The $4.5 billion Rockies Express Pipeline that local natural-gas producers are banking on to move gas to East Coast markets could be delayed by a year under a proposed regulatory timetable.
Kinder Morgan Energy, the majority owner of the pipeline, is aiming to complete the project’s third phase, called Rockies Express East, by Jan. 1, 2009.
But revisions to the timetable by the Federal Energy Regulatory Commission last month could postpone some construction until spring 2009, the company said in a regulatory filing. The filing said the scheduling change could push the completion of the pipeline back a year because of weather- related complications, according to Bloomberg News.
Such a delay could lead to a steep drop in natural-gas prices similar to the decline local producers faced this past summer.
“There continues to be a strong demand for natural gas. This pipeline is a key piece of infrastructure for us to meet that need,” said Doug Hock, a spokesman for EnCana Corp., one of the state’s largest gas producers. “If you have restricted capacity, it is going to impact the price we can get for our gas here.”
The Rocky Mountain region has historically had a shortage of pipeline capacity, creating a local surplus of natural gas that has kept regional prices lower than national averages. Prices in the region dropped even further over the summer because of overproduction.
“There could be a legitimate concern in the marketplace that by the time we get to the spring of ’09, if Rockies Express Phase 3 is not in place, (a drop in prices) could happen again, just like it happened this year,” said Rusty Braziel, managing director of Golden-based consultant Bentek Energy.
Kinder Morgan spokesman Larry Pierce said the company is working with FERC on the schedule.
“We’ve expressed our concerns about their schedule and why it’s important to keep the project on schedule,” Pierce said. “We’re hopeful at this time that that will still be accomplished.”
A presentation by Kinder Morgan officials at a pipeline conference in September indicated Rockies Express East would transport up to 1.6 billion cubic feet of gas daily by January 2009. That number would increase to 1.8 billion cubic feet by November 2009. The pipeline would transport gas from production areas in Colorado and Wyoming to Ohio, where it would link with pipelines serving Eastern markets.
“If that thing gets delayed … it would be a big deal,” Braziel said.
The second phase of the pipeline is scheduled to be completed by the end of this year.
Separately, Williams Cos., the biggest U.S. pipeline company, said it’s holding a so-called open season to gauge shipper interest in an expansion farther into the Northeast of its Transco natural-gas pipeline system.
Bloomberg News contributed to this report.
Andy Vuong: 303-954-1209 or avuong@denverpost.com
