El Paso Moves Forward on California Expansion Projects

Encouraged by the results of recent market tests, El Paso Natural Gas announced two binding open seasons last week for 400-500 MMcf/d of firm transportation capacity on a bi-directional lateral it plans to add to its system within California. It also plans to announce soon additional binding open seasons to expand its mainline.

The lateral, which El Paso obtained as part of its purchase of the All American oil pipeline in February 2000, runs from the area of Daggett, CA, southeast to the area of Blythe, CA, and Ehrenberg, AZ, on the Colorado River. The company intends to convert the line to transport gas between the two points, which are major spot market points for gas trading. The project will facilitate the movement of gas within California and provide service to power plants in California and Arizona. The open seasons close on July 10.

In its previous non-binding open season May 1-25, El Paso said it received requests for more than 2.1 Bcf/d on the Daggett-to-Ehrenberg path and more than 0.9 Bcf/d on the Ehrenberg-to-Daggett path. El Paso is offering to build capacity capable of transporting 500 MMcf/d on the Daggett-to-Ehrenberg path and 400 MMcf/d on the Ehrenberg-to-Daggett path. The receipt and delivery points are interchangeable for the two paths. In the Daggett area, receipt/delivery points include interconnects with Mojave Pipeline, Kern River, Pacific Gas and Electric and Southern California Gas. In the Blythe and Ehrenberg area, the points include interconnects with the proposed North Baja Pipeline Project, Southern California Gas for incremental capacity within California, and El Paso's existing system near Ehrenberg for transportation upstream of California.

For both the Daggett-to-Ehrenberg path and the Ehrenberg-to-Daggett paths, El Paso is offering a reservation rate of no greater than 10 cents/Mcf on a 100% load factor basis. El Paso is estimating a fuel charge for both paths of 1.5%.

If the open seasons result in sufficient binding transportation agreements to make the lateral project economically viable, El Paso will file with FERC with a goal of placing the project in service during the first quarter of 2003.

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