Kern River 2003 Expansion

FYI--Just in case you didn't get a copy of the announcement, below is the article from Inside FERC with the details of the filing at FERC of the previously announced expansion project to be completed and in-service by May, 2003. Kern River will more than double their capacity into California by adding 885,626 Mcf/d of capacity. There's also a related article in todays Gas Daily. gh

KERN RIVER SUBMITS $1.26 BILLION PROJECT TO DOUBLE SYSTEM CAPACITY
With its 2002 Expansion certificate in hand, Kern River Gas Transmission Co. last Wednesday filed
with the commission its next capacity ramp-up, which would more than double the capacity of its 922-mile
gas pipeline system from Opal, Wyo., to California. The 2003 Expansion would bring supplies to a region
of the country that "has experienced well-documented, severe energy shortages," Kern River said.
The $1.26 billion project would add 885,626 Mcf/day of capacity to the 845,000 Mcf/day that will be
available once the 2002 Expansion (CP01-31) is complete (IF, 30 July, 6), said the Aug. 1 application. To
accomplish this, the 2003 Expansion would add 634.3 miles of 36-inch-diameter looping in Wyoming,
Utah, Nevada and California and 82.4 miles of 42-inch-diameter looping of a segment owned jointly with
Mojave Pipeline Co.
The application also calls for a net increase of 163,700 horsepower in compression. The upgrade
includes the construction of three new mainline compressor units - the proposed Coyote Creek station in
Uinta County, Wyo., the Salt Lake station in Salt Lake County, Utah, and the Dry Lake station in Clark
County, Nev. Five existing compressor stations also would be upgraded, and the Daggett compressor
station would be reconfigured to compress only Mojave volumes.
Kern River also plans to build a new meter station under its existing certificate to interconnect Kern
River/Mojave facilities with the 30-inch-diameter Adelanto lateral proposed by Southern California Gas
Co. In response to a request from SoCal Gas, the new Kramer Junction meter station is designed to deliver
up to 500,000 Mcf/day by the planned Dec. 31 in-service date. Although SoCal Gas is committed to
provide only 200,000 Mcf/day of firm access rights from this interconnect, additional takeaway capacity
will be available on an interruptible basis, the application said.
Kern River reported that 18 long-term transportation service agreements have been entered into
with shippers. Following an open season, about 85% of the capacity is contracted for 15-year periods and
the remainder for 10-year periods, the application said. Based upon representations made by the expansion
shippers, nearly all of the capacity is projected to be used to serve existing and new power generation
markets in California.
By far the biggest customer for the capacity would be Reliant Energy Services Inc., which signed a 15-
year agreement for 200,000 Dt/day. The next two largest subscribers are Edison Mission Energy (127,500
Dt/day) and Mirant Americas Energy Marketing L.P. (90,000 Dt/day).
The expansion's proposed initial daily incremental rate on a 100%-load-factor basis, excluding fuel, is
70?/Dt for 10-year firm service and 56.8?/Dt for 15-year firm service. In addition, the 2003 Expansion
shippers would be responsible for paying a fuel in-kind reimbursement factor of 3.05% for volumes
transported from Wyoming to California; the rates would be lower for shorter trips.
As for supply, given the large volume of remaining reserves and the amount of drilling activity in the
Rocky Mountain region, production could increase by more than 1.5 Bcf/day over the next year and by
4.5 Bcf/day over the next five years, according to a report prepared for Kern River by Barlow and Haun Inc.
In addition to the gas available from processing plants directly connected to Kern River in southwest-ern
Wyoming, shippers have access to supplies from other regions via Northwest Pipeline Corp., Colorado
Interstate Gas Co. and Questar Pipeline Co. at the Opal/Muddy Creek market center, the application said.
Two additional interstate pipelines - Wyoming Interstate Co. Ltd. and Overthrust Pipeline Co. - an-nounced
related open seasons in June that could result in interconnects providing access to supplies from
the Wind River and Wamsutter basins, the pipeline noted.
To meet the project's May 1, 2003, in-service date, Kern River asked the commission to issue a prelimi-nary
determination on nonenvironmental matters by Feb. 1, 2002, and a full certificate by May 1, 2002.