Kinder Morgan Interstate Gas Transmission LLC's (KMIGT) proposal to sell a 432-mile segment of its Pony Express natural gas pipeline to an affiliate (Kinder Morgan Pony Express Pipeline LLC) for the purpose of converting it to transport crude oil from the Bakken and Denver-Julesburg/Niobrara shales has drawn protests from ethanol customers.

Nebraska Corn Processing LLC, Prairie Horizon Agri-Energy LLC and Trenton Agri Products LLC -- urged the Federal Energy Regulatory Commission to convene a staff-led technical conference to explore issues related to the proposed alternative service for gas shippers on KMIGT's system. KMIGT filed its application for the conversion/replacement project in August (see Daily GPI, Aug. 21).

The Wyoming Pipeline Authority and the Kansas Corporation Commission argued for "conditions" to be imposed on the changeover.

This is the second time Pony Express has sought to change its stripes. In 1997 the Commission approved its request to convert approximately 804 miles of the line, originally built as a crude oil line, to natural gas service.

The re-conversion of the 432-mile segment of the Pony Express line would clear the way for the transportation of crude oil produced from the Bakken formation in Montana and North Dakota to the oil hub at Cushing, OK, where the oil supplies can have access to local refineries or be transported by downstream pipelines to refineries in other regions of the country, including the Gulf Coast.

In order to maintain 104,000 Dth/d of natural gas service to existing firm customers following the abandonment, KMIGT proposes to construct replacement facilities, including a 14,200 hp compressor station and two laterals. Customers claim the change will involve supplies coming through third party pipelines and mean a degradation of service and higher rates.

The proposed abandonment, if approved by the Commission, "will result in the degradation of the quality of the gas supplied to the ethanol producers' facilities and...will replace low-nitrogen, high-Btu gas with high-nitrogen, low-Btu gas, which will disrupt the ethanol producers' operations and cause them to have significant costs," the three ethanol makers said.

KMIGT has asked the Commission to act on its application by May 1 this year to meet an in-service date of Aug. 1, 2014.

(To read the full story go to shaledaily.com).

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