Noting construction is well under way on all eight segments, the Ruby Pipeline backers at El Paso Corp. said Wednesday several factors including winter weather will determine if the project, now two months behind schedule, can be completed as now planned in June.
El Paso Pipeline President Jim Yardley and CEO Doug Foshee fielded several questions on the project during a third-quarter earnings call.
Even after a two and a half year review process with federal, state and local authorities prior to the July 31 construction start, Ruby still faces the uncertainty of cultural resource and wildlife habitat issues arising during the ongoing construction that could affect its eventual start date next year, the El Paso executives said. In part of the route, El Paso still does not have access to all of the rights-of-way it needs, they said.
An eighth construction spread was added in a mountainous part of Utah and work there is progressing on an accelerated basis, Yardley said, as a means of trying to complete the bulk of the work before winter. Digging and pipe stringing are approximately three-quarters complete, and the welding of the pipe sections about two-thirds complete, he said.
"A lot of work is going on throughout the entire [$3 billion, 680-mile, 42-inch diameter] pipeline route. Our two 'man camps' are up and running in western Nevada and eastern Oregon to house and support up to 1,000 workers throughout the construction," Yardley said. Right now construction is going "very well" on the eastern sections and "slower than expected" on the western spreads in parts of Nevada and Oregon, he said.
The slowing in the West is due to delays in obtaining some culture resource clearances, Yardley said. "We recently had more than 150 archaeologists in the field and now the permitting process has improved. In Nevada and Oregon we now have access to more than half the right-of-way. We continue to get more released in Nevada, and in Oregon we're seeing improvement in the permit approval timeline."
Foshee and Yardley estimated that Ruby will come in 10-15% over budget, primarily due to these delays. The variables in hitting the new June 2011 target date to start will be weather this winter, final regulatory clearances, and the timing for various construction restrictions for the fish and game habitats and nesting periods.
In response to a question about the ongoing risks to Ruby's June timing, Yardley said the project is in the "formative" stage in which construction is well under way, but regarding milestones the company will not have more definitive data until the January-March period next year. "Over the next month or so, we'll know a lot more," he said.
Yardley said all of the pipe should be laid by April 1 to hit the June start-up time. "Remember also that we have in this build-up in capital a significant contingency as a result of these milestones still lying ahead of us."
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