Kinder Morgan Inc. (KMI) reported Thursday that it has signed a 10-year firm natural gas transportation contract with an undisclosed shipper that will result in a 125,000 Dth/d expansion of its TransColorado pipeline system, but a much larger 600,000 Dth/d expansion to accommodate new production from the Piceance, Paradox, Uinta and other basins in Colorado, Utah and Wyoming has been delayed (see Daily GPI, March 17).

TransColorado General Manager Julian Huzyk said it was much easier for the pipeline to move forward with a smaller compression-related expansion than a more costly and time-consuming pipeline looping project. However, he said the company fully expects production growth in the Piceance, Paradox and other Rockies basins will drive future expansion projects.

“We signed the precedent agreement to get moving forward with the easy compression power-up of TransColorado,” said Huzyk, adding that it was easier for the company to negotiate a smaller capacity package with Piceance producers, and easier to move the smaller expansion project through the regulatory process.

“I’m still optimistic that we are going to do more than this in the future, but the compression piece is something we can move quickly and get in place next fall, perhaps sooner if FERC procedures work as we hope they might, in terms of streamlining the certificate process.”

The proposed expansion project would provide additional firm capacity on TransColorado from northwestern Colorado to Blanco, NM. It is expected to cost less than $50 million.

To accommodate the additional volumes, the company will construct three new compressor stations and modify equipment at two existing locations, which will increase compression by more than 20,000 horsepower.

Throughput on TransColorado increased by about 7% during the second quarter of 2003 and 23% over the first six months of the year (see Daily GPI, July 17). The pipeline is fully subscribed into 2004.

“This project demonstrates the need for additional transportation infrastructure to move natural gas to markets from the growing supply basins of the Rocky Mountain region,” said Richard D. Kinder, chairman and CEO of KMI. “TransColorado originates in the prolific, but underdeveloped, Piceance Basin of western Colorado and provides a strategic link to southwestern United States natural gas markets.

“TransColorado’s financial performance has continued to improve with the escalating demand for natural gas transportation,” Kinder added. “Currently, more than 90% of the 300,000 Dth/d of existing, pre-expansion long-haul capacity is subscribed into 2008.”

The current mainline system extends 300 miles from the Greasewood Hub in Rio Blanco County, CO, to the Blanco Hub area near San Juan County, NM. The pipeline also interconnects with several major interstate systems along the way.

Kinder said TransColorado intends to file for a Federal Energy Regulatory Commission certificate before the end of this year for the authority to construct the facilities and place them into service. Conditioned upon regulatory approvals, the additional capacity is anticipated to be available during the third quarter of 2004.

Huzyk said a previously proposed extension of TransColorado south to interconnections with Transwestern Pipeline, El Paso and Kinder Morgan’s proposed Silver Canyon pipeline still is possible. “Target for Silver Canyon is still the 2006 time period. Certainly any major pipe work on TransColorado would push us into 2005. We didn’t want to hang up this power-up of TransColorado in place next fall. But I know that [we still will be] working on the market” to get the additional projects moving forward.

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