CASPER - The Wyoming Natural Gas Pipeline Authority began hearing testimony from natural gas pipeline companies Tuesday, hoping to learn how the state can improve its foothold in the national natural gas market.

The hearings will resume at 8 a.m. today at the Wyoming Oil and Gas Conservation Commission building.

Pipeline officials who testified Tuesday said delays and uncertainty surrounding major oil and gas projects in Wyoming such as created by the Powder River Basin Oil and Gas Environmental Impact Statement prevent the state from getting a better return on the natural gas already being tapped.

Local producers don't know how much natural gas they'll be pumping from the state's vast reserves in coming years so they are reluctant to commit to 10-year contracts for new pipelines that could boost wholesale prices.

"I think the whole EIS issue has definitely played into what's going on, no question. I would hope that something breaks through quickly," said Cliff Rupnow, director of customer service for Williston Basin Interstate Pipeline Co.

After being delayed, the Bureau of Land Management is expected to issue a final decision this month on the Powder River Basin EIS, but environmental groups have already threatened to file suit against the BLM and ask for a moratorium on drilling until water and air quality issues are settled.

Producers are anxious to tap federal coalbed methane reserves, but aren't sure what the future holds.

In response to the uncertainty, Williston Basin lowered contracts to six years and did find enough takers to plan construction of the Grasslands pipeline, which will move 80 million cubic feet (Mmcf) of gas per day. But Rupnow said Wyoming's future in the national natural gas market depends on the completion of federal studies to allow the development of federal minerals and whether the state can aggregate supplies from small producers to attract more pipelines.

"The major marketers say they can't find supply, and that's really frustrating," Rupnow said, speaking of the estimated 25 trillion cubic feet of recoverable coalbed methane gas in the Powder River Basin.

Shelly Wright, director of business services for Questar's regulated companies, said she agreed that federal permitting delays prevent many producers from signing long-term term contracts with pipelines. But pipeline interests can't get financial backing from major investment institutes unless they can show they have the contracts to pay for a pipeline, she said.

"If you go with shorter (contract) terms, you may also be looking at higher transmission (fees)," Wright said.

Wright said Questar's pipeline system links several interstate lines that intersect in southwestern Wyoming. The system allows gas from Colorado to compete with Wyoming gas in the region, further pressuring wholesale prices downward.

Wright also said that a scheduled maintenance shutdown on part of the Questar system one year ago had a severely negative effect on wholesale prices in the southwestern corner of Wyoming. Pipeline Authority Chairman Mark Doelger asked Questar and El Paso officials to voluntarily notify the agency of planned maintenance that might interrupt pricing so that it might ask companies to stagger shutdowns and avoid major interruptions.

"Maintenance is just something you need to do," Wright said. "It definitely had an affect last year on pricing." Wright said a similar maintenance shutdown is scheduled for next spring.

Tom Price of Colorado Interstate Gas said his company plans a 16-hour shutdown of the Cheyenne hub next year, and that could be a major, but temporary, disruption to market prices.

Price said producers can expect a major improvement in wholesale prices when Kern River Transmission Co. - not related to CIG - opens its 860 Mmcf expansion in May.

"That will be a 23 percent increase out of the northern Rockies," Price said, adding the expansion should provide price relieve out of both the east-bound and west-bound trading hubs.