FERC Gives Initial Nod to REX-West Leg of Rockies Express Line

With one commissioner calling it the "King of pipelines," FERC on Thursday issued a favorable preliminary determination (PD) on nonenvironmental issues for the second leg of Rockies Express Pipeline LLC's proposed $4 billion 1,663-mile mega-pipeline project that would transport Rocky Mountain natural gas to Midwest and Northeast markets.

The second leg of the Rockies Express system involves the construction of 713 miles of pipeline from the Cheyenne Hub in Weld County, CO, to an interconnection with Panhandle Eastern Pipe Line in Audrain County, MO. It would have a capacity of 1.5 Bcf/d [CP06-354]. The project, which is referred to as REX-West, also would include a long-term lease of 625,000 Dth/d of capacity from Questar Overthrust Pipeline to permit REX-West shippers to source gas from the Opal Hub in Wyoming.

The REX-West portion of the Rockies Express line would include 176,930 horsepower (hp) of additional compression, as well as five new compressor stations. The Rockies Express pipeline is jointly owned by Kinder Morgan Energy Partners LP, Sempra Pipelines & Storage and ConocoPhillips.

The Federal Energy Regulatory Commission already has approved the first leg of the project, which includes the construction of a 327-mile pipeline system from the Meeker Hub in Rio Blanco County, CO, northward to the Wamsutter Hub in Sweetwater County, WY, and then southeastward to the Cheyenne Hub in Weld County, CO (see Daily GPI, Aug. 10, 2005). That segment of the pipeline is being built in two phases.

The first half of Phase 1 (from Meeker Hub to Wamsutter Hub) was completed in February, while the second half (from Wamsutter Hub to the Cheyenne Hub) still is under construction and is expected to be finished in 2007. Phase II involves the addition of 66,020 hp of compression in Wyoming and Colorado. The 713-mile REX-West pipeline would pick up where the 327-mile leg ends, at the Cheyenne Hub.

Entrega Gas Pipeline Inc., formerly a subsidiary of EnCana Corp., built the Meeker Hub-to-Wamsutter Hub portion of the first leg. But Kinder Morgan, Sempra and ConocoPhillips, which purchased Entrega earlier this year, are constructing the Wamsutter Hub-to-Cheyenne Hub portion.

FERC still has yet to act on another part of the Rockies Express project that has been proposed by TransColorado Transmission. TransColorado is seeking to expand its existing system to transport up to 250,000 Dth/d of natural gas production in the San Juan Basin from the Blanco Hub in New Mexico to the proposed Rockies Express line at an existing interconnection located at the Meeker Hub in Colorado.

"This is a very important project" because it will provide a "direct link" for Rocky Mountain gas supplies to reach major markets in the Midwest and East, said Chairman Joseph Kelliher, regarding REX-West. It will be a "significant addition to our gas infrastructure." He noted that FERC is moving "expeditiously" to complete its environmental review of the REX-West portion of the Rockies Express pipeline -- the final step before a certificate is awarded. Rockies Express has asked FERC to issue a certificate by March 2007 so that the REX-West leg can go into service on Jan. 1, 2008. The Rockies Express line will be the "King of pipelines," providing a "significant market for producers in the West," said Commissioner Suedeen Kelly. She noted that the proposed pipeline will be a "boon to consumers in the Midwest," who primarily have been served by pipelines transporting gas from the Gulf of Mexico and Canada.

Commissioner Jon Wellinghoff called the Rockies Express project a "prime example" of the need for energy efficiency in infrastructure. He said the turbine compressors that will be constructed along the path of the pipeline will produce waste heat that can be recovered and converted to electricity. Wellinghoff called on FERC staff to issue data requests to investigate the energy efficiency options of the proposed line. Kelliher said he already had directed staff to carry out the inquiry.

As part of the PD order, FERC granted Rockies Express Pipeline's request for a pre-determination to roll in the costs of certain REX-West additions into its currently certificated facilities.

Rockies Express said it plans to file in the future a separate, independent application, known as REX-East, to construct pipeline facilities that would extend from the terminus of the REX-West facilities in Audrain County to Clarington, OH. This third and final leg of the project would increase the capacity of the line to 1.8 Bcf/d from 1.5 Bcf/d, it said. The company also currently is testing the market for interest in an extension of the pipeline into Pennsylvania.