A legal battle between Kinder Morgan and Questar over theirTransColorado Gas Transmission partnership could lead to a thirdparty entering the picture to operate the 292-mile pipeline. In abulletin board notice last week, TransColorado invited thirdparties interested in the job to provide statements ofqualification in order to receive requests for proposals.
“Because there is a lawsuit between the two companies and [thepartnership is being dissolved], we have decided to look for athird party operator,” said Kinder Morgan spokesman Larry Pierce.The third party will perform, or engage others to perform,administrative, legal, regulatory and marketing functions currentlyperformed by the partners, the bulletin board announcement said.Candidates must provide a statement of qualifications by Jan. 24.The RFP will be sent by Jan. 31.
KN TransColorado, a subsidiary of Kinder Morgan, Inc., filed alawsuit in Colorado District Court in Garfield County on June 15,2000 against Questar and several of its affiliates for variousbreaches of fiduciary duty, misrepresentation, dissolution of theTransColorado partnership and other charges pertaining to theoperation of the TransColorado Pipeline. A trial date has been setfor February of 2002. The suit was filed after Questar announcedplans to build a competing pipeline extension off of its own systemto deliver natural gas from the Uinta/Piceance area to aninterconnection with Kern River Pipeline, which is TransColorado’scompetitor. The gas would then be transported to California.Questar filed an application with the FERC on Jan. 10, 2000 toconstruct and operate the competing project.
“We are dismayed and disappointed that our own partner has madea decision to build a pipeline that competes with TransColorado,”Kinder Morgan said in a statement at the time. “Questar’s plans tobuild a competing pipeline project make it impossible for Questarto fulfill its fiduciary obligations to TransColorado. Under thecircumstances, we don’t feel that we have any choice except to seekdissolution of the partnership.
“Questar’s actions…discouraged third-party shippers fromentering into long or short-term transportation agreements withTransColorado. In fact, Questar has entered into agreements withTransColorado’s principal competitor (CIG) to carry to Californiathe very same gas that Questar had agreed should be transported onthe TransColorado Pipeline,” the company said.
Pierce noted that it would be a long time before this issue issettled. Kinder Morgan has been operating the pipeline since thelegal scuffle began, but to avoid any additional conflict a thirdparty has to step in and perform day-to-day operations, he said.
The TransColorado system consists of 292 miles of 22-inch and24-inch diameter pipe extending from Piceance Basin near Meeker,CO, to San Juan Basin near Blanco, NM. Phase I was completed in1996 and Phase II was completed in 1999.
To obtain details of the bulletin board notice, including anorganizational chart, call Dianne Barrett at (303) 763-3676 orEvelyn Zimmerman at (801) 324-5564.
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