CMS Energy and Westcoast Energy filed an application with FERClast week for the U.S portion of their TriState Pipeline project, a650 MMcf/d gas pipeline that would extend to the Dawn Hub inOntario from Joliet, IL, near Chicago.

TriState sponsors have signed definitive agreements with sixshippers for 435 MMcf/d, or 67% of the proposed capacity. AffiliateConsumers Energy signed up to utilize 100 MMcf/d of the firm spaceon the project. More than half of the gas is expected to flow toDawn, while 46% will be dropped off at Consumers Energy in WhitePigeon, MI.

The project is slated to be in service in November 2000, a yearlater than the competing Vector pipeline project sponsored by MCNEnergy and IPL Energy. TriState also enters the regulatory racesignificantly behind Vector. The 1 Bcf/d Vector project, whichwould run along a route similar to that of TriState, wonpreliminary FERC approval on non-environmental grounds last month.But TriState sponsors aren’t worried about being behind.

“One of the main supply drivers of both projects is [the 1.3Bcf/d upstream] Alliance [project], and Alliance isn’t going to bethere until the end of 2000,” noted George C. Haas, executivedirector of business development for CMS Enterprises. “Vector has aslight regulatory lead but the markets aren’t going to developuntil 2000.” Haas said there won’t be enough gas available atChicago to flow on either pipeline until Alliance is built andChicago prices fall enough to make the trip to Dawn more economic.

“We also can be competitive at much smaller volumes and we cangrow with the market,” he added. “We don’t need to guess or hopethe market will be there.” He said TriState will cost about $120million less to build than Vector. TriState, like Vector, willlease an existing pipeline. It will utilize an expansion of a linepreviously owned by Consumers in Michigan. That aspect of theproject enables developers to avoid 123 miles of new pipelineconstruction and capture $179 million in cost savings compared tobuilding a new pipeline, CMS said. The cost of the project isestimated to be $400 million. It will be designed to support aninexpensive expansion to 1 Bcf/d of capacity upon market request.

CMS Gas Transmission and Storage CEO William J. Haener saidTriState will be “the most efficient system for moving Canadian gascoming into Chicago east and will also facilitate the sale ofMichigan storage services in Chicago.”

TriState has filed for zoned rates. Its recourse rate fromJoliet to Dawn is about $0.279/Dth, compared to Vector’s $0.267/Dth(revised by FERC). At 10-15 cents, Chicago-Dawn basis currentlydoesn’t support either pipeline project. “There needs to be a biginflux of supply to bring the Chicago side of it down,” said Haas,noting the 700 MMcf/d increase expected from Northern Border’sexpansion/extension project to Chicago this winter probably willnot bring in enough new supply to lower Chicago prices another 12cents.

Rocco Canonica

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