Coastal says it has joined Peoples Energy to build a 130-milepipeline from Indiana to Wisconsin because the market needs thepipe. Others, especially backers of the proposed Guardian Pipeline,say the parent of ANR Pipeline is merely trying to protect its lockon the Wisconsin market.

Coastal said last week that growing power generation and LDCdemand make necessary a pipe to serve incremental growth markets innorthern Illinois, northwestern Indiana and Wisconsin beginning inlate 2001. Initial capacity of the Coastal-Peoples pipe would be1.4 Bcf/d. According to the North American Electric ReliabilityCouncil, the region will need more than 8,200 megawatts ofadditional generating capacity by 2005.

Coastal spokesman Joe Martucci said the pipeline is not incompetition with the Guardian Pipeline, which is a challenge toANR’s service territory backed by CMS Energy of Dearborn, MI; WICORof Milwaukee, WI; and Viking Gas, a wholly owned subsidiary ofNorthern States Power Co. of St. Paul, MN. Two weeks ago, Guardianfiled its project at the FERC. “About 60% of our projected marketarea would include northern Illinois, Chicago and northernIndiana,” and the remaining 40% would be in southeastern Wisconsin.

The Coastal-Peoples project also would not compete with theannounced Horizon Pipeline, Martucci said, which is backed byKinder-Morgan, formerly KN Energy. “I have not heard much at allabout Horizon lately,” Martucci said. “I don’t think that projectis aimed at this particular market area that we’ve identified.”Kinder-Morgan did not return calls for comment by press time.

Guardian backers and a Wisconsin consumer group disagreeentirely.

“We’ve been saying all along that the Wisconsin market ishistorically dominated by ANR, which is a subsidiary of Coastal, soit’s hard to see how a new Coastal pipeline coming into Wisconsindoes anything to increase competition,” said Kelly Farr, CMWspokesman. “Guardian is the only option that provides competition,choice, lower prices. Guardian opens up a host of choices at theChicago Hub.” Further, he said Coastal’s proposed pipe onlyconnects with the ANR system while Guardian accesses the Chicagohub.

“It’s interesting that when Guardian was first announced thatANR went to great lengths to say that no new pipeline project wasneeded coming into Wisconsin, that they could simply expand andeverything would be fine. Now they seem to be agreeing withGuardian that a new pipeline project is necessary. It appears to bea distraction to the competitive situation between ANR andGuardian. I’m not sure that it is in the same geographic area, butit seems to be a distraction into the marketplace.”

Noting ANR’s monopoly position in Wisconsin, Steve Hiniker,executive director of the Wisconsin Citizens’ Utility Board, said,”All along ANR has been fighting Guardian, and they have told mepersonally on many occasions… ‘We don’t need new pipeline inWisconsin.’ That’s the tactic that ANR has been taking for sometime, for over a year now. Last week, lo and behold, it wasrevealed they changed their mind.

“Given the fact that there are no specific diagrams, routes,plans, customers in Wisconsin. And given the fact that this wouldbe an entirely new type of development in the great lakes. We viewthe proposal as a sham and preposterous.” The Utilities Board willfight it from a consumer advocacy standpoint, Hiniker said.

ANR has been a sharp critic of the Guardian project. “I guessI’m surprised from the standpoint it’s a complete reversal of whatthey [ANR] had been saying just a few days before [theannouncement], which was there wasn’t a market need” for a newpipeline into Wisconsin, said Greg Palmer, president of Viking GasTransmission, co-sponsor of Guardian.

“They seem to have done a complete 180-degree turn.” Palmer saidGuardian is ahead in the race anyway since it already has beenfiled at the FERC.

The Coastal-Peoples pipeline would begin at St. John, IN, whereCoastal’s ANR Pipeline has a compressor station, and extend northfor 26 miles to Lake Michigan near the Illinois-Indiana borderwhere a new 50,000 hp compressor station will be built. More than90% of the route is located along existing rights-of-way. Fromthere, the pipeline will continue north under Lake Michigan forabout 104 miles, running about three to 10 miles from the westernshore. Plans call for the pipeline to be installed with a minimumof three feet of cover in the lakebed and deeper in shippingchannels.

Guardian proposes to transport gas from interconnections withAlliance, Northern Border, Midwestern Gas Transmission, and NaturalGas Pipeline of America at the Chicago hub near Joliet, IL, tonorthern Illinois and southern Wisconsin markets. The projectconsists of about 140 miles of 36-inch pipe extending from Jolietto the Ixonia area, with an additional 8.5 miles of 16-inch lateralpipe extending from the main Guardian line to Eagle, WI.

ANR spokesman Joe Martucci said ANR’s lake route would be lessexpensive than a purely land-based route as the pipeline would haveto go through heavily populated areas of Michigan. “The water routemay seem a bit novel. If people keep an open mind… I think theywill come away with a favorable impression of the project” which isexpected to cost $300 million.

Additional equity partners are anticipated; however, Martucciwould not comment on how many are possible or who they might be.Since the system is designed to serve the incremental needs ofmultiple electric and gas customers, plans call for projectmanagement to be structured with multiple owners, with no one partyhaving a controlling interest.

Laterals are planned to serve generation and other markets alongthe pipeline route. The proposed under water route is intended tominimize the project’s impact on landowners. Using horizontaldrilling techniques developed in the Gulf of Mexico, laterals willbe completed without trenching or otherwise disturbing shoreline oradjacent shallow lakebed areas. Following environmental review, thepartnership plans to file with the FERC later next year.

Joe Fisher, Houston

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