$3 billion pipeline

KMP and Sempra Pipelines & Storage are considering the construction a new natural gas pipeline linking producing areas in the Rocky Mountain region to the upper Midwest and Eastern USA.

Kinder Morgan Energy Partners and Sempra Pipelines & Storage have entered into a Memorandum of Understanding (MOU) to pursue development of a proposed new natural gas pipeline that would link producing areas in the RockyMountain region to the upper Midwest and Eastern United States.

As designed, the 42-inch diameter pipeline would have capacity of up to two billion cubic feet per day and cost an estimated $3 billion. The preliminary route of the 1,500-mile pipeline would originate at the Wamsutter Hub in Wyoming and extend to eastern Ohio with an ultimate route to be selected based on shipper interest.

“If built, the pipeline would maximise the value of growing Rockies production by creating unprecedented access by one pipeline to multiple markets and storage, while providing markets in the upper Midwest and Eastern U.S. with direct access to reliable, long-lived domestic natural gas supplies,” said Scott Parker, president of KMP’s Natural Gas Pipelines Group.

Under terms of the MOU, KMP and Sempra Pipelines & Storage will share responsibility for development activities. Additionally, Sempra has agreed to bid for 200 million cubic feet per day of firm capacity from the pipeline during an upcoming open season that it will use to serve distribution utilities on the East Coast. Initially, KMP would own two-thirds of the equity in the proposed pipeline and Sempra would own one-third.

Pending the feasibility of the project, customer commitments and regulatory approval, the proposed pipeline is projected to be staged into service beginning in the latter part of 2008 and continuing through to 2009.