FERC has approved Wyoming Interstate Co. Ltd.'s (WIC) application to build a major supply lateral and mainline compression facilities to satisfy the growing demand for take-away capacity in the Uintah Basin in Utah.
WIC, a pipeline subsidiary of El Paso Co., proposed the "Kanda Lateral and Mainline Expansion Project" to address the demand for additional pipe capacity to transport gas from production areas in the Uintah Basin to other markets and the demand for additional mainline capacity sought by major Uintah Basin producer Kerr-McGee Oil & Gas Corp.[CP:07-14].
The Kanda Lateral portion of the project calls for the construction of approximately 123 miles of 24-inch diameter pipeline and associated facilities, starting at a new interconnect with Kerr-McGee in Uintah, UT. The second part of the project, the mainline expansion facilities, would include the installation of two compressor units totaling about 20,620 hp inside affiliate Colorado Interstate Gas Co.'s Wamsutter Compressor Station at Sweetwater, WY.
The proposed facilities would increase the pipeline's capacity out of the Uintah Basin area by approximately 406,000 Dth/d and its mainline capacity by up to 150,000 Dth/d, according to WIC.
WIC estimates that both components of the project will cost an estimated $143 million to construct. The El Paso pipeline expects the new facilities to be placed into service by January 2008.
Kerr-McGee has signed precedent agreements for 400,000 Dth/d of capacity on the Kanda Lateral for 15 years, and for 137,000 Dth/d of mainline expansion capacity from Kanda to Wamsutter for the first two years of the agreement, increasing to 150,000 Dth/d on the second anniversary of the in-service date of the mainline expansion facilities. At Wamsutter, Kerr-McGee would have access to a number a pipelines that serve the Midwest and eastern markets.
WIC proposed an incremental rate for service on the Kanda Lateral facilities, but it requested that it be allowed to roll in the costs of the mainline expansion facilities at its next Section 4 rate proceeding. The Commission granted WIC's request for rolled-in rate treatment, "absent any material change in circumstances" between now and when the pipeline files its next rate case.
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