• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

KMP-Sempra To Build $3 Billion Rocky Mountain Pipeline

Posted on: Saturday, 1 October 2005, 03:01 CDT

By Anonymous

An ambitious project to build a $3 billion, 1,500-mile pipeline from the Rockies to the upper Midwest and Eastern U.S. has been announced by Kinder Morgan Energy Partners L.P. and Sempra Pipelines & Storage. The 42-inch O.D. pipe specified for the project will make it one of the largest diameter gas pipelines in the country, capable of transporting 2 Bcf/d.

As to the planned route, Kinder Morgan officials indicate the planned route at this time calls for it to originate at the Wamsutter Hub in Wyoming and extend to eastern Ohio with an ultimate route to be selected based on shipper interest.

The fact that Kinder Morgan is involved in a multi-billion dollar pipeline project from the Rockies is not altogether surprising. In early 2004, Kinder Morgan's Natural Gas Pipeline President Deborah A. Macdonald told P&GJ that most of Kinder Morgan's natural gas portfolio revolves around the new or expanded pipelines coming out of the Rocky Mountain basins, supplying fuel to the Southwest and MidContinent.

"Rocky Mountain gas needs to go to all of the MidContinental pipelines," Macdonald asserted. "If you look at the National Petroleum Council study on natural gas there are going to be pipelines with supply constraints without Rocky Mountain gas. Northern Natural, Southern Star, Panhandle Eastern, ANR, as well as NGPL and KMIGT, can all benefit from supplies from the Rocky Mountains," she said.

The timing of the project also seems right. North American gas supply/demand is projected to stay very tight for an extended period of time and leading industry observers say pipelines are needed to handle growing production from the Rocky Mountain Region. Supporting this is the U.S. Energy Information Administration's 2005 Outlook. According to the report, Rocky Mountain region natural gas production will increase from 3.7 Tcf in 2003 to 5.6 Tcf in 2025, making this the largest projected increase in lower 48 onshore natural gas production.

"We are excited about teaming up with Sempra Pipelines & Storage on the proposed project, which would meet the unique challenges of customers at both ends of the pipeline," said Scott Parker, president of KMP's Natural Gas Pipelines Group. "If built, the pipeline would maximize the value of growing Rockies production by creating unprecedented access by one pipeline to multiple markets and storage, while providing markets in the upper Midwest and Eastern U.S. with direct access to reliable, long-lived domestic natural gas supplies to meet growing demand."

"Sempra has evaluated multiple alternatives to move gas from the Rockies and believes this project represents the best long-term solution for the U.S. gas market," said George Liparidis, president of Sempra Pipelines & Storage. "Our business was formed to develop strategic value-added gas pipeline and storage projects across North America, and this project fits that mandate well."

Along with providing producers much-needed takeaway capacity, the pipeline would feature multiple interconnects with other major pipeline systems and create significant flexibility and more options for reaching other demand-anchored markets. Producers would also be able to more effectively address the price differential between Rocky Mountain basins and other parts of the country.

Terms of the MOU call for KMP and Sempra to share responsibility for development activities. Additionally, Sempra has agreed to bid for 200 MMcf/d of firm capacity from the pipeline during an upcoming open season that it will use to serve distribution utilities on the East Coast. Initially, KMP would own two-thirds of the equity in the proposed pipeline and Sempra would own one-third.

Pending the feasibility of the project, customer commitments and regulatory approval, the proposed pipeline is projected to be staged into service beginning in the latter part of 2008 and continuing through 2009.

For information on the project, contact Jeff Rawls at Kinder Morgan (303) 914-4903 or Ryan O'Neal at Sempra Pipelines & Storage (619) 696-4585.

Copyright Oildom Publishing Company of Texas, Inc. Sep 2005

Source: Pipeline & Gas Journal

More News in this Category