Per our discussions last week about the Kern River open season.  I expect 
these shippers to file the same types of comments in the new expansion.  FERC 
has a policy prohibiting pipelines from selling more firm capacity than they 
have at any point, so to the extent these shippers can show that Kern has 
indeed oversold Wheeler Ridge, I think that FERC will have to address their 
issue.  They surely don't want another El Paso on their hands.


NGI's Daily Gas Price Index 
published : March 21, 2001

Shippers Dispute Kern's Wheeler Ridge Sales

Chevron, Amoco Production, CanWest Gas Supply, Aera Energy and RME Petroleum 
have called on FERC to stop Kern River Gas Transmission from overselling 
delivery point rights at Wheeler Ridge into the Southern California Gas Co. 
distribution system. The Firm Shippers said in comments filed this week that, 
in a situation strangely similar to the recent El Paso capacity reallocation 
case, Kern River has oversold capacity at Wheeler Ridge, and its proposed 
expansion project will only exacerbate the situation (Docket CP01-31). 

On Nov. 15, 2000, Kern filed an application to expand its system and provide 
74,500 Dth/d of additional delivery point capacity at Wheeler Ridge into 
SoCal Gas. But Firm Shippers claim recent data provided by Kern and SoCal Gas 
indicates Kern River already has sold more than the 450 MMcf/d of firm 
delivery point capacity it has available into Wheeler Ridge. Firm Shippers 
told FERC. Kern River has sold 468.4 MMcf/d of capacity at Wheeler Ridge. 

Not true, says Lynn Dahlberg, Kern's manager of marketing. "We have to date 
subscribed at 450,000 dth/d. And unless we subscribe at more than 830,000 
dth/d, we have not sold more capacity than SoCal has takeaway." The combined 
Kern-Mojave lines can deliver on a firm basis 600,000 dth/d, with Kern having 
450,00 and Mojave 150,000. "We can move more than that capacity, and we 
have," she added. 

SoCal Gas has noted that it curtails nominations from Kern on a regular 
basis, Shippers said. With the proposed expansion project, Kern will be 
"creating the same type of firm delivery point over-sale situation that the 
Commission found to be unjust and unreasonable on El Paso Natural Gas at El 
Paso's SoCal Gas/Topock delivery point," they added. While they support the 
expansion, they do not want to see their firm delivery rights in Southern 
California degraded. They also complained that Kern's marketing affiliate is 
one of the primary beneficiaries of the proposed additional access to Wheeler 
Ridge. 

Dahlberg conceded that other interstate lines also deliver to the Wheeler 
Ridge point, but "adding more players to Wheeler gives markets on Socal more 
supply options. Shippers have to compete." 

The shippers are concerned, however that "substantial benefits under the 
currently structured proposal accrue primarily to Kern River and its 
affiliate and would restrict the firm rights of existing shippers...." The 
Commission should prohibit Kern from selling additional firm rights at 
Wheeler Ridge, or provide only rights to secondary and tertiary capacity that 
is of a lower priority than the rights of existing firm customers, they said.