Proposed system could boost LV-area natural gas supplies

Malcolm Hall

Monday, Jan. 14, 2002 | 11:03 a.m.

An open season has been declared for customers interested in buying natural gas from a proposed new pipeline spanning 300 miles from Goodsprings in Southern Nevada to Southwestern Arizona.

When completed, the Desert Crossing Gas Storage and Transportation System would include a 10-billion cubic foot storage complex and associated pipeline in the Hualapai Valley south of Kingman, Ariz.

Developers said the 36-inch pipeline is projected to be an 800 million cubic feet per day system that would connect the storage complex with all major interstate natural gas pipelines in Southern Nevada and Arizona.

Open season is a process in which customers interested in acquiring natural gas capacity submit bids setting out the terms they will pay for the fuel.

Project sponsors are Pittsburgh-based Allegheny Energy Supply Co., Phoenix-based Salt River Project and Sempra Energy Resources of San Diego.

Greg Lander, spokesman for the Desert Crossing partners, said the project would cost an estimated $600 million to $700 million.

"The construction date depends on federal and state regulatory approvals but we hope to begin construction on the facilities in January 2004 and the pipeline would be online in June 2004, with the storage complex completed in May 2005," he said.

The complex would connect to the Kern River Pipeline at Goodsprings, Transwestern Pipeline at Needles, Calif., and the El Paso Natural Gas pipeline at Topock, Ariz.

Desert Crossing said connections also are planned to facilities owned by Southwest Gas Corp., PG&E, SoCal Gas, Sonoran Pipeline, Southern Trails and El Paso Southern Mainline.

Southwest Gas spokesman Roger Buehrer, however, said at this point the company is not part of the project.

"But we're very interested as to how the project will develop," he said. "Any new pipeline with additional supplies has to be good for the consumer, which would help drive price. It's too preliminary to determine if we would bid for capacity."

Lander said gas to feed the pipeline would come from the major producing fields in the Western United States and Canada, including the Rocky Mountain region, the San Juan Basin in New Mexico, the West Texas Permian Basin, the Anadarko Basin in Oklahoma and Western Canadian production areas.

Those fields would connect to Desert Crossing via existing and proposed pipelines.

"All the different supply basins would be brought together by a super-header backed by storage," Lander said.

Lander said all three partners have power plant projects in the region that would benefit from the new pipeline, Allegheny with a plant under development in Southern Arizona and Sempra with plants outside Searchlight and another under development in that area.

Salt River Project Utility District has plants in the Phoenix area and is a subdivision of the state of Arizona.

"The key distinguishing factor between this proposed system and others is that it is a consumer-driven project," Lander said. "They are the people who burn the gas and have been dealing with the energy issue in the Southwest, particularly capacity issues, as well as the unique needs of electric generators for flexible and reliable pipeline capacity."

Lander said when the storage field is completed in 2008 it would be able to provide 20 percent of the natural gas needs in the region.

The gas would be stored in underground salt caverns in the middle of a desolate area about 30 miles from Kingman.

Lander said wells would be drilled into the salt deposit, which he said was 10 miles long, 8 miles wide and 2 miles deep.

Dwain Boettcher, vice president of planning for Sempra Energy Resources, said limitations on natural gas transportation and storage in Southern Nevada and Arizona, along with projected increases in demand, have resulted in market conditions that make the project attractive.

"The additional natural gas supplies will help balance the region's escalating energy demands, especially those of electric generators, as well as provide the potential to help reduce future price spikes in the Southwest," Boettcher said.

Michael Morrell, president of Allegheny Energy Supply, said the project, with its north-south pipeline configuration, would be uniquely situated to increase shippers' and consumers' options for sourcing and shipping natural gas to the region.

"The increased storage and transportation capacity will enhance energy reliability at cost-effective prices," Morrell said, "which is good news for consumers and shippers of natural gas."

Lander said the open season closes Feb. 8, and that early response already has been received from serious players, although most bids usually don't come until nearer the end of the open season.

If the project is approved, Lander said three construction crews would be employed, with two beginning at each end of the pipeline and a third in the middle.