Midwest Pipe Project Put on 'Back Burner'
Whitecap Energy System LLC -- a proposed Midwest pipeline -- was dealt a serious setback last week when one of its sponsors pulled out, placing the project "in abeyance" for now.
Peoples Energy withdrew from the 110-mile pipeline project, which was aimed at the Illinois and southeastern Wisconsin natural gas markets, last Wednesday, citing the failure to acquire long-term firm capacity commitments. El Paso Energy is the remaining partner, having inherited the pipeline venture when it acquired Coastal Corp. and its ANR Pipeline subsidiary.
"We believe it is certainly buildable...There are no technical impediments to building the project. But the long-term commitments just are not there now," said Joe Martucci, a spokesman for Whitecap Energy. He dismissed reports that the project was dead, but he did acknowledge that it has been placed on the "back burner" for the time being. He noted Whitecap Energy was not "actively looking" for another partner to replace Peoples Energy at this point.
Although ANR and Peoples cited poor demand, some critics believe the companies had another motive in backing off from the Whitecap venture -- the approval last week by Wisconsin regulators of the Illinois-toWisconsin Guardian Pipeline project. They contend that the two companies were never really serious about the Whitecap pipeline. Rather, they proposed it in an attempt to thwart the Guardian line, which was viewed as a threat to ANR's dominant position in the Wisconsin market.
The Whitecap project was designed to be built in two segements, Martucci said. The land segment would extend from Crete, IL, and run 22 miles north to the shoreline of Lake Michigan. The second portion would run 90 miles at the bottom of the lake, and would include laterals to serve the Illinois and Southeast Wisconsin gas markets. The pipeline could transport up to 1 Bcf/d of natural gas.
Martucci said an application for the Whitecap pipeline hasn't been filed at FERC yet, and it isn't likely that one will be submitted this year.
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