El Paso Corp. said Thursday it has placed into service its 680-mile, 42-inch diameter Ruby Pipeline, which will ship Rockies natural gas to West Coast markets in direct competition with Canadian gas.

“Ruby is across the finish line, completing more than three-and-a-half years of stakeholders outreach and construction,” said Jim Cleary, president of El Paso’s Western Pipelines. The $3.55 billion Ruby Pipeline, which has a capacity of 1.5 Bcf/d and is expandable to 2 Bcf/d, will transport natural gas from an existing supply hub at Opal Hub in Lincoln, WY, to interconnections near Malin, OR [CP09-54].

“Ruby [was] expected to receive a combined 64 MMcf/d of gas supply on July 28 from its four receipt points at Opal and is expected to deliver 16 MMcf/d to its Malin interconnects, based on scheduled volumes posted on the pipeline’s electronic bulletin board,” said Bentek Energy in its “Market Alert” Thursday. The initial flows on Ruby will represent only 4.3% of its total initial capacity of 1.5 Bcf/d, it said.

“Flows could ramp up more significantly Aug. 1, when demand fees and baseload contracts on Ruby kick in.” However, “questions remain as to what extent Ruby will gain market share at Malin in the near-term, given several important market developments, including: 1) regional gas-on-gas competition; 2) more profitable spreads currently from Alberta, Canada, via GTN [Gas Transmission Northwest pipeline]; and 3) capacity constraints currently imposed on the entire PG&E [Pacific Gas and Electric] system,” Bentek said.

On Wednesday PG&E said nominations began being accepted starting gas day July 28 for the new Ruby Interconnect point on its California Gas Transmission (CGT) system. PG&E noted that Ruby will bring Rocky Mountain gas to a new receipt point into CGT’s Redwood Path at Onyx Hills, near the California/Oregon border near Malin.

PG&E added that Canadian gas will continue to enter CGT’s system through the TransCanada-GTN interconnect at Malin. The interconnect with Ruby will be a totally separate interconnect, located approximately 2 miles from the GTN interconnect.

Ruby told FERC that it expects the pipeline to have an approximate throughput load factor of less than 60% for the first several months following commencement of operations. While long-term demand for gas in the project area remains strong, Ruby said near-term pipeline utilization is likely to be lower than expected. Considering that Ruby is just starting up, it is not too surprising that gas nominated for Thursday’s gas flow on the pipe was extremely light (see Daily GPI, July 28).

PG&E is the anchor shipper on Ruby, holding 375 MMcf/d of the capacity, while Rockies producers hold about 620 MMcf/d of the remaining capacity, according to Bentek Energy. Approximately 1.1 Bcf/d of Ruby’s capacity is under 10- to 15-year contracts, said El Paso spokesman Richard Wheatley. The long-haul pipeline will deliver natural gas from major Rocky Mountain basins to consumers in California, Nevada and the Pacific Northwest.

While Ruby is designed to operate at a maximum allowable operating pressure (MAOP) of 1,440 psig, it asked to place its pipeline into service initially at an MAOP of 1,296 psig. The pipeline said it will be able to meet all of its current contractual obligations for firm transportation at the reduced MAOP.

Earlier this week FERC approved Ruby’s requests to revise upward its initial rates for firm long-term transportation service to recover anticipated higher project costs, and to revise its initial in-kind fuel retention rate downward to reflect an expected decrease in projected fuel consumption when the pipeline starts up (see Daily GPI, July 26).

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