Natural gas pipelines proliferating Western region

WELD COUNTY – The completion of the second section of a planned 1,679-mile natural gas pipeline that will eventually send natural gas from Colorado and the Rocky Mountain region as far east as eastern Ohio will result in higher gas prices for Colorado businesses and residents.

And those higher prices, caused by delivery of natural gas to more markets and more competition for it, are expected to climb even higher as other new pipelines planned for the next few years become operational.

The Rockies Express-West pipeline that sends gas pumped from Colorado and Wyoming fields to eastern Missouri – a 713-mile portion that will become fully operational early this month – will have an immediate effect on Colorado heating bills in February, according to Skip Arnold, director of Energy Outreach Colorado in Denver.

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Arnold said changes in the market price for natural gas as a result of the availability of new gas in the Midwest will cause Colorado prices to rise by 6 percent in February over the same month a year ago, a month that would have seen a projected 12 percent decline in prices without the pipeline opening.

“I think that’s strictly driven by the Rockies Express differential and market that’s coming, and that’s going to get more as time goes on,” Arnold said. “It just means more gas is going to be leaving this region.”

Arnold, whose organization helps low-income people pay their energy bills, said Colorado businesses and residents had long enjoyed lower gas bills than much of the rest of the nation because Rocky Mountain gas production fields have been relatively “landlocked” with little of the product piped out of the region.

Arnold said electricity prices are also bound to go up because about half of the electricity in the state is produced by generators burning natural gas.

Mark Stutz, a spokesman for Xcel Energy, said the company has no financial interest in the Rockies Express pipeline and acknowledges that it will move gas prices higher. He said the discounted rate Xcel had been paying for its natural gas to deliver to its customers is going up now that other utilities outside of Colorado will be bidding on the same resource.

And that bump will be passed onto customers, Stutz said. “It’s not a right or wrong situation,” he said. “We understand the producers are going to maximize their profit.”

One of the largest

Allen Fore, a Rockies Express spokesman, said the $4.4 billion pipeline is “one of the largest pipeline projects of this kind in the last 25 years.”

When complete, the 1,700-mile pipeline will be able to deliver 1.8 billion cubic feet of gas each day.

“It’s clear there’s a need for more natural gas supply in the Midwest and on to the east,” he said.

Fore said the Rockies Express-West portion of the pipeline, which runs through Weld, Logan and Sedgwick counties before leaving the state on its way eastward, brought jobs and economic benefits to surrounding communities during its construction. He said the pipeline will continue to benefit local communities through property taxes and could be an asset when courting industries that need a reliable nearby gas supply.

Other companies are also planning to tap into the vast natural gas resources in the Rocky Mountain region, which holds some of the largest reserves in the nation. At least three companies intend to deliver Rocky Mountain natural gas to markets on the West Coast and points between.

“When you’ve got a Rocky Mountain region that says it has excess capacity, there’s a big supply differential and producers and shippers are going to figure out ways to move that gas,” Fore said.

Natural gas broker John Harpole, president of Mercator Energy in Denver, said the Rockies Express pipeline – which will be complete in June 2009 – will increase natural gas export capacity out of the Rocky Mountain region by 20 percent. With more markets to serve, the region’s natural gas producers will soon see prices for gas that equal those in other parts of the nation.

And while Harpole acknowledged that will mean a tougher time for Colorado’s poor to pay their utility bills, it will help bring down bills elsewhere.

“What we have to remember is that there are low-income folks in other states who will benefit from this,” he said.

Harpole said increasing the natural gas industry’s ability to tap into Rocky Mountain reserves is a good thing for the nation. “We’ve got a plentiful resource here that I believe we need to share with the rest of the country,” he said.