Daggett-to-Ehrenberg Lateral Gets Preliminary Thumbs Down

It now appears less likely that El Paso Natural Gas will be placing new bi-directional gas transportation capacity between Daggett, CA, and Ehrenberg, AZ, to facilitate increased in-state California transportation options. The pipeline intended to use portions of the converted All American pipeline to increase capacity between the two major western market locations, but a binding open season revealed insufficient market interest, El Paso said in a bulletin board notice.

The bidding process closed July 10 for the two postings of Line 1903 capacity. El Paso said it rejected all of the bids that were received on capacity offer No. 19420, which proposed firm transportation service from receipt points near Daggett to delivery points near Ehrenberg because there were insufficient volume and term commitments as required to economically justify going forward with the Line 1903 project. Additionally, no bids were received on offer No. 19418, which proposed firm transportation service from receipt points located near Ehrenberg to delivery points located near Daggett.

El Paso held the binding open seasons for 400-500 MMcf/d of firm transportation capacity on the bi-directional lateral. 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. It was 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. For both the Daggett-to-Ehrenberg path and the Ehrenberg-to-Daggett paths, El Paso was offering a reservation rate of no greater than 10 cents/Mcf on a 100% load factor basis and was estimating a fuel charge for both paths of 1.5%.

If the open seasons resulted in sufficient binding transportation agreements to make the lateral project economically viable, El Paso planned file with FERC with a goal of placing the project in service during the first quarter of 2003. El Paso said it will reevaluate the results to determine if there is enough interest to justify moving forward in some fashion with a project.

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