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Colorado Pipeline Sponsors Explore Combining Projects

Colorado Pipeline Sponsors Explore Combining Projects

Even though construction of the intrastate Front Range Pipeline already is in progress and work on the Front Runner Pipeline is expected to start "fairly soon," the sponsors have disclosed that they still are continuing "discussions" to possibly combine the two rival projects into a single pipeline to serve the growing Colorado gas markets.

"I wouldn't call them negotiations. They're discussions at this point. There may be something that will come out of them. But I can't really predict that," said Mark Stutz, spokesman for KN Wattenberg Transmission, sponsor of the Front Runner project. A spokesman for Public Service Company of Colorado, a sponsor of the Front Range project, also confirmed the "on-again, off-again" discussions, but said that no agreement has been reached. The two companies have been engaged in various talks of one form or another with respect to a joint project since 1992.

"Our preference right now, realizing that our project is [already] being constructed, is that we would be the one that would hold the capacity or ownership to the pipeline," said Kurt Haeger, manager of gas supply and planning for Public Service Company. But, he noted, "We haven't gotten to that level of discussion with KN" yet. "We're still pretty much in the general stages of seeing exactly what their desires are and how we would satisfy them."

In the meantime, both companies said they are proceeding with their respective pipeline projects. "You cannot obviously stop your efforts to build a pipeline that we want to get in roughly midway through the 1998-1999 heating season based on the fact that you may or may not have some success with the discussions," Stutz told NGI last week. "If something comes out of it, then we'll let the world know. Until then, we're continuing on a parallel path with plans to build our pipeline."

Construction on the 109-mile Front Runner Pipeline, which was approved by FERC earlier this month (See NGI, July 20), is expected to begin by the end of the third quarter, and is targeted for completion by either late this year or in early 1999, he said. The 254 MMcf/d pipeline would extend from the hub in Rockport, CO, through the so-called Wattenberg Field, which is located north of Denver, into the Denver metropolitan market. It would permit KN Wattenberg to bring in additional gas supplies from the Rockport Hub - augmenting supplies from the Wattenberg Field - to meet the growing needs of the Denver-area region in the winter, and to do backhauls from the field to eastern markets (such as Kansas and Nebraska) during the summer, Stutz said.

Work on the Front Range Pipeline already has started, having won certificate approval from the Colorado Public Utilities Commission (PUC) in June. It is expected to be finished by the start of the next winter heating season. The 269 MDth/d project essentially would be a "reinforcement" of Public Service Company's current system, Haeger said. It would parallel 53 miles of the existing transportation system, which extends from the Chalk Bluffs (or Rockport) Hub at the Colorado-Wyoming border to the Denver area, stopping about 35 miles north of the city.

Public Service Company's existing pipeline already ties in with Williams, Trailblazer and Wyoming Interstate Co. Ltd. (WIC). With the Front Range project, it also would interconnect with Colorado Interstate Gas (CIG) and, depending on the outcome of the talks, possibly the southern leg of KN Energy's Pony Express Pipeline.

"Shortly after they received their decision from the Public Utilities Commission, Public Service Company approached KN Energy [parent of KN Wattenberg] to discuss the possibility of some type of accommodation for the two projects," Stutz noted. "And if you think about it, that makes good business sense," particularly since both pipelines will follow essentially the same corridor from near Rockport to the Denver metropolitan market, will serve similar gas markets (principally Denver), and are at-risk projects.

An agreement to build a single pipeline project in the Front Range region of Colorado could put an end to years of squabbling between KN Wattenberg, Public Service and CIG, also a sponsor of Front Range Pipeline. "It's an interesting business. Some days you're heavy competitors with another company, and some days you're friends," Stutz commented.

Susan Parker

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