The pipeline constrained Rocky Mountain region is less than a month away from getting a major new pipeline expansion, and one other large expansion project is making progress and should be filed with FERC in the next few months, according to company officials.
Kern River Gas Transmission’s $1.2 billion 2003 Expansion project is on schedule for a start on May 1, and company officials are optimistic that there will be adequate upstream supply and sufficient market demand (see NGI, July 22, 2002). Meanwhile, officials at Colorado Interstate Gas (CIG) say they now have enough signed contracts to make a FERC filing for the Cheyenne Plains project (formerly Coastal Connect), which would transport about 560 MMcf/d of gas from the Cheyenne Hub in northern Colorado to numerous pipe connections near Greensburg, KS (see NGI, Sept. 30, 2002).
“We got subscriptions of 540 MMcf/d of capacity on Cheyenne Plains, which basically filled it out,” said CIG spokesman Greg Reuben. “Once we got into more of the engineering and compression detail, they recognized that there was another 20 MMcf/d of capacity that will be available so we have a supplemental open season that is out there now. That closes 4 p.m. MDT on April 11. Our plan is to file with FERC sometime in the next month. We are working diligently with FERC on some of the initial processes with regard to the environmental [issues].”
However, Reuben said CIG affiliate Wyoming Interstate Co. (WIC) has had less success with its flow reversal project. An open season has been extended to April 30 on the WIC Expansion West project, which would involve modifying existing compressor stations to allow east-to-west flow of gas and constructing 60 miles of new pipeline (see NGI, Feb. 3, Aug. 19, 2002). The size of the new facilities will be determined based on the volume of firm service requested. The capacity of the expansion could be 300,000 Dth/d if 24 inch diameter pipe is used or 550,000 Dth/d if 36 inch diameter pipe is used. A new interconnect would be installed with Kern River in the Opal area. The project is expected to be in service by May 2005.
“We are still in negotiations. We have one large strong customer that we’ve been working with and we’ve been working with all the other usual suspects,” said Reuben. He said Powder River Basin producers have been reluctant to sign up for new pipeline capacity or a new project until they have assurance that they will get a favorable Environmental Impact Statement from the Bureau of Land Management on tightening the well spacing in the basin to 20 acres from 40 acres.
“Obviously the marketplace was saying to us that they needed that behind them to have an understanding of where their production was going so that they could then go forward with any new plans for a pipe that they may need to get their production out.
“We know there is a need for gas supply [into the Southwest and California],” but Reuben said it was debatable whether Powder River Basin production was needed to fill up Kern’s expansion. “Obviously Kern could get filled up and someone else could go without [gas in their pipeline]. From a gas balance perspective, there is some debate whether these volumes are needed. What load factor will all these pipelines run at after Kern’s expansion goes in?”
Kern River Project Development Manager Laurie Brown said she’s expecting the 2003 Expansion to fill up quickly. “We have several proposals from different companies to enhance infrastructure to bring gas to Kern River.” She mentioned the WIC open season and another open season on Questar’s Overthrust system. “The Opal plant is being expanded to process an additional 350,000 Dth/d. We know that there is enough receipt point capacity to serve the incremental 900 MMcf/d and we believe there is enough market to flow to. It’s just a question of whether all the shippers have all their ducks in a row. I can’t imagine that too many shippers will leave their capacity stranded because they still have to pay demand/reservation charges whether they flow gas or not.”
She said basin-to-California border price spreads should cover maximum rates on Kern River “easily into October, maybe longer. So even if our firm shippers don’t flow, other shippers will be flowing gas on interruptible capacity or authorized overrun service. I believe it will be filled up in May.
“I think a lot of the gas will come from the Jonah field and the Pinedale from behind the Opal plant. We do bring in a lot of gas off of Questar’s Main Line 104 in Price, UT, from the Drunkards Wash area; that receipt point is designed for almost 300,000 Dth/d and we’ve been seeing volumes near that.”
Brown said Questar has been looking at some additional modifications to boost flows into Kern, including a 250 MMcf/d new meter station that will interconnection with the Overthrust pipeline at Questar’s JL 90 line. “That will send gas directly into Kern River.”
Regarding the markets, Brown said Kern is expecting more than 6,500 MW of new gas-fired generation to be in place by early next year. “Those are directly connected to Kern River so in addition to all the existing power that is currently served by us, this incremental 6,500 MW will need service. That amount of new generation would require more than 1 Bcf/d of natural gas [if they run at peak load all the time].”
Those plants are unlikely to run at peak rates every day of the week 365 days a year. In fact, the current generation surplus and low power price environment will further reduce their load factors. And at least two of the proposed plants have been deferred by Duke Energy. A 750 MW unit planned by Calpine isn’t expected to be in service until June 2005.
But the Rocky Mountain natural gas market likely will accept these new challenges with open arms just as long as its age-old problem of inadequate pipeline capacity is finally being solved (see NGI, July 1, 2002).
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