El Paso Says It's Open to Expansion of System
El Paso Natural Gas "is willing to expand its system" to the California 
border if "sufficient support" for such a project can be demonstrated through 
long-term capacity contracts, the pipeline told FERC. 
The pipeline's comments were in response to a Commission inquiry asking El 
Paso to consider the feasibility of upgrading its proposed Line 2000 
crude-oil conversion project to a system expansion to help ease the pipeline 
capacity crunch in the West.  Daniel M. Adamson, director of FERC's Office of 
Energy Projects, raised the prospect in a Jan. 3 letter to El Paso, saying 
that modifying the project "could assist the difficult situation" now facing 
the California gas market. 
Specifically, the Commission has recommended that 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. 
However, "there are several ways that an expansion could be accomplished," 
wrote El Paso Vice President Al Clark on Jan. 15. "El Paso could add 
compression to the proposed Line 2000 project, or it could replace or 
recommission the compression that the pending application proposes to abandon 
in place." As a third option, he said El Paso could add new compression to 
its existing system or loop either the existing system or Line 2000 project. 
The "preferable method will have to be determined by a careful analysis of 
the relative costs and a determination of where shippers want the capacity, 
i.e. where they want to put gas into El Paso's system and where they want the 
gas delivered," Clark said. 
As a "first step" towards gauging market support for an expansion, he noted 
that El Paso on Jan. 12 posted 1.2 Bcf/d of California-bound pipeline 
capacity for sale effective June 1 of this year. The capacity currently is 
held by affiliate El Paso Merchant Energy, whose contracts expire May 31. 
When the posting results are known, "El Paso will determine whether another 
open season is needed to solicit expressions of interest in additional 
pipeline capacity to serve markets both into and upstream of California." 
If El Paso finds there is an "unmet demand for additional capacity" on its 
system, the pipeline at that time "will evaluate whether an expansion of the 
existing system or a modification of the Line 2000 project, or both, is the 
appropriate means of accomplishing the expansion," Clark noted. 
In the meantime, he urged the Commission to approve El Paso's application for 
the Line 2000 project as it was filed. Not only will the project "increase 
the operational flexibility" of El Paso's current system, but converting the 
line from oil to gas service will be a "necessary prerequisite" to any future 
expansion of the pipeline's system, according to Clark.