The Powder River Basin in Wyoming is expected to become thehottest new gas supply point in the Rocky Mountain region over thenext few years, and multiple pipeline companies are fighting toothand nail to deliver the burgeoning supplies. The basin is expectedto show huge production growth in a relatively short period oftime, leading some observers to compare it with the San Juan Basin,where the benefit of tax credits on coal-seam gas triggered rapiddevelopment. But Powder River producers, such as Barrett Resourcesand Western Gas Resources, are doing the job without federal help.New E&P technologies and finding techniques have enabledproducers to find the reserve sweet spots faster than ever before.

Currently, estimates show the Powder River Basin could hold upto 30 Tcf of gas reserves. Production from the basin is expected tomore than triple its current 210 MMcf/d level over the next fiveyears with the potential to reach 1.4 Bcf/d if all the existingleases are fully developed.

Such rapid growth in the capacity-constrained basin has not goneunnoticed by the pipeline community. Competition is red hot, withQuestar, Wyoming Interstate and KN Energy vying to establish aposition that eventually will pay off in substantial throughput.All three have expansion projects in the works.

“We’ve got a lot of exciting areas but [the Powder River]certainly is where the competition has heated up the most andoffers the most growth potential in terms of production,” saidWIC’s Thomas Price. WIC has an existing line entering the basinthat currently is being expanded by 49 MDth/d for service thisfall, but the company also is advertising a variety of otherexpansion projects, including a pipeline loop that is slated toadd 120 MDth/d by October 1999 or a much larger loop of itsexisting line that would add 300 MMcf/d. A third possibility wouldinvolve building 145 miles of new 24-inch diameter pipelinedirectly from the basin to Cheyenne, WY, adding 600 MMcf/d of gastransportation capability. That project could be in service inDecember 1999 if producer response is significant, Price said.

Questar has proposed a major 24-inch diameter line that couldextend 380 miles to the Montana border from a connection withQuestar’s existing system near Kanda, WY. The project is expectedto be filed next year with service by October 2000. In contrastwith other proposed projects, the Questar line would be designed todeliver more than 300 MMcf/d of Powder River production to westernmarkets through interconnections with Kern River, TransColorado andother southbound and westbound pipelines. “Potential in the PowderRiver basin is just unbelievable as far as total volume that is outthere,” said Questar’s Gary A. Schmitt. It promises to be thefastest growing producing area in the Rocky Mountain region overthe next decade, he said. Questar’s Brad Burton, senior businessdevelopment representative, said a June open season for the Questarexpansion drew preliminary bids from producers, marketers and endusers for the entire 300 MMcf/d of proposed firm capacity.

KN Interstate is selling a 450 MMcf/d project that would extendfrom Glenrock, WY, to its Rockport Hub near Cheyenne, which isbasically the same route proposed by WIC. KN’s project would be inservice in January 2000. “Frankly we were very encouraged by theresult of our open season,” KN Energy’s Buddy Farah said last weekat the Colorado Oil and Gas Association’s annual conference inDenver. “We had terrific response from the producer community,which in my opinion on pipeline projects is pretty exciting to see.We’ve seen estimates and had our own studies on that which showdeliverability could be as high as 700-800 MMcf/d once that play isdeveloped. We’re currently negotiating with shippers who haveexpressed interest in the project.” The timeline on KN’s project isdependent on getting producer commitments, which historically hasmeant a long delay for Rocky Mountain region pipeline projects. Butsome observers believe that may be changing because of greatertransportation out of the region, more favorable prices and thewillingness of pipeline companies to accept much shorter terms ofservice in contracts.

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