El Paso Tests Market for Mainline Expansion
El Paso Natural Gas apparently got the message when its last open season for 1.2 Bcf/d of firm transportation capacity attracted bids for 14.4 Bcf/d. The pipeline has announced an open season to test market interest in a mainline expansion and to satisfy regulatory concerns that something needs to be done to relieve the apparent capacity constraint at the California border. 
El Paso has been under significant pressure from regulators and shippers to expand because of enormous demand and skyrocketing prices in California. In a Jan. 3 letter to the pipeline, Daniel M. Adamson, director of FERC's Office of Energy Projects, urged El Paso to consider modifying its Line 2000 project to "assist the difficult situation" now facing the California gas market. Specifically, the Commission recommended El Paso amend a pending application in which it seeks to acquire an existing 30-inch diameter, 1,088-mile crude oil pipeline from Plains All American Pipeline L.P., and convert part of it to natural gas transportation service. The line extends from McCamey, TX, to Bakersfield, CA. El Paso plans to convert to gas service a 785-mile segment from McCamey to Ehrenberg, AZ. El Paso proposed the Line 2000 project as a loop line to replace existing compression, and not as a system expansion. 
El Paso Vice President Al Clark told the commission that market demand for an expansion would have to be evaluated first. He said the open season for 1.2 Bcf/d of capacity being held by affiliate El Paso Merchant Energy would give the first indication whether such an expansion was needed. 
Following such a resounding wake-up call, El Paso is holding a new open season to determine interest in additional capacity on the mainline or in relinquishing mainline space. The open season will end March 23. 
El Paso officials said they will consider requests for firm transportation service originating in any receipt basin and delivered to any location on its system. If a new load can be matched to an existing shipper's offer of release or relinquishment, El Paso will attempt to facilitate the transfer of the capacity between the parties prior to proposing an expansion. Upon receipt of non-binding expressions of interest, they will begin to identify appropriate facilities to possibly expand the system. 
Clark previously told FERC the pipeline could add compression to the proposed Line 2000 project or replace or recommission the compression that the pending application proposes to abandon. Another option, he said, would be to add new compression to the existing system or loop either the existing system or Line 2000 project. The economics of the project will determine the eventual form. 
For more information on the open season visit El Paso's web site <http://tebb.epenergy.com/ebbEPG/ebbmain.asp?sPipelineCode=EPNG> or call Jerry W. Strange, director of transportation marketing, at (915) 496-3139.