Kern Solicits Shippers, Updates CA Expansion

Kern River Gas Transmission Co. reported last week that it was soliciting bids from natural gas shippers seeking to replace some or all of their long-term, firm transportation service with primary firm delivery point entitlements at Kern River's Wheeler Ridge delivery point to Southern California Gas Co. (SoCalGas) with primary delivery point entitlements at a proposed Kramer Junction interconnect with SoCalGas.

The solicitation is tied to SoCalGas's recently announced plans to construct a 32-mile pipeline that would connect its existing Adelanto compressor station to the Kern River/Mojave pipeline near Kramer Junction (see NGI, May 21). SoCalGas said its proposed pipeline will have a maximum capacity of approximately 500 MMcf/d. SoCalGas proposes to provide primary firm access rights on its system for at least 200 MMcf/d of gas receipts at Kramer Junction, with the balance of the receipts to be interruptible.

Gas quantities in excess of the 200 MMcf/d that SoCalGas will takeaway will be dependent upon operating conditions of SoCalGas, the delivery pressure from the Kern River/Majove pipeline and on the condition that these new deliveries do not degrade the deliverablility for other existing receipt points into the SoCalGas system.

In conjunction with the new 32-mile pipeline, Kern River has proposed to construct a new meter station at Kramer Junction designed to provide up to 500 MMcf/d of primary firm delivery point entitlements from its system to the SoCalGas system. Consistent with Kern River's policy, the company has notified its shippers that all the capacity of its proposed Kramer Junction delivery point is reserved to facilitate a reduction in the facilities otherwise required for its planned 2003 expansion project.

"To reduce 2003 expansion project facility requirements, Kern River is providing this opportunity for existing long-term shippers, 2002 expansion project shippers and 2003 expansion project shippers to acquire primary firm delivery entitlements at the proposed Kramer Junction interconnect with SoCalGas in return for relinquishing equivalent primary firm delivery entitlements at the Wheeler Ridge interconnect with SoCalGas," Kern River said in its notice.

To maximize the reduction in the 2003 expansion project design requirements and associated costs, Kern River said it will allocate Kramer Junction delivery point capacity as follows:

  • First, capacity will be allocated to any shipper requesting delivery point entitlements to be realigned from Wheeler Ridge to Kramer Junction that has aggregate primary firm delivery point entitlements at delivery points downstream of Kramer Junction in excess of the Maximum Daily Quantity (MDQ) under its TSA (excess entitlements) and that also relinquishes or realigns such excess entitlements to available delivery points at or upstream of Kramer Junction;
  • Second, capacity will be allocated pro rata among shippers that have no excess entitlements but request to replace Wheeler Ridge entitlements with Kramer Junction entitlements; and
  • Third, available capacity will be allocated pro rata among shippers that have excess entitlements and request to replace Wheeler Ridge delivery entitlements with Kramer Junction entitlements, but that do not offer to relinquish or realign excess entitlements in the way described.

If Kern River does not receive requests from shippers for all of the proposed Kramer Junction capacity, the uncommitted Kramer Junction capacity will be made available under its tariff procedures to all shippers on a first-come, first-served basis. The company said requests can be made no earlier than 25 days before the delivery point is made available for service.

"Further, any Kramer Junction delivery point capacity committed to the Kern River 2002 or 2003 expansion project shippers in this request process will be made available, under the same first-come first-served procedures, for other shippers to utilize on an interim basis until these expansions are placed in service," the company said.

Kern River said the availability of delivery point capacity at Kramer Junction is subject to the company completing construction of the Kramer Junction meter station and SoCalGas completing the construction of its downstream lateral. The anticipated completion date for such facilities is on or about Dec. 31.

Eligible shippers must execute a binding precedent agreement establishing a commitment to execute a TSA amendment to reflect the requisite changes in primary firm delivery point entitlements. Interested parties can contact Jeff Leishman at (801) 584-6682 to obtain a copy of the precedent agreement. Shippers must complete, execute and return two originals of the precedent agreement by 5:00 p.m. MST today (June 18).

Kern River also announced last week that it will continue to make extraordinary efforts in seeking to have the facilities that are necessary for the California Emergency Action Expansion in service as soon as possible. The company said it is continuing to strive for its previously announced July 1, 2001 in-service date.

In April, the Federal Energy Regulatory Commission moved with record speed to issue a certificate to Kern River for its 135 MMcf/d, mostly compression, expansion to the natural gas-starved California market (see NGI, March 19). The $81 million California Emergency Action Expansion of the 900-mile,Wyoming-to-California Kern River system received criticism from some that said it would not flow any more gas to the Wheeler Ridge Interconnection in California than is currently available there. Critics claimed that it would simply displace existing gas.

"Construction is approximately 85% complete and Kern River anticipates the construction phase of the project will be completed around June 22, 2001," Kern River said in a statement. " The commissioning phase of the project will begin once the construction has been completed. This schedule is very aggressive and there can be no unforeseen problems for this target date to be achieved."

In order to fully utilize contracts, Kern River warned that shippers need to be prepared to have the necessary supply and market arrangements in place for gas day July 1 should it be able to meet its projected in-service date. The company said it will provide further updates today (June 18), June 25 and June 29.

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