ConocoPhillips acquires Rockies Express interest

Pipeline & Gas Journal, August, 2006

ConocoPhillips has exercised its option to acquire a 25% interest in the Rockies Express Pipeline project. The 1,663-mile pipeline will be one of the largest natural gas pipelines ever constructed in North America and will transport natural gas from the prolific producing basins in Wyoming and Colorado to the upper Midwest and eastern United States. The approximately $4.4 billion project will have the capability to transport 1.8 Bcf/d of natural gas. Binding firm commitments from creditworthy shippers have been secured for virtually all of the capacity on the pipeline.

Kinder Morgan Energy Partners will operate Rockies Express and now owns 51% of the equity in the project, which will become 50% when the project is completed. Sempra Pipelines & Storage has a 25% ownership interest in the project. ConocoPhillips currently owns a 24% interest in the project with an additional 1% interest to be acquired after the pipeline is completed.

The following is a status update on Rockies Express:

* A binding open season ran through July 14 to assess shipper interest to extend the pipeline farther eastward from the Clarington Hub in Monroe County, OH, to Oakford, PA.

* Interim service has begun on the initial 136-mile segment of the pipeline from Meeker, CO to the Wamsutter Hub in Sweetwater County, WY.

* Construction on the 192-mile segment from the Wamsutter Hub to the Cheyenne Hub in Weld County, CO, is scheduled to begin this summer and is expected to be in service by Jan. 1.

* Service on the 713-mile segment from the Cheyenne Hub to eastern Missouri (REX West) is scheduled to commence on Jan. 1, 2008.

* The 622-mile segment from eastern Missouri to the Clarington Hub (REX East) is expected to be in interim service as early as Jan. 1, 2009 and fully completed by June 2009. These projected dates are subject to regulatory approvals.

* In May, KMP and Sempra Pipelines & Storage filed the FERC certificate for REX West. In June, the National Environmental Policy Act pre-filing for REX East was made with the FERC.

In other news, KMP announced the start of a non-binding open season to seek shipper support for firm transportation capacity on its Kinder Morgan Interstate Gas Transmission (KMIGT) pipeline system. As proposed, the project would increase natural gas deliveries into the Grand Island, NB market area by 170,000 Dth/d and help accommodate the growing demand for natural gas to serve ethanol production facilities in the Midwest. Depending on shipper support, the expansion could increase to about 270,000 Dth/d.

The incremental capacity would be created through a combination of line looping, increased compression and other operational upgrades. Pending regulatory approval, a portion of the capacity could be available by next summer with the remaining capacity ready for service in 2008