Pipes

By the end of the year, at least 400 MMcf/d of coal-bed methanegas will be flowing from the Powder River Basin in Wyoming andsoutheastern Montana, which is nearly double what is being producedcurrently and more than three times the total produced a year ago.

Pennaco Energy, the largest leaseholder and most active operatorin the Powder River Basin in Wyoming and southeastern Montana,reported that its gross gas production out of the basin has reached46.1 MMcf/d and is expected to increase rapidly now that newpipeline infrastructure is in place. This promising coal-bedmethane play, which took the national spotlight last year, isexpected to be one of the fastest growing areas in the RockyMountain region over the next decade.

Pipes were selling like hotcakes last week as El Paso EnergyCorp. divested its interest in three major pipelines to meetFederal Trade Commission (FTC) conditions set just before El Pasoand Sonat finalized their merger last year. East Tennessee Pipelinewas spun off to Duke Energy Gas Transmission, the Sea RobinPipeline went to CMS Energy and El Paso’s share of the Destin Pipeline was sold toan undisclosed buyer. Combined, all three assets were sold for $620 million.Closings on the sales are expected to occur within the next fewmonths, pending FTC consent, El Paso said.

Kinder Morgan Inc. made several significant moves last week as part of its “back to basics” strategy, which is designed to streamline and increase the efficiency of the businesses acquired through its merger with KN Energy earlier this year (see NGI, July 12, Aug. 9, and Aug. 20). Company officials, however, say they are only midway through this transition, and there have been quite a few changes to their original plans.

With the opening of expanded gas storage and deliverability thisweek at jointly-owned Jackson Prairie in southwest Washingtonstate, interstate pipelines like Williams Northwest are trying todevelop better services for electric generation plants, which areexpected to multiply significantly in the coming years.

FERC staff has begun sending out letters to pipelines askingthem to explain how their proposed projects will square with thenew policy statement that favors incremental pricing. NorthernBorder Pipeline Co. – the first pipe to receive a letter – madeclear its disdain for the pricing policy in its response last week.

Florida Gas Transmission (FGT) last week extended its lead over other pipes that are flocking to Florida to cash in on the gas-fired power generation market when FERC staff issued draft environmental approval for its Phase IV mainline expansion.

No injuries or fire resulted from a rupture Sunday evening onone of El Paso’s two 24-inch pipes (Line 1201) in the San JuanTriangle south of the pipeline’s San Juan River Mainline Station.The ruptured line was isolated and the other one remained inservice. Monday’s throughput impact was estimated at 50-75 MMcf/d(about 3% of Triangle capacity); no scheduling increases were beingallowed for Cycles 3 and 4 of the gas day. El Paso expected tocomplete repairs Monday night and that Triangle capacity would beback to normal today.

A major environmental group in New England foresees a “fairlyimmediate” need for expansion of two new pipelines in the regionand for “significant” additional pipe capacity to satisfy thenatural gas demands of power plants that are planned for that area.