Burgeoning gas demand in the southeastern United States andChicago’s supply hub status have spawned another pipeline project.The latest comes from Columbia Gulf Transmission, AGL Resources,and MCN Energy Group. The trio last week began a six-week openseason offering up to 250,000 Dth/d of capacity on the proposedVolunteer Pipeline.

“The why is simply the fact that the southeastern market is agrowing, booming area, and this is an effort to get into that area.The Northeast has been talked about a lot. The Southeast is anotherarea,” said Columbia Gulf spokesman Bob Kiser.

“Volunteer is targeting a growing market that needs additionalcapacity, so we’re not competing against alternative proposals…We’re providing an economic means to meet that growing need forgas,” said MCN spokesman Stewart Lawrence. This is a very strategiclink among existing pipeline systems. One of the key benefits hereis it allows for the delivery of Canadian natural gas tosoutheastern markets by utilizing backhaul arrangements and othermeans. There are direct links into the Midcontinent area as well.”

The 24-inch diameter Volunteer would run 160 miles from aninterconnect with El Paso Energy’s Midwestern Gas Transmission nearPortland, TN, to an interconnect with recently unbundled AtlantaGas Light near Chattanooga, TN. Interconnections with EastTennessee Natural Gas and Southern Natural Gas, as well as ColumbiaGulf and Texas Eastern Transmission also will be available.Potentially expandable to 500,000 Dth/d, Volunteer expects toprovide firm transportation at rates in the neighborhood of 22 to24 cents/Dth.

The partners expect to garner commercial and industrial loadbehind the AGL system, said Jim Hart, Columbia Gulf vice presidentof commercial services. Because AGL is unbundled, in GeorgiaVolunteer will be seeking contracts among the marketers serving thearea rather than just the LDC. Hart said Volunteer isn’t expectingto secure 15-year contracts like it might have gotten from abundled LDC. “What we’re looking for is a minimum contract term of10 years. That’s what we’ve requested in the open season. We’lljust have to wait and see what the market response to that contractterm is.

“Obviously it’s easier to sell to one customer than it is tosell to five, who may have five different views of the future.. Itis more difficult from that standpoint, but what it has done is ithas caused us as a pipeline company to become quicker, to becomemore flexible, to become more in touch with the needs of themarket.”

Hart said there are no Volunteer competitors on the horizon asyet. “I think [Tennessee] itself, at least from our preliminaryindications, is pretty excited about the prospect of anotherpipeline coming through the state.”

The equal partners in the project expect to file with theFederal Energy Regulatory Commission in 2000 and have the pipelinein service by November 2001. Columbia Gulf will operate thepipeline, which is expected to cost about $160 million

“I believe we’ve got strong support for this project,” Lawrencesaid. “We’ve done a lot of leg work on it and believe the openseason is going to be successful. We will see in about 45 days.”The open season ends May 28, 1999.

East Tennessee last month announced an open season forincremental capacity along its mainline in Tennessee and Virginia.The expansion would entail construction of mainline, compressionand related facilities with in service planned for Nov. 1, 2000.”East Tennessee is really a subset of the whole Southeast, which isjust growing by leaps and bounds with a lot of industrial growth inthe area,” said Bryan Neskora, El Paso manager of businessdevelopment.

The Volunteer Pipeline is not to be confused with Columbus,OH-based marketer Volunteer Energy of which Williams EnergyServices recently acquired another 50%, increasing its stake to100%.

Joe Fisher, Houston

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