Denver Post
Natural-gas pipeline commitments seal deal

Wednesday, June 25, 2008

A new pipeline linking the Rocky Mountain region to Oregon and northern California will go forward with construction, pending regulatory approvals.

El Paso Corp., which is building the $3 billion Ruby Pipeline, said Wednesday that it has received enough commitments from customers to make the 670-mile link between Opal, Wyo., and Malin, Ore., economically viable.

Customers have provided binding commitments to ship 1.1 billion cubic feet of gas a day, a large share of the 42-inch diameter pipeline's capacity, Houston-based El Paso said.

Rising natural-gas production in Colorado and Wyoming combined with limited pipeline capacity to other locations has depressed prices in the region.

Natural gas nationally cost $12.96 per thousand cubic feet on Wednesday morning versus $9.14 for natural gas coming out of Colorado and Wyoming, and the gap in recent weeks has topped $5, said Porter Bennett, president and chief executive of Bentek Energy, a natural-gas analytical firm based in Evergreen.

"Ruby will be a big help," Bennett said. "Capacity is constrained all the way around."

Wyoming and Colorado natural gas can get to Southern California, and the Ruby will make it easier to get gas to power plants being built on the northern California border, along with the heavily populated Bay Area.

Odds are good that another pipeline in the works will link the Ruby with Portland, Ore., and Seattle, opening up additional markets, Bennett said.

El Paso said the Ruby Pipeline is expected to go into service by March 2011.

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