.28804/Dth/month, the usage charge is $0.00267/Dth, the 100% load factor rate is $0.17652/Dth, the ACA charge is $0.00219/Dth and the fuel reimbursement charge is 0.8 %. Both projects are expected to be in service by Nov. 1, 2002.

"There are a lot of customers that have signed up for capacity on other pipelines that are interested in getting gas supplies to those pipelines," said Alan Allred, vice president of business development for Questar Pipeline. "There also are a lot of producers who are developing new supplies and are interested in getting their supplies moved. Questar Pipeline is fortunate to sit right in the middle of the Rockies in this producing area with growing production and also to be interconnected to most of the major pipelines in the West. We've seen open seasons on Kern River, Northwest Pipeline and CIG for its new pipeline (Ruby) going to California. All of that has prompted a lot of interest in moving gas across our system.

"With the current [high] prices for gas and [strong] demand for gas, I think every available drilling rig we know of in the various basins is producing," he added. "Certainly the Powder River [Basin] is producing a lot. We have the Emory coal-seam in Utah that's producing a lot of gas. There's drilling going on all around our pipeline: the Jonah area, the Mesa-Pinedale areas. And on the other end, there's a lot of demand in California." He also noted there are multiple gas-fired power plants being constructed around Denver and in Wyoming, Utah, Nevada and in California, all of which could be served by Questar's pipeline and its new high-deliverability storage project.

Questar's Rattie said the Wyoming Salt Cavern Storage Project is expected to be ready for service in June 2004, but partial service could be ready in 2003. The project, which will be located in Uinta County, WY, will include four 3.5 Bcf salt caverns, each capable of up to 12 cycles per year. "That is ideal for peaking power and other flexible services," he said. "This will make high deliverability multi-cycle, salt-based storage available for the first time for customers connected to the long-haul pipes out of the Rockies."

The proposed storage project near Evanston, WY, will provide firm storage service with interconnects to Questar Pipeline, Williams Pipeline-West (Kern River and Northwest Pipeline), Overthrust Pipeline and Overland Trails Pipeline. Ultimate maximum storage capability is expected to be 14 Bcf. Depending on market support, caverns will be developed on a sequential or concurrent basis. The open season for the storage project will close on June 1, 2001. To determine rates, Questar said it will evaluate the working gas quantity requested, the anticipated shipper utilization patterns and the facilities required to complete the project. It anticipates that the price of these services will be $4.00/Dth/year plus usage charges, ACA, fuel reimbursement or any other applicable charges. For a shipper cycling its storage 12 times per year, this equates to $0.333/Dth/cycle. For more information on the projects see Questar's website at www.questarpipeline.com.

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