Exciting developments for North American pipelines

The Federal Energy Regulatory Commission (FERC) – an independent agency that regulates the interstate transmission of natural gas, oil, and electricity in America – has said that the major pipelines proposed in the US will provide a total capacity 15.18 Bcf/d of natural gas.

With a large number of pipeline projects going on in North America each year, of varying sizes and for different products, we have compiled this overview of some of the larger projects.

Rockies Express Pipeline

One of the largest natural gas pipelines ever to be constructed in North America, the Rockies Express Pipeline is a proposed 1,679 mile natural gas pipeline system from Rio Blanco County, Colorado, to Monroe County, Ohio.

Rockies Express (REX) has three components: Rockies Express – Entrega, Rockies Express – West, and Rockies Express – East.

REX – Entrega, is an existing FERC-certified 328 mile 36 inch and 42 inch diameter pipeline that was purchased by Rockies Express Pipeline in 2006. REX – Entrega runs from the Meeker Hub in Rio Blanco County to the Cheyenne Hub in Weld County, Colorado.

REX – West is a 713 mile 42 inch diameter pipeline currently in construction from Weld County to Audrain County, Missouri, with various laterals. It was approved by FERC on April 19, 2007 with completion expected in December 2007.

Associated Pipe Line Contractors is constructing Spread 1 of REX-West – approximately 120 miles through Colorado, Nebraska and Wyoming. Sheehan Pipe Line Construction will construct Spread 2 – approximately 97 miles; H.C. Price Co. will construct Spread 3 – approximately 106 miles; Gregory & Cook Construction will construct Spread 4 – approximately 100 miles; Latex Construction will construct Spread 5 – approximately 102 miles. Gulf Interstate Engineering is handling the project management, engineering, procurement and construction management services for the project.

REX – East is a proposed 638 mile 42 inch diameter pipeline from Audrain County to Monroe County. Construction of REX – East is scheduled to begin in early spring of 2008. The targeted in-service date for REX – East is June 2009.

Rockies Express is being developed by Rockies Express Pipeline LLC, which is a joint development of Kinder Morgan Energy Partners, L.P.; Sempra Pipelines & Storage, a unit of Sempra Energy; and ConocoPhillips.

Pacific Connector Gas Pipeline

Subsidiaries of Williams, PG&E Corporation and Fort Chicago Energy Partners LP are jointly pursuing construction of a new gas transmission pipeline that will increase the supply of natural gas for the West Coast region of the US – the proposed Pacific Connector Gas Pipeline.

The pipeline would extend for 231 miles, from the Jordan Cove Liquefied Natural Gas terminal in Coos Bay, Oregon to an interconnect with Williams’ Northwest Pipeline near Myrtle Creek, Oregon and continuing on to interconnects with Avista Corporation near Shady Cove, Oregon and Pacific Gas and Electric’s system and the Tuscarora Gas Transmission system, both located near Malin, Oregon.

The partnership is seeking regulatory approvals and market commitments for the proposed pipeline project and began environmental evaluations along the proposed route in April 2007. The companies hope to begin construction of the Jordan Cove LNG Facility in early 2008 and begin pipeline construction in the second quarter of 2010, to commence service for both in the fourth quarter of 2011.

Continental Connector

El Paso Corporation is proposing a gas transportation project, the Continental Connector, which would link fast growing supply areas including the Rockies, Mid-Continent, and the Barnett Shale fields of north Texas, with existing infrastructure at the Perryville Hub, Louisiana, accessing virtually every gas market in the eastern and southeastern US.

Taking full advantage of El Paso’s existing pipeline systems, the Continental Connector would span more than 700 miles and include about 300 miles of new 36 inch diameter pipeline along with leased capacity on other pipeline systems to connect El Paso’s Colorado Interstate, WIC, and Cheyenne Plains pipelines to points on the company’s ANR Pipeline and Tennessee Gas Pipeline. El Paso anticipates that the project can be placed in service in fall 2008.

Southeast Supply Header

A joint venture between subsidiaries of CenterPoint Energy and Spectra Energy is due to commence construction in late 2007 on the Southeast Supply Header (SESH). This 270 mile, 36 inch and 42 inch diameter pipeline will extend from the Perryville Hub in northeastern Louisiana to the Gulfstream Natural Gas System pipeline, near southern Mobile County, Alabama, with a capacity of approximately 1 Bcf/d.

SESH will link the onshore natural gas supply basins of east Texas and northern Louisiana to southeast markets now predominantly served by offshore natural gas supplies from the Gulf of Mexico. This pipeline will give customers an important alternative to offshore supply, which can be vulnerable to weather-related disruptions.

Along its route, SESH will interconnect with several interstate natural gas pipelines, providing opportunities for supply to reach southeast and northeast markets as well as several storage facilities.

In December 2006, SESH announced an agreement with Southern Natural Gas (SNG), an affiliate of El Paso Corporation, to expand the design capacity of the project to reach new markets in the southeast. SESH and SNG will jointly own the first 115 miles of the pipeline, from the Perryville Hub to an interconnection with SNG in Mississippi. The pipeline is anticipated to be in service in the summer of 2008.

Phoenix Expansion Project

Transwestern Pipeline Co. is proposing to extend its natural gas pipeline system from its mainline in Yavapai County south to the Phoenix area, Arizona, to provide an additional 500 million cubic feet per day of capacity to delivery points in the growing Phoenix market.

This includes adding approximately 260 miles of 36 inch diameter pipeline and involves the construction of additional pipeline loops on Transwestern’s existing San Juan Lateral in New Mexico.

The expansion will increase the capacity of Transwestern’s existing San Juan Lateral by 375 MMcf to 1.6 Bcf/d. The San Juan Lateral extends from San Juan County, New Mexico, to connect with Transwestern’s mainline in McKinley County, New Mexico.

Midcontinent Express Pipeline

The Midcontinent Express Pipeline (MEP) is a 500 mile natural gas pipeline system which is proposed to extend from the southeast corner of Oklahoma, across northeast Texas, northern Louisiana, central Mississippi and into Alabama.

The MEP will be owned by Midcontinent Express Pipeline LLC, a joint venture between Kinder Morgan Energy Partners, LP and Energy Transfer Partners, LP Kinder Morgan Energy Partners and Energy Transfer Partners.

Midcontinent Express Pipeline land representatives expect to begin negotiating easement agreements with landowners by the end of 2007. Willbros was recently awarded an installation contract for three segments of the pipeline.

Gulf Crossing Pipeline Project

The Gulf Crossing project is proposed to include approximately 353 miles of 42 inch diameter pipeline; four compressor stations with an aggregate of approximately 100,000 horsepower; a parallel pipeline approximately 17 miles long, and expansion of one existing compressor station.

Boardwalk Pipeline Partners, LP is proposing to construct and operate the new interstate natural gas pipeline system to traverse southern Oklahoma, northern Texas and northern Louisiana. Construction is projected to start in April 2008, and the completion date is expected to be October 2008.

East Texas to Mississippi Expansion Project

Gulf South Pipeline Company, LP has commenced construction of the pipeline, which it will own and operate, entailing 242 miles of 42 inch diameter natural gas pipe originating in Keatchie, Louisiana and terminating at Harrisville, Mississippi.

The project was issued a FERC Certificate in June 2007, with construction commencing in July 2007 and the pipeline expected to be in service in the fourth quarter of 2007.

Overland Pass Pipeline

Overland Pass Pipeline is a proposed 750 mile natural gas liquids (NGL) pipeline from Opal, Wyoming, in the southwestern part of the state, to the mid-continent natural gas liquids market centre in Conway, Kansas, one of the nation’s primary NGL distribution and storage hubs. The pipeline will be designed to transport 110,000 bbl/d of natural gas liquids. Additional pump facilities would increase the capacity to 150,000 bbl/d.

Alaska Natural Gas Pipeline

Over the years several different options have been put forward for the development and transportation of Alaskan gas. Recently, two major options have been put forward.

BP, ConocoPhillips and ExxonMobil have developed a preliminary plan to build a natural gas pipeline and related facilities, extending approximately 3,500 miles from the Alaska North Slope to markets in Alaska, Canada and the lower 48 states.

The major components forming the Alaska Gas Pipeline Project include gas transmission pipelines from upstream facilities to a proposed Gas Treatment Plant (GTP), a mainline pipeline in Alaska, a pipeline from Alaska to Alberta, potential Natural Gas Liquids extraction facilities, and a potential pipeline from Alberta to Chicago and the lower states.

The mainline would be an approximately 730 mile long, large diameter pipeline that extends from the GTP on the Alaska North Slope to the Alaska/Canada border. The Alaska to Alberta Pipeline, which would be a continuation of the mainline, would be an approximately 1,400 mile long pipeline that extends from the Alaska/Canada border into Alberta.

The final portion of the project would be the Alberta to Lower 48 Pipeline. One option considered during a 2001-02 study was a “new-build” pipeline from Alberta to Chicago. This pipeline would originate at the point of termination of the Alaska to Alberta Pipeline and be routed generally parallel to the existing Alliance Pipeline right-of- way, continuing 1,500 miles into the Chicago gas hub. However, more cost-effective alternatives may ultimately be developed, for example, utilising existing pipeline capacity made available by decline from existing natural gas sources, expansion of existing pipeline systems, or installation of other “new-build” pipeline concepts.

Another potential project, the TransCanada-supported Alaska Highway Pipeline Project, proposes to move natural gas from Prudhoe Bay in northern Alaska to North American markets. The pipeline would stretch more than 2,700 km from Prudhoe Bay in Alaska to Alberta. It would follow the route of the existing Trans-Alaska oil pipeline and the Alaska Highway, and continue through northern British Columbia to link with the pipeline grid in north western Alberta.

In January 2007, Alaska’s Governor Sarah Palin introduced a new bill in the state’s legislature, entitled the Alaska Gasline Inducement Act (AGIA). The AGIA was enacted in May 2007, and is now the state’s vehicle for inducing a project sponsor to proceed with the construction of the Alaska natural gas pipeline. Under AGIA, Alaska’s Commissioner of Natural Resources and Commissioner of Revenue will review competitive applications from project sponsors seeking an AGIA.

Three potential projects are under consideration by the project sponsors. These include the TransCanada project and the BP, ConocoPhillips, and ExxonMobil project, as well as the Trans-Alaska Gas System (TAGS), a liquefied natural gas (LNG) export project which is being promoted in some form by the Alaska Gasline Port Authority.

The Alaska Gasline Port Authority has indicated that it will apply for an AGIA licence, but the plans of the other two potential project sponsors regarding the AGIA process and licence are not known.

Mackenzie Gas Project

The Mackenzie Gas Project proposes to build a 1,220 km pipeline system along the Mackenzie Valley. It would link northern natural gas producing wells to southern markets. The main Mackenzie Valley Pipeline would connect to an existing natural gas pipeline system in northwestern Alberta, Canada.

The Mackenzie Gas Project is being proposed by Imperial, ConocoPhillips Canada, Shell Canada Limited, ExxonMobil Canada and the Aboriginal Pipeline Group (APG). The APG was formed in 2000 to represent the ownership interest of the Aboriginal peoples of the Northwest Territories in the proposed Mackenzie Valley Pipeline.

The project proponents are awaiting the necessary regulatory approvals, and the exact route of the Mackenzie Valley Pipeline is still under study. The National Energy Board (NEB) expects to release a decision on the project in the first quarter of 2008. The NEB review will include technical aspects of the project such as route, site selection and engineering design, among other things. A final decision on whether to proceed to build the pipeline will depend on NEB approval and will include evaluation any detail the regulators may attach to the approval. In addition, the decision will depend on other factors including the final terms of benefits and access arrangements, final agreements on fiscal matters, natural gas markets, project costs and shipping commitments.

Keystone Oil Pipeline

The Keystone Oil Pipeline is a proposed 2,969 km (1,845 mile) pipeline with an initial nominal capacity to transport approximately 435,000 bbl/d of crude oil from Hardisty, Alberta, Canada to US Midwest markets at Wood River and Patoka, Illinois. Keystone is underpinned by firm, long-term contracts secured in January 2006, which total 340,000 bbl/d.

Earlier in 2007, a second binding open season was held and commitments obtained through this process resulted in 155,000 bbl/d of additional firm contracts from Hardisty to Cushing, Oklahoma with a duration averaging 16 years. The commercial commitments will involve the construction of a 294 mile (473 km), 36 inch diameter extension of the US portion of the pipeline from the Nebraska/Kansas border to a hub near Cushing, Oklahoma and support the expansion of the Keystone Pipeline to a nominal capacity of approximately 590,000 bbl/d. The expansion and extension target in-service date is fourth quarter 2010.

Approximately 1,078 miles (1,735 km) of new pipeline will be constructed in the US. The Canadian portion of the proposed project includes the construction of approximately 370 km (230 miles) of new 30 inch diameter pipeline and the conversion of approximately 864 km (537 miles) of existing TransCanada pipeline from natural gas to crude oil transmission.

Provided that regulatory approvals are received, construction is expected to begin in early 2008.

Alberta Clipper Project and Southern Lights Project

Alberta Clipper is a proposed crude oil pipeline that will provide service between Hardisty, Alberta, Canada and Superior, Wisconsin, USA. This 1,607 km segment of an Enbridge Inc. expansion is designed to resolve expected capacity constraints and is expected to be in service by mid-2010.

The Southern Lights Project will transport light hydrocarbons (diluents) from the Chicago area to Alberta’s oil sands, in another of Enbridge Inc.’s expansion plans. The project will require new pipeline and use of some segments of existing Enbridge pipeline that will be reversed for south-to-north diluent service. A separate diluent pipeline is proposed to be built from Edmonton, Alberta, to the heavy oil sands region in northern Alberta. The project also will require the construction of a new 313 mile, 20 inch crude oil pipeline from Cromer, Manitoba, to Clearbrook, Minnesota, to replace the capacity of an existing Enbridge pipeline that will be converted to diluent service.

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