The Wyoming Natural Gas Pipeline Authority has called on FERC to expeditiously approve the proposed Cheyenne Plains Pipeline that would connect Rocky Mountain natural gas with eastern markets, “as well as any other pipelines seeking approval to build or enhance capacity out of Wyoming and the Rocky Mountain region.”

In addition, the Wyoming authority asked the Commission to allow Cheyenne Plains Gas Pipeline Co., a subsidiary of El Paso, to consider expanding the size of the pipeline system to 36-inch diameter from the originally proposed 30-inch diameter. This would increase the throughput of the Cheyenne Plains project to 1.7 Bcf/d from 1 Bcf/d, and boost the incremental cost by $75 million, it said [CP03-302].

The Wyoming authority is a “corporate and political subdivision of the state” that was created by legislation to “plan, finance, construct, develop, acquire, maintain and operate gas pipeline systems within…the state.” It can issue up to $1 billion in bonds to pursue its goals, the authority said in comments filed at FERC.

“During the past five years, natural gas production has grown almost 50% in the state with limited additions to the infrastructure necessary to export growing production” to market. The Wyoming authority estimated current gas production in the state is approximately 4.2 Bcf/d, and it believes it could grow to more than 6 Bcf/d within the next five years “if environmental and regulatory delays can be cleared.”

But the price for Wyoming gas has trailed the rest of the nation. Gas produced for injection into the Colorado Interstate Gas (CIG) system in Wyoming lagged the Nymex-Henry Hub prices by an average of 52 cents/MMBtu in 2000, 77 cents/MMBtu in 2001, and $1.25/MMBtu in 2002 “as a result of the rapid build-up in supply deliverability and limited expansion in export capacity,” the Wyoming authority noted. In March of this year, the price differential had exceeded $4/MMBtu.

Even with the capacity added by the Kern River expansion (almost 1 Bcf/d) in May, the authority said Wyoming prices continue to fall behind Henry Hub prices by at least $1/MMBtu.

“It is conservatively estimated that, in 2002, Wyoming lost $130 million in revenue as a result of the spread in natural gas prices exceeding what has historically been approximately 50 cents to Henry Hub prices,” it noted. The federal government missed out on about $75 million of revenue from Wyoming during the same period. And in March of this year, Wyoming was deprived of more than $1 million per day in revenue due to the $4 spread between Wyoming and Henry Hub prices, according to the Wyoming authority.

In addition to narrowing the price spread, El Paso’s Cheyenne Plains project “will enhance the United States capability to expand its productive natural gas capacity and give the nation access to abundant, long-lived supplies in a more timely and cost-effective manner than longer term solutions to deliverability offered by LNG, McKenzie Delta and Alaskan natural gas resources,” it said.

Cheyenne Plains Gas Pipeline filed its application to build the proposed 380-mile line at FERC in late May (see NGI, May 26). The Commission has not taken any action yet on the project, which would transport as much as 560 MMcf/d from the Cheyenne Hub to connections with Midcontinent pipes in Kansas. The line, if approved, is expected to be in operation in the mid-summer of 2005.

Cheyenne Plains would provide a new direct route to Midcontinent markets for rapidly growing Powder River Basin coalbed methane production, gas supply from the Jonah Field in the Green River Basin and other production from Wyoming. Greensburg, KS, was picked as a destination for the pipe because several pipelines meet there, including ANR Pipeline, Kinder Morgan Interstate Pipeline, Northern Natural Gas, Panhandle Eastern Pipe Line and Williams, which together provide more than 6 Bcf/d of takeaway capacity in the area.

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