El Paso Says It's Open to Western Pipeline Expansion Given
El Paso Natural Gas "is willing to expand its system" to the
California border if "sufficient support" for such a project
can be demonstrated through long-term capacity contracts, the pipeline
told FERC last week.
The pipeline's comments were in response to a Commission inquiry asking
El Paso to consider the feasibility of upgrading its proposed Line 2000
crude-oil conversion project to a system expansion to help ease the pipeline
capacity crunch in the West (See NGI, Jan. 8,
2001). Daniel M. Adamson, director of FERC's Office of Energy Projects,
raised the prospect in a Jan. 3 letter to El Paso, saying that modifying
the project "could assist the difficult situation" now facing
the California gas market.
Specifically, the Commission has recommended that El Paso amend a pending
application in which it seeks to acquire an existing 30-inch diameter,
1,088-mile crude oil pipeline from Plains All American Pipeline L.P., and
convert part of it to natural gas transportation service. The line extends
from McCamey, TX, to Bakersfield, CA. El Paso plans to convert to gas service
a 785-mile segment from McCamey to Ehrenberg, AZ. El Paso proposed the
Line 2000 project as a loop line to replace existing compression, and not
as a system expansion.
However, "there are several ways that an expansion could be accomplished,"
wrote El Paso Vice President Al Clark on Jan. 15. "El Paso could add
compression to the proposed Line 2000 project, or it could replace or recommission
the compression that the pending application proposes to abandon in place."
As a third option, he said El Paso could add new compression to its existing
system or loop either the existing system or Line 2000 project.
The "preferable method will have to be determined by a careful
analysis of the relative costs and a determination of where shippers want
the capacity, i.e. where they want to put gas into El Paso's system and
where they want the gas delivered," Clark said.
As a "first step" towards gauging market support for an expansion,
he noted that El Paso on Jan. 12 posted 1.2 Bcf/d of California-bound pipeline
capacity for sale effective June 1 of this year. The capacity currently
is held by affiliate El Paso Merchant Energy, whose contracts expire May
31. When the posting results are known, "El Paso will determine whether
another open season is needed to solicit expressions of interest in additional
pipeline capacity to serve markets both into and upstream of California."
If El Paso finds there is an "unmet demand for additional capacity"
on its system, the pipeline at that time "will evaluate whether an
expansion of the existing system or a modification of the Line 2000 project,
or both, is the appropriate means of accomplishing the expansion,"
In the meantime, he urged the Commission to approve El Paso's application
for the Line 2000 project as it was filed. Not only will the project "increase
the operational flexibility" of El Paso's current system, but converting
the line from oil to gas service will be a "necessary prerequisite"
to any future expansion of the pipeline's system, according to Clark.