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Enogex Leases Out Capacity to Two Major New Pipelines

OGE Energy Corp. pipeline subsidiary Enogex Inc. said Friday it is preparing to lease capacity on its Oklahoma pipeline system to Boardwalk's Gulf Crossing project, a 355-mile, 1.65 Bcf/d project that will bring gas from interconnections with other pipelines in Sherman, TX, Bennington, OK, and Paris, TX, to the Perryville, LA, Hub (see Daily GPI, Nov. 20).

Enogex announced a similar lease deal earlier in the week with Kinder Morgan Energy Partners to support the Midcontinent Express Pipeline project, which will deliver gas from the Rockies, Midcontinent and West Texas along a path similar to Gulf Crossing to long-haul pipelines in Louisiana (see Daily GPI, Dec. 14).

Keith Mitchell, vice president of transportation at Enogex, said together the two leases could end up totaling 750-1,000 MMcf/d of Enogex capacity depending on the results of the Midcontinent Express and Gulf Crossing open seasons, which end Jan. 15 and Dec. 15, respectively.

The two leases follow the failure of an agreement between Enogex and El Paso's Continental Connector project, which was canceled in October (see Daily GPI, Oct. 6). Enogex had planned to lease 750,000 Dth/d to the Continental Connector project. Enogex operates 8,200 miles of intrastate gas gathering and transportation pipelines in Oklahoma.

"These are two exciting projects that fit perfectly with [Enogex's] strategic objectives and ongoing focus to deliver increased value to our customers," said Enogex COO Danny Harris, regarding the Midcontinent Express and Gulf Crossing projects. "Enogex will provide a seamless transportation path for our customers from various locations in Oklahoma into these projects."

The leased space on Enogex's system will allow Midcontinent Express to avoid constructing pipeline across Oklahoma, while also providing more upstream supply for the Gulf Crossing system.

Mitchell said all of the leased space will be used to transport growing Oklahoma production and supply that has become stranded in the region as a result of El Paso's Cheyenne Plains pipeline, which extends from the Cheyenne Hub in Colorado to Greensburg, KS, and the Rockies Express project, which will extend from Colorado and Wyoming across the Midwest to Ohio.

"There's a lot of supply growth coming out of Oklahoma," said Mitchell. "Some of it is just being developed. But some of the infrastructure being built out of the Rockies is actually taking up some of the markets that the gas that had already been in Oklahoma had been enjoying. Some of it is gas that is just constrained, so we'll provide a different market outlet for it."

Mitchell said the leases will require up to $100 million in new pipeline and compression on the Enogex system. "We are using some existing capacity and existing assets as well as putting in some facilities to expand," he said. "The pipeline we're proposing to add is a connection over to [Anadarko's] Waynoka [processing plant in Woods County, OK] which is about 47 miles of pipeline, and the rest of the expansion facilities are primarily compression. There will be some tie-overs between lines to make more efficient use of the existing system."

Kinder Morgan and Energy Transfer Partners announced during the week that they will jointly develop the $1.25 billion Midcontinent Express project. The pipeline will stretch 500 miles from a connection with Enogex in Bennington, OK, through Perryville, LA, terminating at an interconnect with Transcontinental Gas PipeLine (Transco) in Butler, AL. The project will have an initial capacity of 1.4 Bcf/d. It is expected to be in service by February 2009.

The $1.1 billion Gulf Crossing pipeline also will include leased capacity on Boardwalk subsidiary Gulf South Pipeline that will enable Gulf Crossing shippers to make deliveries from Perryville to Transco at Station 85 in Choctaw County, AL. Subject to regulatory approvals, the Gulf Crossing project is expected to be in service during the fourth quarter of 2008. It also will source supply from Enogex at Bennington, OK.

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