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Kinder Fully Subscribes NGPL Storage Capacity

Kinder Fully Subscribes NGPL Storage Capacity

The previously underutilized pipeline and storage assets of Natural Gas Pipeline Company of America (NGPL) have enjoyed robust volume growth under the management of the merged KN Energy and Kinder Morgan. Last week, Kinder Morgan's NGPL said it has fully subscribed its storage service with the latest of a number of deals.

NGPL signed storage contracts for 25 Bcf of firm nominated service. Most of the capacity was awarded under two separate three-year contracts. NGPL's nominated storage service has capacity of 130 Bcf and is now fully subscribed until at least Jan. 1.

"These long-term storage transactions, combined with the previously announced rollover and new transportation and storage services contracts, signify that our back-to-basics strategy to focus on our core pipeline businesses is paying off," said CEO Richard D. Kinder.

In January, NGPL signed three- and five-year contracts with Peoples Gas, Light and Coke and North Shore Gas - subsidiaries of longtime customer Peoples Energy - for more than 200,000 MMBtu/d of firm transportation, plus storage (see NGI Jan. 10). Under a contract running from Jan. 1, 2000 through April 30, 2005 NGPL will provide Peoples with 114,000 MMBtu/d of firm capacity. A second pact for three years will give Peoples 90,000 MMBtu/d of FT and 10 Bcf of storage. The companies also signed a letter of intent, subject to NGPL's capacity award procedures, to provide Peoples with 89,000 MMBtu/d of FT and 9.3 Bcf of storage from April 1, 2000 through April 30, 2003.

The contracts are the latest of several long-term firm pacts NGPL has pursued successfully in advance of the delivery date of its newest rival, Alliance Pipeline, due into Chicago from Canada Oct. 1.

Last October another major NGPL customer, Nicor Gas, parent of Northern Illinois Gas signed a three-year contract (see NGI Oct. 4). The agreement, effective April 1, covers 1 million MMBtu/d (or about 970 MMcf/d), includes Nicor's entire storage and transportation portfolio and accounts for nearly one-third of the firm transportation that NGPL provides to the Chicago area.

Underutilization on NGPL was said to be a main stumbling block that caused the failure of KN's $6 billion merger with Sempra Energy in June. The fallout from that put Kinder and William Morgan atop the merged Kinder Morgan and KN Energy.

Joe Fisher, Houston

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