CMS Energy Corp., Marathon Ashland Petroleum LLC, and TEPPCOPartners LP. are forming a limited liability company to own andoperate part of Trunkline’s mainline that is being converted totransport refined products from the Gulf Coast region to Illinois.Each of the companies will own a one-third interest in the venture.CMS already is seeking FERC approval to convert the 720-mileportion of its pipeline from gas to refined products service.Conversion of the pipeline to liquids service is expected by theend of 2001.

“This project illustrates the CMS Energy North American strategyof maximizing the use of our existing assets by converting anunderutilized gas line to liquids service,” said Chris Helms,president of CMS Panhandle Pipe Line Cos. “The Panhandle Pipe LineCos. serve as a building block for the company’s growth andexpansion into all forms of energy.”

CMS spokesman John Barnett said the gas industry no longer needsthe pipeline because of changes in gas service to the Midwest. “CMSTrunkline has been a key supplier of natural gas and natural gastransportation service into the Midwest since 1951 when this26-inch pipeline was built, but a number of industry factors, suchas increased natural gas availability in that Midwest region aswell as additional storage capacity, have changed the long-haultransportation market. As a result, really since the mid-1980s,long-term firm demand for pipeline capacity has declined.”

He said the project would have minimal affect on gas supply andtransportation in the Midwest because of significant new capacitybeing added by the Alliance Pipeline project this fall. “We lookedat this, looked at the market area and saw that there was a need, agrowing need, for refined petroleum products and capacity… jetfuel, diesel fuel and gasoline.”

In October, Trunkline Gas Co. said it “entered into discussionswith several parties” to either sell or spin down the gas pipeline forconversion to refined products transportation (see Daily GPI, Nov. 2). Trunkline first proposed spinningdown this segment of its pipeline [Line 100-1] to an affiliate,Trunkline A.P. Pipeline Co., in July 1998 (when it still was owned byDuke Energy). Since then, however, Trunkline’s ownership changedhands, with CMS Energy buying it in March 1999.

Trunkline shippers have been opposed to the line conversion.Many consider Trunkline’s system still to be a key link in theMidwest gas pipeline grid, even in light of all the new pipelineconstruction coming into that market.

The joint venture intends to build a 70-mile, 24-inch diameterpipeline connecting TEPPCO’s facility in Beaumont, TX, with thestart of the gas pipeline extending from Longville, LA, to Bourbon,IL. The line, called Centennial Pipeline, will pass throughportions of seven states — Texas, Louisiana, Arkansas,Mississippi, Tennessee, Kentucky and Illinois. The CentennialPipeline will intersect TEPPCO’s existing mainline near Lick Creek,IL, where a new two-million-barrel refined petroleum productsstorage terminal will be built.

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