By Ann Davis
ZANESVILLE, Ohio -- To the energy industry, REX is the king of pipelines. For this town's struggling work force, REX is the king of jobs. The last leg of one of the largest natural-gas pipelines built in 25 years -- stretching 1,679 miles from Colorado to Ohio -- is being laid, welded and buried under fields just east of here. Kinder Morgan Energy Partners LP's Rockies Express, or REX -- nicknamed the King of Pipelines by a federal regulator -- will link the vast but remote stores of fossil fuel buried under the Rocky Mountains with the power-hungry markets of the Midwest and Northeast.
The push to build REX came from Rockies gas producers in late 2005. Pipeline capacity there was so limited that producers couldn't get fuel to market. Gas there sold at a discount of as much as 30% compared with prices in the East.
REX has already begun to level natural-gas prices across the U.S. Research firm Bentek Energy cites the opening of a portion of REX earlier this year as a significant factor in reducing the premium Eastern regions pay over the West to 17 cents per million British thermal units in September from $2.77 last year.
REX has been so popular with gas producers that shipping capacity on the pipeline sold out more than three years ago. At the time, gas in the East frequently traded above $10 per million BTUs, well above today's range of $3, helping Kinder lock in higher transportation rates and a steady flow of cash for 10 years.
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