Kern River Gas Transmission officially kicked off construction on its $1.2 billion, 900 MMcf/d 2003 expansion project, which received a final certificate from FERC on July 17 (see Daily GPI, July 18). The project will more than double Kern River’s current transportation capacity, providing much needed market access for burgeoning gas supplies coming from supply basins in the northern Rocky Mountain region.

The region has suffered from low prices and wide basis differentials for years because of inadequate takeaway pipeline capacity. Kern’s expansion is expected to improve the situation by giving producers new capacity from their most liquid hub at Opal, WY, to power generation customers in Utah, Nevada, Arizona and California.

“By directly serving nearly 6,000 MW of new electric generation, the Kern River expansion will help promote energy price stability and reliability throughout the Western market,” said Robert L. Sluder, president of Kern River, adding the project will also help communities along the pipeline meet critical peak day needs.

When the expansion is completed in May 2003, the pipeline will be capable of transporting 1.73 Bcf/d of gas, an increase of 906 MMcf/d over its existing capacity. An additional 717 miles of loop pipeline will be constructed adjacent to the existing pipeline in Wyoming (Lincoln and Uinta counties), Utah (Summit, Morgan, Salt Lake, Utah, Juab, Millard, Beaver, Iron, Washington counties), Nevada (Lincoln and Clark counties) and California (San Bernardino and Kern counties). In addition, 163,700 hp of compression will be added at three new and six existing compressor stations, and five existing meter stations will be modified. The new compressor stations will be constructed in Uinta County, WY; Salt Lake County, UT; and Clark County, NV.

The expanded pipeline system will contribute $12 million annually in new property tax revenue to counties along the Kern River system. In addition, Kern River will employ 35% of the project workforce from local labor pools to construct the pipeline and compression facilities. The project is expected to generate about $9.5 million in sales and use taxes in Wyoming, Utah, Nevada and California during construction.

The Williams Companies sold Kern River in March for $960 million in cash and debt to a subsidiary of Des Moines-based MidAmerican Energy Holdings, which is partly owned by Berkshire Hathaway (see Daily GPI, March 8). MidAmerican also recently purchased Northern Natural Gas from Dynegy and its other energy-related business platforms include CalEnergy Generation, MidAmerican Energy and Northern and Yorkshire Electric.

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