FERC made a lot of Rocky Mountain gas producers a bit happier last Tuesday. It issued a certificate to Williston Basin Interstate Pipeline Co. to build the much-anticipated Grasslands Pipeline project, which will open up a new route for producers to transport Powder River Basin coalbed methane gas and Rocky Mountain conventional supplies to markets in the Midwest and Midcontinent.

The Commission had been expected to vote out the certificate at its regular meeting last Wednesday, but it chose instead to issue an order approving the 253-mile pipeline on Monday. “Approval of this proposal is in the public interest because the Grasslands project will provide an outlet for the increasing production of natural gas in the Powder River Basin, enhance access to Williston Basin’s storage facilities in eastern Montana, and provide access from Williston Basin’s storage facilities to additional downstream transportation facilities,” the order said [CP02-37]. Most importantly, it will provide a “significant source of natural gas” for consumers and end-users, it noted.

The Grasslands Pipeline has had the widespread backing of Wyoming and Montana natural gas producers and other western business interests, which pressed the Federal Energy Regulatory Commission to award a certificate quickly so that the line could be constructed this year — before the onslaught of the winter season.

In May, a spokesman for Williston Basin said the company hoped to have the pipeline in service by Nov. 1 of this year, provided the Commission acted soon. The company plans to have three construction crews working simultaneously on 80-mile sections of the pipeline in order to meet the November deadline, he told NGI.

Williston Basin, a subsidiary of Bismarck, ND-based MDU Resources Group Inc., reported that all of the 80 MMcf/d of the initial capacity to be created by the pipeline already has been subscribed. Before it can begin construction, the FERC order said the pipeline will have to execute service contracts for that capacity.

The Commission further granted Williston Basin’s request to roll in the construction cost of the Grasslands Pipeline ($57.9 million) into its system-wide rates, noting that such rate treatment would not require existing shippers on Williston Basin’s system to subsidize the project. If anything, it would offer existing shippers a benefit by reducing the system-wide rate for fuel use, the order said. Barring “material changes” in facts or circumstances, the company can seek rolled-in treatment for Grasslands at its next Section 4 general rate case, it noted.

The proposed 16-inch pipe will start 15 miles north of Gillette, WY, and will terminate just south of Killdeer, ND, where it will interconnect with the Northern Border Pipeline system. While the line’s initial capacity will be 80 MMcf/d, it will have the capability to expand to approximately 200 MMcf/d by adding compression and some looping, according to Williston Basin.

Williston Basin already is considering plans to expand the Grasslands Pipeline by about 125 MMcf/d, according to FERC. The company is expected to file an application on or before Nov. 1, 2003 with service on the expanded line to begin Nov. 1, 2004, the agency said.

In addition to building the Grasslands line, Williston Basin proposes to loop existing lines in Wyoming, upgrade the allowable operating pressure of existing laterals in Wyoming and Montana, and add 4,180 horsepower of compression in North Dakota and 1,200 hp of compression in Montana.

The Williston Basin system currently includes 3,123 miles of transmission lines serving North Dakota, South Dakota, Montana and Wyoming. It has the capability to delivery 400 to 500 MMcf/d on a peak day.

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