Market Gives Thumbs-Up to CA Sonoran Pipeline
The proposed Sonoran Pipeline project crossed its first hurdle late last week as potential shippers expressed interest in a significant level of capacity on the proposed 1,030-mile gas pipeline. However, the market seemed to make those hurdles a bit taller as gas prices closed in on $2 in the Rockies and plummeted to nearly $5 at the border.
Kinder Morgan Energy Partners LP (KMP) and Calpine Corp. said they received significant interest in their proposed pipeline project during the open seasons that finished on June 1. Phase One of the Sonoran Pipeline, which would run from the San Juan Basin in New Mexico to Needles and Topock near the California border, received more than 1 Bcf/d of binding precedent agreements and non-binding expressions of interest.
The massive $1.7 billion gas pipeline project, which was announced at the beginning of May (see NGI, May 7; May 14), is one of several proposed new pipelines and multiple expansions in the works to serve the wild demand growth in California. Not all of the new capacity is likely to be needed, or built, however.
The immense Sonoran project is being split into two phases with two separate open seasons. The second phase of the project would extend from the California border to the San Francisco Bay Area. In early May, Sonoran already had received an acceptable binding commitment from Calpine Energy Services LP for 400,000 Dth/d on Phase One and a non-binding commitment for 500,000 Dth/d for Phase Two.
"Our goal now is to individually negotiate binding precedent agreements with the open season participants for the entire project within the next 30-to-60 days so that a fully supported certificate application can be filed with the Federal Energy Regulatory Commission by the end of the year," said Scott Parker, vice president of Sonoran Pipeline. "Given the overwhelming show of support from the market during the open season, in particular from developers of natural gas-fired power generation, we are confident that this is achievable."
Phase Two of the pipeline will be able to connect with several gas pipelines, utilities and suppliers, such as Kern River, Mojave Pipeline, Elk Hills, Pacific Gas & Electric, Southern California Gas and a number of gas-fired generation plants, including those owned by Calpine, the companies said. In addition, KMP and Calpine noted Sonoran would be open to other connections that are requested by shippers.
Sonoran Pipeline LLC is owned by KMP and an affiliate of Calpine. KMP and Calpine plan to jointly develop the Sonoran Pipeline, subject to successful completion of the open season and other approvals. The project is expected to provide much needed natural gas transportation capacity to California to serve rapidly growing electric generation demand. The projected in-service date for Sonoran is the summer of 2003.
Interested shippers seeking additional information on the project should contact Parker at (630) 691-3689. For more information on the Sonoran Pipeline, visit Kinder Morgan's web site at www.kindermorgan.com.
©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.