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Colorado Pipeline May Face Delays

Sat November 03, 2007 - West Edition

DENVER (AP) The company building a much-needed pipeline to deliver natural gas from the Rockies to the East Coast says its completion could be delayed up to six months unless federal regulators speed up their schedule for environmental review.

If it happens, the delay will have a snowball effect that will hurt producers and consumers as well as add tens of millions of dollars in costs to the project, Rockies Express Pipeline President Rockford G. Meyer said in a letter to regulators.

Joe Hollier of Kinder Morgan Energy Partners, majority owner of the pipeline, said Oct. 5 they are working with the Federal Regulatory Energy Commission in an effort to reach a compromise.

Commission spokeswoman Tamara Young-Allen said the environmental review schedule was established last month to give all parties an idea of when the commission expects to take action. She said the dates are tentative and parties will be informed if a schedule change is necessary.

The $4.4 billion 1,663-mi. (2,676 km) pipeline project, nicknamed REX, would deliver 1.8 billion cu. ft. of natural gas produced in Western states to the Midwest and East Coast. It is being built in three phases with completion set for January 2009.

The undertaking should solve at least two key problems for natural gas producers by providing needed shipping capacity and likely boosting prices which are lower in the region than nationally because the pipeline shortage forces producers to cut prices to get shipping space.

The most recent development revolves around FERC’s May 2008 date for issuing a final environmental impact statement. That means the commission’s final order likely would not be issued until June or July of that year, two months later than the company had hoped, Meyer said in last month’s letter.

The company asked FERC to deliver the draft environmental impact statement by Nov. 30 instead of the current plan of Jan. 4, with the goal of completing the final statement by March and a commission order by April.

The FERC timeframe would affect the ability to start construction, obtain necessary authorization from landowners and other tasks necessary to complete the project by December 2008 even taking into account winter weather complications.

All told, the project could be delayed as much as six months if the schedule stands, Meyer said.

“A six-month delay would have significant repercussions both to the U.S. gas market and the financial structure of the project,” he said. “Producers in the Rocky Mountains would be required to shut in their gas for another complete heating season…consumers in Midwest and Eastern markets would be unable to gain the market benefits of additional, competing sources of gas.”

Kinder Morgan Energy Partners owns 51 percent of the project. Its partners include Sempra Pipelines & Storage and ConocoPhillips.

The first phase of the pipeline opened in February 2006 and ships gas from Wyoming to Colorado. The second phase, expected to be finished in December, will take the gas from Colorado to Audrain County, Mo., while the third phase will deliver gas from Missouri to Ohio.

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