The fact that Kern River’s 900 MMcf/d expansion has been 90% full almost from its opening in May is a clear indication of the need for another major pipeline, and soon, according to experts addressing members of the Colorado Oil and Gas Association (COGA) in Denver Wednesday.

“Lack of infrastructure is the cause of the basis differential” in the Rocky Mountain area, John Holcomb, vice president of Pace Global Energy Services, said. Despite the complaints about the lack of access to federal lands in the West, “if the pipeline capacity is there, production will come.” Additional pipe in the next few years could lift Rockies production from the 6 Bcf/d range to over 10 Bcf/d. A Pace study of the Rockies area identified lack of infrastructure as the key component in the lower prices for Rockies gas.

The next big pipeline should go to the Midwest, Holcomb said, pointing out that the Rockies area currently supplies 35% of California’s gas and only 10% of the supplies for the Midwest market — a market that is twice as large as California. The proposed Cheyenne Plains pipline will add some capacity in 2005, but nothing is planned beyond that and most pipeline projects take about four years to develop.

Producers need to step up to the plate and sign on for firm capacity to get a new project going, Holcomb said. He noted that LDCs/end-users continue to invest in firm transportation, but the middleman marketers who used to be major backers of new projects with FT commitments now are gone. Producers will have to take their place, the Pace executive said.

The state of Wyoming may become an FT shipper, Mark Doelger, chairman of the rejuvenated Wyoming Pipeline Authority (WPA), said. If the state decides to take royalties and severance taxes in kind, it could sign on as a 500 MMcf/d shipper. This is a move the WPA is considering. Wyoming currently produces 4 Bcf/d. “That figure should be 12 Bcf/d,” Doelger said. “Wyoming could capture the market ahead of LNG, frontier and Arctic gas.”

The state, which nets about 17% of the sales of gas produced in the state, has upped the bonding authority for the WPA to $1 billion in support of pipelines to carry Wyoming gas to market. Although the state can’t own a pipeline, it can ensure that one gets built. “If the pipelines won’t do it, Wyoming will,” Doelger said.

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