KN Energy and Devon Energy signed a letter of intent to formThunder Creek Gas Services and build a new $110 million, 126-milegas gathering system and associated facilities in the Powder RiverBasin of northeast Wyoming. The 24-inch diameter gathering systemwould extend between Gillette and Glenrock, WY, bringing up to 450MMcf/d of new production to connections with multiple downstreampipelines during the first half of 1999.

The project is just one among several other pipeline projectsdesigned to tap the Powder River’s huge reserves. Western GasResources and an affiliate of Colorado Interstate Gas have proposeda 90-mile, 20-inch diameter gathering system and a treatingfacility to bring 200 MMcf/d out of the basin. And KN, CIG andQuestar are planning new downstream interstate pipelines andexpansions that could increase access to the basin by 1.3 Bcf/d.

The basin is expected to be one of the fastest growing onshoreareas in the country over the next few years. Currently, estimatesshow the Powder River Basin could hold up to 30 Tcf of gasreserves. Production from the basin is expected to more than tripleits current 210 MMcf/d level over the next five years with thepotential to reach 1.4 Bcf/d if all the existing leases are fullydeveloped.

“We think we have a lot of gas potential here,” said Devon’sDarryl Smette, vice president of marketing. “Currently there arevery few pipeline outlets for gas in this area. We see the PowderRiver Basin having substantial growth.” Devon currently owns160,000 net acres in the basin.

Rocco Canonica

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