CMS Oil & Gas announced last week the start of commercialoperations at the Fort Union Gas Gathering System, one of its mostimportant Powder River Basin assets, and the opening of a newoffice in downtown Denver to manage the company’s activities in thebasin. Gas started flowing through the Fort Union system Sept. 1.

CMS is the operator and one of the of the five companies withinterest in the 24-inch, 450 MMcf/d Fort Union Gathering system.The other companies involved include Enron North America Corp.,Western Gas Resources, Inc., Barrett Resources Corp. and ColoradoInterstate Gas Co. (CIG). It will deliver gas into CIG’s PowderRiver Lateral, KN Interstate and Wyoming Interstate Co.’s newMedicine Bow lateral. The $46 million project, which was completedunder budget, began receiving purge gas on August 18. The 106-mile,24-inch gathering header requires no compression.

Because it just recently came on line, Fort Union has less than15 MMcf/d flowing to the CIG interconnect, said Lanny Waguespack.Pennaco Energy, one of the largest producers in the basin, will beone of the system’s largest customers, he added. Pennaco and CMShave formed a partnership to explore the coal bed methane (CBM) gasin 580,000 acres in the basin.

The Fort Union system is just one part of CMS’ overall plan forthe region. Another pipeline, called the Northern Header PowderRiver Gathering System, is planned to begin operation Nov. 1. Thisproject, owned wholly by CMS, is designed to gather 256 MMcf/d ofcoal bed methane gas. The system can be expanded to 500 MMcf/d withthe addition of compression. Gas will be gathered in northernWyoming (around Gillette and Sheridan), and in southern Montana,for delivery to the Fort Union system and other market areas in theU.S. via pipelines connected to Fort Union.

Waguespack expressed confidence that all this production willfind a home in other markets. “We’re reasonably sure that the gas,which will be sold at the Rockport Hub in northeastern Colorado,will move the gas.”

The Thunder Creek Pipeline, constructed jointly by KN Energy andDevon Energy, represents CMS’ main competition for transporting gasout of the basin, Waguespack said. Thunder Creek announced thebeginning of commercial operations earlier last week.

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