DUSTIN BLEIZEFFER Star-Tribune energy reporter | Posted: Tuesday, January 15, 2008 12:00 am
The second phase of the Rockies Express natural gas pipeline to the Midwest is complete, although some "off-ramps" on the eastern end are not yet open.
"The freeway is finished, but not all of the exits," said Brian Jeffries, executive director of the Wyoming Pipeline Authority.
The 1,663-mile Rockies Express pipeline is one of the largest natural gas pipelines ever constructed in North America, and will transport natural gas from prolific producing basins in Wyoming and Colorado to the upper Midwest and eastern United States, according to developers Kinder Morgan and Sempra Energy.
When completed, the $4.4 billion project will transport up to 1.8 billion cubic feet of gas per day.
Rockies Express represents a lifeline for Wyoming's natural gas industry, which provides about one-third of state government revenue. Rising gas production in the Rockies approached pipeline export capacity and drove prices well below the national average in 2007.
So far, completion of Rockies Express pipeline's second phase has added about 900 million cubic feet per day of export capacity for the region, helping lift wholesale prices closer to the national average.
Completion of several more "off-ramps" to the segment in February should add another 500 million cubic feet of daily capacity. That's enough to serve about 18,000 homes for a year.
Ongoing additions to Rockies Express, combined with colder weather, pulled wholesale natural gas prices in Wyoming to within $1 per thousand cubic feet of gas on the daily index.
Wyoming's average daily spot price of $7.13 per thousand cubic feet at the Cheyenne Hub on Monday was just $1 behind the Henry Hub in Louisiana, which the industry uses as a market barometer.
Several other smaller export expansions prescribe a somewhat competitive standing for Rockies producers on the national scene for the next couple of years. But that doesn't mean Wyoming producers are any better shielded from uncertain national price movements.
"Now let's hope the national price stays high," Jeffries said.
Weather, pipeline interruptions and many other factors can have a dramatic effect on natural gas prices.
Wyoming Oil and Gas Conservation Commission Supervisor Don Likwartz said a gas plant fire choked some pipeline flow in the Four Corners region of New Mexico in December. This fall, a compressor station fire at the Cheyenne Hub in northeast Colorado temporarily cut 400 million cubic feet of daily capacity on El Paso Corp.'s Cheyenne Plains pipeline.
However, the addition of Rockies Express should help ensure reliability of natural gas pipeline infrastructure for the region.
"The whole grid is larger than it was a year ago," Jeffries said. "So any maintenance outage will probably have less of an effect than it did a year ago."
Energy reporter Dustin Bleizeffer can be reached at (307) 577-6069 or dustin.bleizeffer@trib.com.