TriState Files to Build 650 MMcf/d Gas Line
CMS Energy and Westcoast Energy filed an application with FERC
last week for the U.S portion of their TriState Pipeline project, a
650 MMcf/d gas pipeline that would extend to the Dawn Hub in
Ontario from Joliet, IL, near Chicago.
TriState sponsors have signed definitive agreements with six
shippers for 435 MMcf/d, or 67% of the proposed capacity. Affiliate
Consumers Energy signed up to utilize 100 MMcf/d of the firm space
on the project. More than half of the gas is expected to flow to
Dawn, while 46% will be dropped off at Consumers Energy in White
The project is slated to be in service in November 2000, a year
later than the competing Vector pipeline project sponsored by MCN
Energy and IPL Energy. TriState also enters the regulatory race
significantly behind Vector. The 1 Bcf/d Vector project, which
would run along a route similar to that of TriState, won
preliminary 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 1.3
Bcf/d upstream] Alliance [project], and Alliance isn't going to be
there until the end of 2000," noted George C. Haas, executive
director of business development for CMS Enterprises. "Vector has a
slight regulatory lead but the markets aren't going to develop
until 2000." Haas said there won't be enough gas available at
Chicago to flow on either pipeline until Alliance is built and
Chicago prices fall enough to make the trip to Dawn more economic.
"We also can be competitive at much smaller volumes and we can
grow with the market," he added. "We don't need to guess or hope
the market will be there." He said TriState will cost about $120
million less to build than Vector. TriState, like Vector, will
lease an existing pipeline. It will utilize an expansion of a line
previously owned by Consumers in Michigan. That aspect of the
project enables developers to avoid 123 miles of new pipeline
construction and capture $179 million in cost savings compared to
building a new pipeline, CMS said. The cost of the project is
estimated to be $400 million. It will be designed to support an
inexpensive expansion to 1 Bcf/d of capacity upon market request.
CMS Gas Transmission and Storage CEO William J. Haener said
TriState will be "the most efficient system for moving Canadian gas
coming into Chicago east and will also facilitate the sale of
Michigan storage services in Chicago."
TriState has filed for zoned rates. Its recourse rate from
Joliet to Dawn is about $0.279/Dth, compared to Vector's $0.267/Dth
(revised by FERC). At 10-15 cents, Chicago-Dawn basis currently
doesn't support either pipeline project. "There needs to be a big
influx of supply to bring the Chicago side of it down," said Haas,
noting the 700 MMcf/d increase expected from Northern Border's
expansion/extension project to Chicago this winter probably will
not bring in enough new supply to lower Chicago prices another 12
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