As reported by NGI Friday, Rockies Express Pipeline LLC (REX) began interim service as scheduled on Saturday with capacity of about 1.4 Bcf/d on approximately 500 miles of REX-West from the Cheyenne Hub in Weld County, CO, to the ANR delivery point in Brown County, KS (see Daily GPI, Jan. 14).

Start-up of the pipe was seen as crucial to Rockies producers as deliveries on REX-West will send bottled-up Rockies gas to connections serving the Midwest. The move is expected to rein in the widening overall basis differential between prices at Rockies receipt points and the Henry Hub price for production in the Gulf and in the Midcontinent. While prices have evened out in the last few weeks with extreme winter weather in the local Rockies market, as recently as last fall price quotes for Rockies gas sank as low as a penny (see Daily GPI, Sept. 17, 2007).

The operational section of the pipeline also includes delivery points to Kinder Morgan Interstate Gas Transmission, Northern Natural Gas Company and Natural Gas Pipeline Company of America. The remaining 213-mile section of REX-West will continue eastward to Audrain County, MO, and is expected to be in service in early February, at which time capacity will increase to about 1.5 Bcf/d. In total, REX-West is a 713 mile, 42-inch diameter pipeline.

“We are delighted the majority of REX-West is in service and look forward to REX-West being fully operational in early February,” said Scott Parker, president of Kinder Morgan’s natural gas pipelines.

REX is a joint venture of Kinder Morgan Energy Partners LP (KMP), Sempra Pipelines and Storage and ConocoPhillips. When completed, after receipt of all necessary approvals, the 1,678-mile pipeline will have a capacity of approximately 1.8 Bcf/d. Binding firm commitments from creditworthy shippers have been secured for all REX capacity. KMP is overseeing construction of the project and will operate the pipeline.

Subject to receipt of regulatory approvals, it is anticipated that interim service on REX-East will begin as early as Dec. 30, 2008, and the entire system will be fully operational by June 2009. The first 328-mile segment of REX, which runs from the Meeker Hub in Rio Blanco County, CO, to the Wamsutter Hub in Sweetwater County, WY, to the Cheyenne Hub is in service and has a current capacity of 500,000 Dth/d.

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