The landscape of projects and programs to move Canadian gasarriving in Chicago on to the East changed again last week. KinderMorgan’s Natural Gas Pipeline Co. of America (NGPL) and TexasEastern Transmission (TETCO) are targeting the market with areciprocal capacity lease arrangement.

NGPL says the transportation service can be provided with onlyone additional interconnect, so it is far more cost effective thanthe greenfield projects already proposed, which require massiveconstruction. “With the growth of Canadian imports via the NorthernBorder and Alliance pipelines, Chicago will become a major supplysource for natural gas,” said Kinder Morgan CEO Richard D. Kinder.”HubAmerica will utilize NGPL’s strategic location, wide variety ofinterconnects and flexible transportation and storage services toenable shippers to move natural gas from the Chicago areaefficiently and cost effectively to other geographical marketsthroughout America. We believe this program will benefit ourcustomers and significantly increase throughput on NGPL.”

NGPL signed a letter of intent with Duke Energy’s Texas Easternfor a long-term reciprocal gas pipeline capacity lease. Under theagreement, TETCO and NGPL will lease capacity on each other’spipeline systems to offer seamless transportation services ofnatural gas from the Chicago area to eastern markets.

An NGPL interconnect to TETCO is planned at Bald Knob, AR, saidNGPL President Deb Macdonald. “This is the first of many kinds ofalliances with other interstate pipelines that we’re going to enterinto.” NGPL also is in discussions to enhance its interconnect withTranswestern, she said.

Macdonald said NGPL will file with the FERC following an openseason. She said any challenges to the pipeline’s plan can beovercome by the fact that, besides the interconnect, it does notinclude any new facilities, unlike competing projects.

TETCO is labeling its part of the plan the “Enhanced Spectrum “program, following on its earlier eastbound “Spectrum” project. Theplan is to use capacity turnback on TETCO and back-haul capacity onNGPL. Service under Enhanced Spectrum is designed to be availablebeginning Nov. 1, 2000, coinciding with the start-up of AlliancePipeline, said Robert B. Evans, president of Duke EnergyTransmission.

The proposed capacity-lease arrangement between the twopipelines appears to be a new, and seemingly improved, twist to aproposal that TETCO had been pushing at FERC for months as analternative to the greenfield Independence Pipeline and SupplyLinkand MarketLink expansions, which still are pending. TETCO hasargued all along that it has or will have enough unsubscribed firmcapacity on its system to meet most of the needs of the customersthat would be served by the Chicago-to-East Coast pipelineprojects. Therefore, it reasoned that construction of the pipelineswas not necessary. The Commission staff, however, flatly rejectedTETCO’s proposal as a viable alternative in its final environmentalreview of the three projects.

Several companies have proposed projects to move gas east ofChicago by constructing new pipelines that would cost millions ofdollars. “Through this agreement, NGPL and TETCO will be able tomove gas to eastern markets on our existing systems simply byadding an interconnection between our pipelines. This is a superbexample of two companies partnering to provide the marketplace andcustomers with important natural gas transportation solutions,”Kinder said. Over time, NGPL intends to expand the reach ofHubAmerica by entering into similar strategic arrangements withother transporters. These alliances will enhance the value ofHubAmerica by providing direct access to markets not directlyconnected to NGPL’s system.

In addition to natural gas from Canada, NGPL has access to RockyMountain supplies through interconnects with Kinder Morgan’sTrailblazer and Pony Express pipelines. HubAmerica will providedirect access to major markets in Illinois, Indiana, Iowa andWisconsin; and indirect access to Dallas, Houston, St. Louis,Kansas City and to markets on the West Coast, East Coast andSoutheastern states through numerous downstream interstate andintrastate pipelines.

HubAmerica will offer firm and interruptible transportationservices in conjunction with other NGPL services, such as parkingand loaning transactions and other storage and balancing services.Daily rates for transportation service will be conveniently postedon NGPL’s bulletin board.

Enhanced Spectrum will be accepting capacity commitments ofthree years or more. Both companies will hold their open seasonsfrom May 15 through June 15 to determine the level of customerinterest. Information meetings have been scheduled for May 9 inHouston and May 11 in Calgary. Contacts are Bruce Page, director ofHubAmerica, (877) 482-2637 and Randy Riha for Enhanced Spectrum,(713) 627-4746 or

Joe Fisher, Houston

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