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Houston-Based Natural Gas Pipeline Operator Explores East Coast Link

Posted on: Tuesday, 4 October 2005, 21:00 CDT

By Wayne Heilman, The Gazette, Colorado Springs, Colo.

Oct. 5--The nation's largest natural gas pipeline operator said Tuesday it is exploring whether to build a 1,000-mile link between its Rocky Mountain network and the East Coast eastern and western networks.

Houston-based El Paso Corp., which has regional headquarters in Colorado Springs, said the proposed "Continental Connector" would encourage natural gas production in Colorado and other Rocky Mountain states and alleviate the current nationwide shortage by giving producers an outlet to sell the additional gas.

"This pipeline won't get built unless there is enough extra production to bring down prices for everyone," said Patrick Johnson, strategy director for El Paso's Eastern Pipeline Group in Houston. "The Rocky Mountain region is leading the country's natural gas supply growth."

El Paso began Tuesday soliciting interest in the project, which would link to its gas hubs in southwest Kansas and northeast Louisiana, from potential natural gas shippers and will decide the size and scope of the project after the solicitation is completed Nov. 4.

The 42-inch pipeline would be built in phases and completed by November 2008, the company said. About 12 of the 500 employees at El Paso's Western Pipeline Group headquarters in the Springs are working on the Continental Connector project, Johnson said.

Natural gas prices have skyrocketed to record levels of more than $14 per million British thermal units in recent weeks after hurricanes Katrina and Rita damaged southeastern U.S. gas pipelines and gas production facilities in the Gulf of Mexico.

Tuesday, Interior Secretary Gale Norton said it will probably take months to return the offshore production to normal levels.

"After the hurricane events of the past few weeks, it is clear the United States needs access not only to new sources of natural gas supply but diversity in those supply sources," El Paso Chief Executive Doug Foshee said when announcing plans for the pipeline.

The project likely would end transportation bottlenecks that have kept Colorado natural gas from leaving the state and kept prices about $2 per million BTUs below the national average because of the higher local supply. The new pipeline would mean Colorado prices would move closer to the national average, Johnson said.

"It is unlikely prices in Colorado would be higher than they are today after the pipeline is built and it is much more likely that prices would be lower because of increased production," Johnson said. "All signs point to prices being lower in the future than they are today."

Drew Rankin, general manager of energy supply for Colorado Springs Utilities, said the new pipeline may eliminate regional price differences that in the short term won't benefit Colorado customers, but the bottleneck has hurt local customers in the past, said

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Copyright (c) 2005, The Gazette, Colorado Springs, Colo.

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EP,

Source: The Gazette

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