Even though construction of the intrastate Front Range Pipelinealready is in progress and work on the Front Runner Pipeline isexpected to start “fairly soon,” the sponsors have disclosed thatthey are continuing discussions to possibly combine the two rivalprojects into a single pipeline to serve the growing Colorado gasmarket.
“I wouldn’t call them negotiations. They’re discussions at thispoint. There may be something that will come out of them, but Ican’t really predict that at this point,” said Mark Stutz,spokesman for KN Wattenberg Transmission LLC, sponsor of the FrontRunner project. A spokesman for Public Service Company of Colorado,a sponsor of the Front Range project, also confirmed the “on-again,off-again” discussions, but said that no agreement has beenreached. In any agreement, “we [Public Service] see ourselves asbeing the owner, operator of that pipeline,” while KN Wattenberg”maybe [would] negotiate for capacity that meets their needs,” thespokesman noted.
In the meantime, both companies said they are proceeding withtheir respective pipeline projects. “You cannot obviously stop yourefforts to build a pipeline that we want to get in roughly midwaythrough the 1998-1999 heating season based on the fact that you mayor may not have some success with the discussions,” Stutz told NGI.”If something comes out of it, then we’ll let the world know. Untilthen, we’re continuing on a parallel path with plans to build ourpipeline.”
Construction on the 109-mile Front Runner Pipeline, which wasapproved by FERC earlier this month, is expected to begin by theend of the third quarter, and is targeted for completion by eitherlate this year or in early 1999, he said. Work on the 53-mile FrontRange Pipeline already has started, having won certificate approvalfrom the Colorado Public Utilities Commission (PUC) in June. It isexpected to be finished by November.
“Shortly after they received their decision from the PublicUtilities Commission, Public Service Company approached KN Energy[parent of KN Wattenberg] to discuss the possibility of some typeof accommodation for the two projects,” Stutz noted. “And if youthink about it, that makes good business sense,” particularly sinceboth pipelines will follow essentially the same corridor from nearRockport, CO, to the Denver metropolitan market, will serve similargas markets (principally Denver), and are at-risk projects.
An agreement to build a single pipeline project in Coloradocould put an end to years of feuding between KN Wattenberg, PublicService and Colorado Interstate Gas (CIG), also a sponsor of FrontRange Pipeline. “It’s an interesting business. Some days you’reheavy competitors with another company, and some days you’refriends,” Stutz commented.
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