August 20, 2008

Transco Pipeline Project Earns Approval of FERC

By Kirby Lee Davis

Williams has received federal approval for a Transco pipeline expansion in New Jersey and Pennsylvania.

Through two phases approved by the Federal Energy Regulatory Commission, Williams' Sentinel project will add 142,000 dekatherms of daily capacity to its Transco line.

By as early as Nov. 1, Tulsa-based Williams will add 40,000 dekatherms of capacity to meet customer requests. The second phase will complete the project by Nov. 1, 2009.

To achieve those targets, Williams will add or replace about 18 miles of pipe in those two states. The company also will make compressor facility modifications at Transco Station 195 in Delta, Pa.

Analyst Jim Carnett said this project represents one of the smaller pipeline expansions under way to meet growing demand in Northeastern states. The U.S. Department of Energy projects that region's natural gas consumption will rise 8 percent by 2009.

Williams also is pursuing a 250-mile Transco expansion to connect station 195 to the east end of the 1,700-mile Rockies Express, a consortium pipeline that will originate in the natural gas-rich Piceance Basin of Rio Blanco County, Colo.

That connector in the Northeast Supply Project would handle up to 688,000 dekatherms per day, which Williams said is enough natural gas to heat about 3 million homes. Williams hopes to get that service started as early as November 2011.

The 10,500-mile Transco pipeline system has a system design capacity of 8.1 billion cubic feet per day. The Northwest Supply Project would boost that to 8.3 billion.

The natural gas giant also intends to boost its Mississippi capacity with a 15-mile Transco connector due in the second half of 2011. That promises to increase its delivery capacity to Angola LNG Supply Services LLC - which pledged to take all of the expanded capacity - by 467,390 dekatherms per day.

Subsidiary Northwest Pipeline GP has proposed a 16-mile Sundance Trail

expansion project in Wyoming, to go online in November 2010, that would use capacity on the proposed 29-mile lateral to Northwest's Colorado Hub Connection project.

Williams also has outlined a proposal to build a 618-mile pipeline with TransCanada Corp. to carry natural gas produced by Williams and others in the Rocky Mountains to West Coast consumers. Called the Sunstone Pipeline, that project also could be completed by 2011.

Such projects reflect not only growing demand for natural gas, but also the need to find consumers for increased supplies coming from Colorado, Wyoming and Canadian producers.

Williams did not provide a cost estimate for the Sentinel project. But with unpredictable construction difficulties, right-of- way issues and construction inflation, analysts have said even small projects like Sentinel may run in the tens of millions of dollars, while the Sunstone Pipeline would total in the billions.

Despite the perceived demand and investment, natural gas futures remain highly volatile. Carnett, senior portfolio manager with Fredric E. Russell Investment Management Co. of Tulsa, said contracts that topped $13 per thousand cubic feet earlier this year now trade around $7.

"It's kind of followed crude oil on the way down," he said, noting the parallel to the more well-known energy commodity.

Originally published by Kirby Lee Davis.

(c) 2008 Journal Record - Oklahoma City. Provided by ProQuest LLC. All rights Reserved.