PG&E Corp. has signed a letter of intent to acquire a 25.5% interest in El Paso Corp.’s Ruby pipeline project, the two companies said late last month. The line would extend 680 miles from the Opal Hub in Wyoming to the Malin, OR, interconnect near California’s northern border.

The deal came less than a week after PG&E inked a precedent agreement for 375,000 Dth of long-term transportation capacity (15 years) on the proposed 42-inch diameter pipeline. “We are very pleased by PG&E’s decision to become an anchor shipper on the Ruby Pipeline,” said Jim Cleary, president of El Paso’s Western Pipeline Group. “Ruby will provide PG&E and its customers access to natural gas from the Rockies, the nation’s most important supply growth region for natural gas.”

Houston-based El Paso earlier in December said it also was partnering on the Ruby project with The Bear Stearns Companies Inc.’s Bear Energy LP, which may become an initial shipper on the pipeline (see NGI, Dec. 10, 2007).

The Ruby pipeline, which is expected to cost $2 billion, would have an initial capacity of 1.2 Bcf/d and be expandable to 2 Bcf/d. It would give Rocky Mountain producers access to high-demand markets in northern California, Nevada and the Pacific Northwest, according to El Paso. The Ruby project is anticipated to be in service in the first quarter of 2011, assuming regulatory approvals and the approvals of the companies’ boards of directors are obtained.

“PG&E’s participation in the Ruby Pipeline project underscores the importance of this critical infrastructure project in transporting increasing supplies of natural gas from the Rockies to key consuming markets” in the West, said Cleary.

El Paso said it is in discussions with other prospective Ruby shippers and will announce a formal open season shortly.

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