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Questar's Southern Trails Gets Green Light

Questar's Southern Trails Gets Green Light

Despite the objections of potential competitor Southern California Gas (SoCal), FERC last week awarded Questar Southern Trails Pipeline Co. a certificate to build a new 693-mile pipeline that would directly serve customers in southern California --- territory that has long been dominated by SoCal.

The certificate gives Southern Trails, a subsidiary of Questar Pipeline, two years to build and place into service the $155 million line, which would provide 207,500 Dth/d of firm transportation from the Four Corners area (near the borders of New Mexico, Arizona, Utah and Colorado) to the southern California gas market.

The pipeline has acquired a former crude oil pipeline from another Questar company and is converting it for its project, and also plans new construction of pipe replacement and realignment facilities. The line will be divided into two zones - the East Zone and the West Zone. The East Zone will originate in the San Juan Basin in New Mexico and end at the California border, and will have 87,500 Dth/d of available capacity. The West Zone will operate wholly within California and will have 120,000 Dth/d of available capacity.

Questar has envisioned Southern Trails as the last leg of a three-part chain (TransColorado Gas Transmission-Questar-Southern Trails) that would ship cheaper gas supplies to customers in the southern California market in direct competition with LDC SoCal. Questar owns a 50% interest in TransColorado.

Both SoCal and the California Public Utilities Commission have opposed the Southern Trails project, saying it would create excess pipeline capacity in the state and could result in a bypass of SoCal and other utilities serving the area, creating stranded costs.

But FERC wasn't convinced, and rejected SoCal's request for rehearing of the preliminary determination granted to Southern Trails last October. "SoCal continues to express concerns of excessive capacity and resultant financial detriment of a speculative nature without presenting any objective evidence to substantiate that the proposed expansion would result in unfair competition or other material harm," the order said [CP99-163-001].

Furthermore, FERC noted the pipeline received an automatic presumption of public need in light of the fact that Southern Trails sought approval of its project under the Commission's optional-certificate regulations, which put the pipeline at risk for all of the project's costs. This presumption will continue until or unless a third-party can successfully rebut it, the order said, adding that "SoCal has presented no new arguments to rebut it."

Susan Parker

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