After receiving a one-year extension last July to get the West Zone of its converted pipeline up and running and supplying natural gas in California, Questar Southern Trails Pipeline Co. is back at FERC again — this time, it has asked for an 18-month extension to overcome the state regulatory roadblocks that it claims are frustrating the western end of its project.

“It’s the same challenge we’ve had since the beginning of the project” — once Southern Trails crosses the California state line, the “regulatory situation favors the incumbent pipeline,” said Chad Jones, a spokesman for Questar Corp., parent of Questar Southern Trails. “The rate structure is such that you can’t be competitive with the benefits given to SoCal Gas.”

Under the gas distributor’s tariff, prospective customers on the West Zone of the Southern Trails line would be required to “double pay” for their gas — once to Southern California Gas and then to Southern Trails, Jones told NGI. This has “hamstrung the project” in that region of California for the past two to three years, he noted, adding that this situation doesn’t exist in Northern California.

“We’re not giving up on it [the West Zone] because demand for gas is increasing” in Southern California, he said. But Jones acknowledged that Questar is pursuing other just-in-case options for the West Zone line, possibly selling it to companies that want to transport petroleum products or natural gas liquids.

The entire Questar Southern Trails system, which is a converted crude oil pipeline, spans about 700 miles. The East Zone, which began deliveries last July, extends approximately 490 miles from the Blanco Hub in New Mexico to multiple delivery points at the California border. It transports up to 80 MMcf/d of gas supplies from the Rocky Mountains and New Mexico’s San Juan Basin to the gas-starved state.

The 210-mile West Zone, if completed, would have the capability to deliver 120 MMcf/d of gas from the California border into Long Beach, CA. Southern Trails was able to begin service on at least a portion of the West Zone (the easternmost part) last July. Questar estimated it already has invested $52 million to prepare the West Zone for service.

In filing for the second extension on Tuesday, Questar Southern Trails told FERC marketing of the West Zone transportation services “has been hampered by a combination of regulatory and market uncertainties” in California. It believes the “additional time requested will allow the regulatory and market uncertainties to be resolved, thereby enabling QST to sell its available transportation capacity on a firm basis,” and permit it to complete all the pipeline repair, replacement and extension work on the West Zone [CP99-163-001].

“Long-term projections demonstrate that substantial new gas-fired generation will be needed in Southern California and new natural gas transportation capacity will be needed to serve the market. The need for additional interstate capacity to serve California is widely recognized…Consequently, QST remains optimistic of its market prospects, providing that it receives an extension” from FERC, the company said.

Given that its optional certificate authority expires on July 28, Questar Southern Trails has asked the Commission to respond expeditiously to its request to push back the in-service deadline.

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