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KMIGT Files to Convert Pony Express to Serve Bakken
In response to the booming development in the Bakken Shale play, Kinder Morgan Interstate Gas Transmission LLC (KMIGT) is seeking FERC authorization to transfer a portion of its Pony Express natural gas pipeline to an affiliate to transport crude from the Bakken to key refinery centers.
The company also would build replacement facilities so it can continue to provide service to existing natural gas firm transportation customers.
The conversion of a 432-mile segment of the Pony Express facilities will create “economic and strategic benefits” for the nation by “linking increased domestic crude oil supplies produced from the Bakken formation in Montana and North Dakota to [the oil hub at] Cushing, OK, where the oil supplies can have access to local refineries or be transported by downstream pipelines to refineries in other regions of the country including the Gulf Coast,” said Kinder Morgan Interstate, a unit of Houston-based Kinder Morgan. The Pony Express system currently is part of Kinder Morgan Interstate.
Kinder Morgan a year ago floated the idea of converting a portion of the Pony Express back to its original function of carrying crude, citing the booming oil development in the Bakken and the Denver-Julesburg/Niobrara shales and a shrinking demand for Rockies gas in the East.
In addition to acquiring and converting the 432-mile segment, which extends from the pipeline’s existing Guernsey Compressor Station in Platte County, WY, to the interconnect with Natural Gas Pipeline Co. of America (NGPL) in Lincoln County, KS, Kinder Morgan Pony Express Pipeline proposes to construct approximately 260 miles of pipeline facilities to connect its system with the Cushing Refinery in Oklahoma.
Kinder Morgan Pony Express earlier this month announced it received sufficient binding shipper commitments during a recent open season to move forward with the conversion project, which will allow it to provide crude oil transportation from receipts points near Guernsey to the Phillips 66 refinery in Ponca City, OK, and delivery points in Cushing. The converted pipeline system will be able to transport up to 220,000 bbl/d of light crude oil and is anticipated to begin service in the third quarter of 2014, according to Pony Express.
In order to continue serving its existing gas shippers, Kinder Morgan Pony Interstate proposes to build two laterals, 14,200 hp of compression, and “construct, convert or modify” seven interconnecting meter stations and related pipe to enable deliveries into and/or receipts from the interstate systems of NGPL, Northern Natural Gas Co., Southern Star Central Gas Pipeline (SSC), Trailblazer Pipeline and Wyoming Interstate Co. (WIC).
It further noted that it has entered into agreements with Trailblazer and NGPL and is currently in discussions with SSC and WIC to provide long-term transportation of natural gas on Kinder Morgan Interstate’s behalf to help it meet its shipper obligations.
Kinder Morgan Interstate called on the Federal Energy Regulatory Commission (FERC) to act on its application by May 1, 2013. “This time frame is necessary to permit the proposed construction of replacement-type natural gas facilities, isolation of specific Pony Express Pipeline segment facilities from [Kinder Morgan Interstate’s] existing system, and sufficient time for conversion of the abandoned pipeline segment to accommodate the transportation to meet a market driven in-service date of Aug. 1, 2014.”
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