El Paso and PG&E have entered into a letter of intent for PG&E Corporation to acquire a 25.5 percent interest in El Paso's Ruby Pipeline project -- a proposed 680-mile, 42-inch natural gas transmission pipeline that would begin at the Opal Hub in Wyoming and terminate at the Malin, Oregon, interconnect, near California's northern border. Capital expenditures for the project are expected to total approximately $2 billion.
The Ruby Pipeline will have an initial capacity of 1.2 billion cubic feet per day (Bcf/d) and is expandable to 2 Bcf/d. It will connect Rocky Mountain natural gas producers with one of the most attractive natural gas demand regions in the country and provide natural gas users in northern California, Nevada, and the Pacific Northwest with competitively priced natural gas from the nation's most important supply growth region. Subject to Federal Energy Regulatory Commission and other regulatory approvals, approvals of respective companies' boards of directors, and after obtaining necessary customer commitments, the Ruby Pipeline is anticipated to be in service in the first quarter of 2011.
"PG&E's participation in the Ruby Pipeline project underscores the importance of this critical infrastructure project in transporting increasing supplies of natural gas from the Rockies to key consuming markets," said Jim Cleary, president of El Paso's Western Pipeline Group. "We are excited to have PG&E as a partner in this project as we work to meet the future infrastructure needs of the western states."
"We are delighted at the prospect of partnering with El Paso to help develop the Ruby Pipeline natural gas project," said Richard Rollo, vice president-Strategic Development and Business Integration for PG&E Corporation. "The Ruby Pipeline will provide reliable access to supplies of Rocky Mountain gas necessary to meet the growing demand of markets in the western United States."
In early December, El Paso announced that it is planning to partner in the project with Bear Energy LP, a subsidiary of The Bear Stearns Companies, and partnering discussions include Bear Energy becoming an initial shipper on the pipeline.
El Paso is also in discussions with other prospective shippers and will announce a formal open season shortly.