KN Energy last week launched an open season for its HorizonPipeline project with a 300 MMcf/d shot across the bows ofcompeting projects to serve the cold weather market in northernIllinois and southern Wisconsin. The anchor customer will be NicorGas of Illinois which needs the 300 MMcf/d for supply flexibilityand to serve new customers.

The 36-inch, 129-mile, high-pressure pipeline from Joliet, IL,to Hales Corners, WI, will have capacity of up to 1.2 Bcf/d uponcompletion, which is expected in fall 2001. The estimated cost is$150 million to $250 million, depending on shipper response anddesign capacity. The open season for firm capacity began Thursdayand extends through 5 p.m., CDT, Friday, June 25.

“The Horizon Pipeline will accommodate the continued growth andincreasing need for additional gas supply and competitively pricedstorage and hub services in northern Illinois and southernWisconsin,” said Rick Wells, KN executive vice president. “NicorGas’ readiness to sign on and its level of commitment demonstratethe value that this project brings to the Midwest.”

“We’ve looked at a number of alternatives to serve the growingneeds of the northern part of our service territory,” said LonnieUpshaw, Nicor vice president of operations. “Our customers in Lake,McHenry, DuPage, Kane, Cook and Will counties will benefit from theadditional supplies and increased flexibility that the Horizonproject will bring.” Nicor Gas adds about 30,000 customers per yearin this region. We believe of all the options out there today,Horizon ideally serves Nicor Gas’ needs in an efficient,cost-effective and environmentally friendly manner.”

Horizon will begin at the emerging gas supply hub near Joliet,where the interconnection of several pipelines offers access to gassupply and a variety of storage and hub services. The pipeline willconnect with Natural Gas Pipeline Company of America (NGPL), asubsidiary of KN Energy, and with Nicor Gas and the AlliancePipeline. Potential connections to other pipelines are beingreviewed. NGPL would operate Horizon, and KN plans to jointly ownthe pipeline with one or more other partners. Horizon would useabout 45 miles of existing 36-inch pipeline and plans to use asignificant amount of existing electric transmission right-of-way.

KN announced Horizon May 5. Scott Parker, KN director ofbusiness development, said the company already has a strongrelationship with customers who could use the new pipe as it servessouthern Wisconsin through NGPL already. He said KN is talking toWisconsin LDCs and is eyeing the potential for power generationload in the region. He would not speculate on what percentage ofHorizon throughput could end up serving power generators. AsHorizon is a stand-alone pipeline, it would have its own tariffwith rates yet to be determined, Parker said. “We’re going to beextremely competitive..”

By using existing facilities and rights-of-way and minimizingnew pipe, Horizon would be able to deliver gas to WisconsinElectric Power’s system in Milwaukee and Racine counties, WI, andNGPL’s and Nicor Gas’ systems in McHenry County, IL. In addition,there is potential to connect to North Shore Gas Co.’s system inCook and Lake counties, IL. Based on potential shipper demand,Wisconsin Gas’ distribution system can be connected with theaddition of a short lateral.

Wisconsin Gas, however, already has signed up for 650 MMcf/d offirm capacity on the competing Guardian Pipeline, another newinterstate line planned to serve northern Illinois and southernWisconsin. Guardian is holding an open season through June 3. Thepipeline would have a minimum capacity of 650 MMcf/d and would beexpandable, depending on the market, to up to 1.1 Bcf/d. Theproject’s planned in-service date is Nov. 1, 2002. Guardian wouldtransport gas from interconnections with Alliance, Northern Border,Nicor, Midwestern, NGPL and the proposed TriState Pipeline nearJoliet, IL, to the Watertown, WI, area. The project is jointlyowned by WICOR, CMS Energy Corp. and Viking Gas Transmission, witheach holding a one-third interest.

Others have tried targeting the Wisconsin market and failed. TheIllinois-Wisconsin Express Project – backed by Peoples Energy,Northern Border, El Paso Energy, and Enron – has been put onindefinite hold. And TransCanada PipeLines and Nicor Inc. late lastyear scrapped plans for their reconfigured Voyageur Pipeline.Peoples Energy and Northern Border have given signals they might goahead with a Wisconsin project on their own.

Meanwhile, Coastal’s ANR in March applied to the Federal EnergyRegulatory Commission for another expansion of its Wisconsin systemto add nearly 200 MMcf/d of capacity for in-service November 2000.

For information on the open season, call (630) 691-3689.

Joe Fisher, Houston

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