El Paso Energy, Enron, Peoples Energy and Northern BorderPipeline have formed a joint venture to target prized Midwest gastransportation markets left unguarded when TransCanada Pipelinesand Northern States Power put the Viking Voyageur project on holdearlier this year.

The venture partners plan to build a $220-$280 million 36-inchdiameter pipeline, called the Illinois Wisconsin Express Project,which would stretch 150-200 miles to Fond du Lac, WI, about 50miles north of Milwaukee from Joliet, IL. The pipeline would bedesigned initially to carry 650 MMcf/d of gas.

“Each of the different partners are bringing their own areaexpertise to this. It kind of made sense for the four of us tobring this together,” said Peoples’ spokesman Rod Sierra. “We havea considerable storage and wheeling capability here in the Chicagoarea. That is going to help turn this project around and get thatgas back out into Illinois and Wisconsin. The others have the keyexperience on the pipelines, the access to the Canadian supply.Enron has the market knowledge on these kinds of projects.”

And there’s plenty of market, particularly because of the needfor new gas-fired generation. “I’m sure you’ve been following thewoes of the electric generation companies this week across thecountry but especially in the Midwest. And a week ago, we announcedour own electric generation plant to serve the region,” Sierranoted. “So there’s a big need for an ample supply of gas to fuelthese plants. We think they all will be fueled by natural gas.”

The project is targeting basically the same markets as VikingVoyageur: local distributors, large industrial buyers and powergenerators in eastern Wisconsin and northern Illinois. “But Vikingwas a little early and probably did not see as much opportunity onthe power generation side as I think we are going to encounter,”said Mike Stokdyk, coordinator of the project at El Paso subsidiaryTennessee Gas Pipeline. The companies plan to file an applicationfor the project by summer 1999 with service beginning in November2001. The size of the project will determine the rates, butsponsors are projecting reservation rates to be between 10 and 20cents/Dth/d.

Stokdyk said the plan should avoid the pitfalls encountered byViking Voyageur because it would not be competing for Canadiansupply with the Alliance Pipeline and Northern Border projects.Instead it would provide downstream transportation for gas enteringthe region on those upstream pipeline expansions.

It will be competing, however, with ANR Pipeline, which begancourting the same markets Tuesday in an open season (see Daily GPI,June 25). ANR is planning a smaller, incremental expansion thatwould be in place next year.

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