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El Paso Tests Market for Mainline Expansion
El Paso Natural Gas apparently got the message when its lastopen season for 1.2 Bcf/d of firm transportation capacity attractedbids for 14.4 Bcf/d. The pipeline has announced an open season totest market interest in a mainline expansion and to satisfyregulatory concerns that something needs to be done to relieve theapparent capacity constraint at the California border.
El Paso has been under significant pressure from regulators andshippers to expand because of enormous demand and skyrocketingprices in California. In a Jan. 3 letter to the pipeline, Daniel M.Adamson, director of FERC’s Office of Energy Projects, urged ElPaso to consider modifying its Line 2000 project to “assist thedifficult situation” now facing the California gas market.Specifically, the Commission recommended El Paso amend a pendingapplication in which it seeks to acquire an existing 30-inchdiameter, 1,088-mile crude oil pipeline from Plains All AmericanPipeline L.P., and convert part of it to natural gas transportationservice. The line extends from McCamey, TX, to Bakersfield, CA. ElPaso plans to convert to gas service a 785-mile segment fromMcCamey to Ehrenberg, AZ. El Paso proposed the Line 2000 project asa loop line to replace existing compression, and not as a systemexpansion.
El Paso Vice President Al Clark told the commission that marketdemand for an expansion would have to be evaluated first. He saidthe open season for 1.2 Bcf/d of capacity being held by affiliateEl Paso Merchant Energy would give the first indication whethersuch an expansion was needed.
Following such a resounding wake-up call, El Paso is holding anew open season to determine interest in additional capacity on themainline or in relinquishing mainline space. The open season willend March 23.
El Paso officials said they will consider requests for firmtransportation service originating in any receipt basin anddelivered to any location on its system. If a new load can bematched to an existing shipper’s offer of release orrelinquishment, El Paso will attempt to facilitate the transfer ofthe capacity between the parties prior to proposing an expansion.Upon receipt of non-binding expressions of interest, they willbegin to identify appropriate facilities to possibly expand thesystem.
Clark previously told FERC the pipeline could add compression tothe proposed Line 2000 project or replace or recommission thecompression that the pending application proposes to abandon.Another option, he said, would be to add new compression to theexisting system or loop either the existing system or Line 2000project. The economics of the project will determine the eventualform.
For more information on the open season visit El Paso’s web site or call Jerry W. Strange, director of transportation marketing, at (915) 496-3139.
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