Questar Pipeline Co. filed an application with FERC this week tobuild a 75.6-mile, 272,000 Dth/d pipeline loop running fromnortheastern Utah to north central Utah. The project, called MainLine (M.L.) No. 104, would cost more than $80.8 million and loop aportion of Questar’s existing M.L. No. 40 and the entirety of M.L.No. 41. It would extend from a coal-seam reserve in the area ofPrice, UT to interconnections with the its own Payson Citygate andalso potentially Kern River. Questar requested the Commission issuean order authorizing construction no later than August.

“Questar believes that the M.L. No. 104 project is warranted andis in the public interest,” the Salt Lake City, UT-based companysaid in the filing. “The project will serve new transportationdemand, requires no subsidies from existing customers, enhances theservice reliability and flexibility of the Questar system forexisting customers and will have no adverse affects on otherpipeline customers or pipeline companies.”

One of the main reasons for the pipeline, according to Questar,is the burgeoning production of the Price area reserve. The fieldis now producing 150 MMcf/d as compared to 4 MMcf/d in 1993.Questar estimated that production could reach 250 MMcf/d by 2002.M.L No. 40 and No. 41 are both running at full capacity and Questarbelieves additional facilities are needed to satisfy “the presentand projected demand” for additional transportation capacity.

The loop could also serve western markets, Questar argued, bytransporting volumes delivered to it by CIG Resources from the CIGUinta Basin Lateral to Kern River. Questar is already in theprocess of negotiating an interconnect with Kern River at Elberta,UT.

An open season was conducted in early 1999 to determine thepossible market demand . Eight customers demonstrated interest, thecompany said. Questar has forged four firm transportationagreements with three customers for virtually all of the capacityin the project. Of those agreements, two are with its affiliate,Questar Gas, one is with CIG Resources and another with TexacoNatural Gas . The agreements range in length between five and 10years.

The filing seeks authorization to construct and operate thepipeline, as well as own 50%. After the facilities are placed inservice, Questar said it intends to sell 50% undivided interest toCIG Gas Supply. CIG will then lease that 50% back to Questar undera 30-year lease with full possessory and operational rights. At theend of the lease, Questar will have the right to re-purchase CIG’sinterest at net-book value. Because CIG will be a “passive owner”in the project, Questar said CIG does not need certificateauthority.

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