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Thunder Creek Construction Under Way

Thunder Creek Construction Under Way

Thunder Creek Gas Services LLC, a joint venture of Devon Energy Corp. and KN Energy, has begun construction of a 126-mile gas gathering system in the Powder River Basin of northeast Wyoming. The system is expected to be operational by fall at a total cost of about $100 million.

The gathering system will consist of a 126-mile trunk line, low-pressure field gathering systems and related CO2 removal facilities. It will extend from Glenrock, WY, to about 12 miles north of Gillette, WY. The 24-inch trunk line will have an initial capacity of 450 MMcf/d. The system will deliver gas from the CO2 removal plant into the existing KN Interstate pipeline and the Colorado Interstate Gas pipeline at Glenrock, as well as KN Interstate's proposed Pathfinder project, and Wyoming Interstate's proposed Medicine Bow lateral.

With its coal-bed methane and conventional gas potential, the Powder River Basin is becoming one of the more active onshore U.S. gas exploration areas. Thunder Creek will significantly increase gas gathering capacity in the basin and should accelerate development of coal-bed methane in the Powder River Basin, the companies said.

"U.S. demand for natural gas is projected to increase during the next few years. This increase is expected to stimulate the transformation of the high-reserve Powder River region into a top U.S. exploration area," said Darryl Smette, Devon Energy vice president of marketing. "We expect the Thunder Creek system to be serving one of the largest and most exciting gas development projects in the country."

Thunder Creek is among several projects intended to tap the Powder River's huge reserves. In January Western Gas Resources announced participation in Fort Union Gas Gathering LLC, which will build a 106-mile, 24-inch diameter gathering header to gather coal bed methane in the Powder River Basin. Western will have a 23 1/3% interest and be the construction contractor and field operator of the header and a gas treating facility. CMS Gas Transmission and Storage and Enron Capital &amp Trade Resources each will hold a 33 1/3% interest with CMS serving as the managing member. CIG Resources, a Coastal Corp. subsidiary, will hold a 10% interest. The Fort Union gathering header will have an initial capacity of about 450 MMcf/d of gas with expansion capability. The treating facility is to be built near Glenrock, WY. Construction is to begin in April with operation to begin on or about Sept. 1. Western and a joint development partner control more than 800,000 gross acres in the Powder River coal bed methane play with current production of about 72 MMcf/d from about 300 producing wells.

Devon owns about 220,000 net acres in the Powder River Basin and is noted for its substantial San Juan Basin coal-bed methane development. 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 over the next five years. "We think we have a lot of gas potential here," said Smette. "Currently there are very few pipeline outlets for gas in this area. We see the Powder River Basin having substantial growth."

Joe Fisher, Houston

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