KN, Devon Form Powder River Gathering Company

KN Energy and Devon Energy signed a letter of intent to form Thunder Creek Gas Services and build a new $110 million, 126-mile gas gathering system and associated facilities in the Powder River Basin of northeast Wyoming. The 24-inch diameter gathering system would extend between Gillette and Glenrock, WY, bringing up to 450 MMcf/d of new production to connections with multiple downstream pipelines during the first half of 1999.

The project is just one among several other pipeline projects designed to tap the Powder River's huge reserves. Western Gas Resources and an affiliate of Colorado Interstate Gas have proposed a 90-mile, 20-inch diameter gathering system and a treating facility to bring 200 MMcf/d out of the basin. And KN, CIG and Questar are planning new downstream interstate pipelines and expansions that could increase access to the basin by 1.3 Bcf/d.

The basin is expected to be one of the fastest growing onshore areas in the country over the next few years. Currently, estimates show the Powder River Basin could hold up to 30 Tcf of gas reserves. Production from the basin is expected to more than triple its current 210 MMcf/d level over the next five years with the potential to reach 1.4 Bcf/d if all the existing leases are fully developed.

"We think we have a lot of gas potential here," said Devon's Darryl Smette, vice president of marketing. "Currently there are very few pipeline outlets for gas in this area. We see the Powder River Basin having substantial growth." Devon currently owns 160,000 net acres in the basin.

Rocco Canonica

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