Williston Basin Interstate Pipeline Co. is in the midst ofupgrading firm transportation capacity on its system inanticipation of supplying cheaper Powder River Basin gas toshippers on Northern Border Pipeline, who it believes will bedeprived of economical Canadian gas supplies when Alliance Pipelinegoes into service in October.

“We feel that with the Alliance Pipeline coming on-line thatthere’s going to be an opportunity for shippers [Powder Riverproducers] to make use of a pretty good market on Northern Border”at Glen Ullin in North Dakota, where Williston Basin interconnectswith Northern Border, to fill an expected shortfall in Canadiangas, said Bill Kickert, WillistonBasin’s transportation servicesmanager.

“I think they’re going to be supply short in Canada at least fora short period of time, if not for a longer period,” with producersunable to supply both Alliance and Northern Border, he noted. Signsof a supply shortage have already been seen on the TransCanadaPipeline system, and “I think Northern Border is going to see someof the same,” Kickert said.

“There’s only a finite amount of gas in Canada, and I don’tthink there’s enough to feed all the pipelines. I think Alliancewill be fully subscribed…But some of the Northern Border shippersare going to be looking for gas.” Williston Basin plans to be thereto fill that void.

The window of opportunity to market Powder River Basin gas,which primarily is coal-bed methane (CBM), at the Glen Ullininterconnection will begin when Alliance “rolls in” and will lastuntil 2003 or possibly beyond, Kickert noted. In 2003, he said a”pretty huge” number of contracts on Northern Border and FoothillsPipeline will be up for renewal, at which time shippers “would havethe opportunity to change their receipt points” for gas. “That’skind of what I’m hoping [for] is that if gas is available off ofour system, some of those Northern Border shippers may…decide tomove their primary receipt points downstream.”

Kickert believes lower prices will make Powder River gas evenmore attractive than Canadian supply. “…[I]f there is a tightsupply in Canada, the Canadian prices for gas are going to go up.Northern Border shippers don’t necessarily have to take gas fromCanada, even if it is available. They could take the cheaper gasoff of our system.”

Williston Basin is “just pulling the final strings together” onits first system expansion out of the Powder River Basin, whichwould add 40 MMcf/d of transportation capacity by Dec. 1, accordingto Kickert. It would loop about 45 miles of the pipeline’s existingsystem from a point called Recluse in Line Section 14 in northeastWyoming to its Belle Creek point in Montana. The open season forthe capacity closed in late June.

The pipeline, whose system is mostly located in North Dakota andMontana, is planning a second project to add another 50-60 MMcf/dto its existing system capacity of about 450-475 MMcf/d (peak-daywinter). “We plan to do some looping, but the majority of it willbe 80 miles of new pipe” extending from Williston Basin’s LittleBeaver compressor plant in Montana to its Dickinson compressorstation in Line Section 1 in North Dakota. Kickert said the pipeplans to file an application at FERC by the end of the year,seeking project implementation by Nov. 1, 2001.

The “ultimate goal” of both projects “is to increase ourcapacity for folks [Powder River producers] to transport gasto…..Glen Ullin,” he noted. “Our whole marketing strategy is togrow our pipeline in step with the development of the Powder River.We’re not trying to build a huge pipeline. But yet at the same timewe want to make sure we’re ready when the gas is ready.”

More Powder River gas will become available, he said, asproducers move into the western part of the basin. “There’s quite abit of production that’s starting to ramp up there. It’s reallyfairly new yet. There are a lot of wells being drilled. [But] thegas has really no way to get out.” Williston Basin’s sistercompany, Bitter Creek Pipelines, is building a 16-inch pipeline togather gas produced in the western part of Powder River andtransport it to the eastern section of the basin, which has accessto interstate pipelines, Kickert said. Likewise, Big Horn GasGathering (a joint venture between CMS, Enron and Northern BorderPartners) is planning to extend its line into Sheridan, WY, therebyconnecting both the eastern and western portions of the basin.

Susan Parker

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