Rockies Gas Pipeline May Mean Price Hike
by AFX News Limited
February 28, 2008
El Paso Corp., the largest transporter of natural gas
in North America, presented plans Wednesday for a pipeline that will carry
natural gas from producers in the Rocky Mountains to the high-demand market of
The company laid out the $2 billion Ruby Pipeline project at a Wyoming House
Minerals, Business, and Economic Development Committee meeting.
Pending approvals, El Paso plans to start construction in 2010 on the line,
which would run from the Opal plant in southwestern Wyoming to Malin on the
Brian Jeffries, executive director of the Wyoming Pipeline Authority, said
the project will likely mean higher prices for Wyoming natural gas after two
years of depression.
Jeffries said wholesale natural gas prices for Wyoming producers averaged
$4.50 per thousand cubic feet last year, compared with a $7 average in other
This month, Wyoming prices reached $7 per thousand cubic feet, partly
because of cold temperatures and the opening of the Rockies Express, a pipeline
that started transporting gas from the Rocky Mountain region to the Midwest in
Jeffries attributed the price dip of previous years to the Rockies'
insufficient number of pipelines. The lower prices means a loss of hundreds of
millions of dollars in state revenues for taxed gas, he said.
Although Wyoming is the nation's third-largest producer of natural gas,
Jeffries said the pipeline shortage limits sales because it hampers
transportation to markets.
"When there's not enough pipes to go around, the prices go down," Jeffries
Jeffries said the Ruby Pipeline is one of many proposed pipeline projects
that could help Wyoming bring gas prices up again.
"We have to start building now," Jeffries said. "We want this to move as
quick as possible."
Tom Price, vice president of El Paso's Western Pipelines division, said El
Paso already forged a partnership with Pacific Gas & Electric, a major
California energy supplier, to build the pipeline. PG&E has committed to buying
gas transported by the pipeline.
Price said he has also been in talks with most of the Rockies gas-producers
to supply gas.
PG&E will need to get state regulatory approval for the project by the end
of October for the construction to continue. Price said El Paso hopes to have
the pipeline in service by March 2011.
The Ruby Pipeline is one of three natural gas pipelines proposed to run from
the Rockies to California.
Spectra Energy Corp. solicited investors last month to help fund the Bronco
Pipeline that would also transport gas produced in Colorado, Utah and Wyoming to
Northern California consumers.
A 500-cubic-feet expansion of the Kern River pipeline proposed in 2003 will
bring Rockies gas to Southern California.
Copyright 2008 AFX News Limited. All Rights Reserved.
El Paso Holding Company, L.L.C., an affiliate of El Paso Corporation
Opal Hub, Wyoming to Malin, Oregon United States