Warren R. True
Pipeline/Gas Processing Editor
Two gas-pipeline hubs west of the U.S. Rocky Mountains are undergoing rapid development as major shipping points for current and future gas volumes from the area.
These hubs anchor major transportation systems moving gas both north and South along existing or planned large pipeline systems or east and west along expanding major systems.
The first part of this two part series (Part 1, OGJ, Oct. 1, pp. 79) assessed the significance of two major pipeline projects in the area which greatly expanded the ability of producers to move their gas north or south.
- The 81-mile Questar Pipeline Co. crossover was commissioned early last month. It now links the company's formerly separate 2,400-mile, east-west oriented segments.
- The TransColorado system, proposed in July, would connect Questar Pipeline's southern segment with gas-pipeline facilities in northwestern New Mexico.
Further, it would compete directly with the only existing north-south pipeline along the western Rockies, Northwest Pipeline Corp.
Pipeline hubs at Opal, Wyo., and Blanco, N.M., are experiencing a surge of activity as a result of increased drilling and producing in their areas. Each stands to be a major part of a system to move much formerly curtailed as well as new gas into east-west main lines.
PRODUCTION PICTURE
These two projects, oriented north-south as they are, and the facility expansions in Wyoming and New Mexico, offer hope to producers in the region for greater, more flexible transportation out of the area.
For some time, production of significant gas volumes in Wyoming and Colorado has been stymied by lack of pipeline access or by the onerous effects of "rate stacking" as gas moves through several pipeline systems to get to a main line.
This is particularly true for production along a north-south line running roughly from Lincoln and Sublette counties, Wyoming, through the counties of the Piceance basin along the western slope of the Rocky Mountains in western Colorado (Fig. 1).
The importance in terms of gas production of the counties in southwest Wyoming is shown by figures from the Wyoming Oil & Gas Conservation Commission for 1989 gas production.
Total statewide gas production for 1989 was 865.9 bcf. Of that total, approximately 88%, or 766.3 bcf, was produced in Lincoln, Sublette, Uinta, Sweetwater, Fremont, and Carbon counties of southwestern Wyoming.
The commission estimates that an additional 200-300 MMcfd was curtailed, much of it because of lack of pipeline capacity to transport it.
In Colorado, the same pattern appears.
The Colorado Oil & Gas Conservation Commission estimates that total state gas production for 1989 was 237.4 bcf.
Of that total, counties of the Piceance basin (Moffat, Rio Blanco, Mesa, and Garfield) produced approximately 56.7 bcf, or about 24%.
Adding that to the 45.2 bcf production for La Platta County in southwestern Colorado yields a total production for those major areas of 101.9 bcf, or about 43% of the state's gas production.
Again, Colorado's commission echoes Wyoming's in citing the large amount of gas, particularly along the Piceance basin, shut in for lack of pipeline capacity.
The two major gas-producing areas of Colorado--the northwest and southwest corners--are currently scenes of intense gas exploration, especially for coalbed methane supplies. An attractive tax credit for coalbed drilling ends on Dec. 31.
Colorado Oil & Gas Conservation Commission reports that Archuleta County, which had only 7.8 MMcf of gas production for 1989, is anticipated to have much higher production for 1990-91 as a result of coalbed drilling.
In northwestern New Mexico, in San Juan, McKinley, and Rio Arriba counties, increased drilling activity into coalseam gas (OGJ, Oct. 9, 1989, p. 49) has rendered inadequate the gathering and transportation systems out of that area.
The San Juan basin contains an estimated 88 tcf of methane in coal seams of the Fruitland (50 tcf) and Menefee (38 tcf) formations.
Coalbed methane production is from Fruitland coal seams. This coal contains as much as 600 scf methane per ton; gas-in-place (GIP) is as much as 35 bcf/sq, Mile.
Production rates of more than 10 MMcfd of gas and 2,000 bw/d have been reported for wells in the northern San Juan basin (OGJ, Oct. 23, 1989, p. 64).
New Mexico gas production for 1989 reached 860.9 bcf.
Complicating the physical lack of pipeline transportation facilities for much of this production capacity is the problem of "rate stacking" on many existing systems.
Ed England, Northwest Pipeline Corp.'s vice-president for processing, says that as a producer's gas moves through several systems to get to a main line transporter and ultimately an end user, each system's transportation rate (tariff) "stacks" on the previous systems' rates.
The more complicated the routing, the more expensive is the cumulative transportation cost and the less competitive the gas becomes.
The effect in terms of curtailing gas supplies is the same as if no pipeline existed from the producing field.
Heretofore, either lack of physical systems to gather and transport the gas or the incremental effects of rate stacking have kept much gas from moving. Or, when it did move, tended to offer limited access to markets.
Questar's north-south connection combined with the TransColorado pipeline increases producers' flexibility for moving gas north or south. In addition, producers are looking forward to one or two major pipelines taking gas to California by the end of 1991.
And by that time, the Trailblazer system out of southwestern Wyoming expects to achieve full open-access status, thus making eastern U.S. markets more attractive to producers.
OPAL HUB
Construction activities around Opal, Wyo., and Blanco, N.M., have been aimed to a great extent at remedying producers' problems. But they have also anticipated installation of one or both major Wyoming-California pipelines across Utah.
As decision time has neared for the building of either Kern River or WyCal, gas gatherers and transporters in the southwest corner of Wyoming have been engaged in activities to position themselves to pick up expected volumes.
For the most part, these activities have centered geographically on Northwest Pipeline's Opal gas plant.
This 425-MMcfd plant (Fig. 2) consists of a 250-MMcfd cold oil absorption plant and a 175-MMcfd turboexpander plant able to extract ethane. Liquids move from Opal by truck, rail, or a connection to Mapco Inc.'s gas liquids pipeline to the Gulf Coast.
Within a few hundred yards of this plant either Kern River or WyCal (or both) will initiate volumes into a system for transportation to California. (Summaries of these projects appear in the first article of this series.)
In the last 24 months, Colorado Interstate Gas Co. (CIG) has built 53.5 miles of 20-in. pipeline to connect the CIG system to the Opal plant (Fig. 3). Willbros Energy Services, Tulsa, was the contractor.
Gas for this connection is being transported from Enron's Big Piney gas field north of the Opal plant down Northwest's 30 and 16-in. lines.
CIG states that the primary motivation was a contract with Enron to move initially 50 MMcfd for delivery into Enron's Northern Natural Gas Co. system in Kansas and the Texas Panhandle. Contractually, gas volumes moving in the new pipeline will increase to 100 MMcfd by 1992.
Northwest Pipeline will soon begin installing a 20-in. line from its Moxa Arch gathering system to the Opal plant. It will be able to carry up to 150 MMcfd and parallel a currently used 16-in. line (Fig. 3).
According to Ed England, the line will provide a clean route for gas to the Opal plant, a route uncluttered by "rate stacking" along other lines into the plant.
In advance to installing this new line from Moxa Arch, Northwest revamped and simplified its gathering agreements with producers there.
Gathering along the Moxa Arch evolved with little planning, according to England. Both Northwest Pipeline and Questar Pipeline connected producers over the years, but systems crossed each other and some of Northwest's producers had connected to Questar and some of Questar's to NWPL.
In the end, he says, an agreement was worked out under which a producer connected to the nearest gatherer, regardless of which was the contractual gatherer, and the two pipelines balanced out at an exchange point in the field.
With "open access," however, producers indicated they no longer cared for this increasingly complicated arrangement.
After a period of negotiations, England says, Northwest Pipeline won most of the production along Moxa Arch especially from such large producers as Amoco and Union Pacific Resources.
Questar Pipeline retained some other production including its own.
So far as the physical facilities are concerned, England says that a good deal of crossover work has been taking place along with new producers being hooked up.
The significance so far as the development of Opal as an area pipeline hub is that gas can get to that hub more easily, thus encouraging more production into that major gathering system.
Another example of construction is in the nearby network being built by Presidio Oil Co. (Englewood, Colo.) to its Granger, Wyo., gas plant.
Presidio is currently installing 52 miles of 4, 6, 8, and 10-in. gathering lines from the Moxa Arch area to the Granger plant. The company says it projects an additional 35 MMcfd over the new line.
This is in anticipation of additional gas volumes to be produced in the area following the furious pace of drilling taking place.
Presidio also has recently commissioned new fractionation capacity at the Granger plant and expects to increase plant capacity in the near future from the current 105 MMcfd up to between 135 and 155 MMcfd. The plant is currently running at capacity, Presidio says.
Also, Western Gas Processors Ltd., Denver, completed in 1988 a 58-mile, 10-in. system along the Moxa Arch tying its Lincoln Road gathering system into its Lincoln Road gas plant south of Green River.
Current volumes are running at about 24 MMcfd in the plant which has a capacity of 45 MMcfd expandable to 60 MMcfd.
Gas in the Lincoln Road system is dedicated exclusively to CIG.
TRAILBLAZER ACTIVITY
Related to these changes is the recent move to increase the currently underutilized Trailblazer Pipeline taking gas eastward to the hub at Beatrice, Neb.
Natural Gas Pipeline Co. of America's (NGPL) Canyon Creek compressor station, adjacent Amoco Production Co.'s 275-MMcfd Whitney Canyon plant in southwestern Wyoming, is the initial delivery point for the Trailblazer system.
NGPL's James J. McElligott, vice-president for regulatory affairs, states that the Canyon Creek station has been operating under full blanket open access since Aug. 14, 1989.
The second and third segments, the Overthrust pipeline operated by Questar Pipeline and the Wyoming Interstate Gas Co. system (WIC, operated by Colorado Interstate Gas Co.), have petitions for open-access status pending before the U.S. Federal Energy Regulatory Commission (FERC) as part of rate-case settlement proposals.
Finally, the Trailblazer pipeline itself, from Rockport (Wyo.) station east to Beatrice, Neb., has also applied for open access as part of a rate-case settlement.
In late 1989, it accepted limited open access (under Section 311 of the Natural Gas Policy Act) and applied for a rehearing of the rate case seeking more satisfactory terms. Final settlement is expected to bring full open-access status.
This activity on Trailblazer is aimed at filling up the excess capacity on the system.
Upon certification in 1983, capacity on the Trailblazer portion was 353 MMcfd without compression. Early plans, NGPL states, envisioned some added compression so that capacity might have been increased to 525 MMcfd.
However that may be, volumes have run short of certificated capacity.
Canyon Creek from its 1983 opening through the first 8 months of 1989 averaged 52% of its capacity of 233 MMcfd before open access.
For the final four months of 1989, volume utilization was up less than 1% because the pipelines downstream of Canyon Creek were not operating under open access.
During the first 4 months of 1990, utilization dropped off more, to less than 40%, possibly due to down time at the Whitney Canyon plant.
Once all four segments of the Trailblazer system begin operating under open access, another piece of the transportation puzzle to move gas more efficiently and less expensively out of the area will have fallen into place.
NGPL knows the potential for gas production in the area and what it means for Trailblazer. It's no surprise, then, that the company almost immediately filed as another intervenor in the TransColorado project.
Gas that moves south on TransColorado into the Blanco area can then move west or east.
Gas that moves north from TransColorado into Questar's system, through its north-south connection with Clay basin and the northern section, can then move into its western markets off the northern segment or into Northwest Pipeline for U.S. Northwest markets. Or, gas can move westward through one of the pipelines to California, when one is built.
In other words, those would be volumes not moving east over Trailblazer.
And a great deal of gas is potentially available from the Piceance basin which would be served by TransColorado.
Regarding its intervention filing, NGPL denies any effort to stifle competition. It claims a desire merely to ensure all facts about gas transportation in the area are well known.
BLANCO HUB
What is true for the pipeline hub evolving around Northwest Pipeline's Opal hub in Wyoming is equally true for activity about 325 miles south around Blanco, N.M.
Whereas shut-in gas is motivating much of the activity in Wyoming along with the prospect of a major pipeline connection to California markets, in New Mexico much of the activity is being driven by the pace of gas drilling, especially in coalbed regions, as well as by the prospects of Western U.S. markets.
Northwest Pipeline will begin construction soon on a 30 in. x 0.325-in. W.T. X65 Grade, 33.9-mile extension of its main line from the Ignacio gas plant at Durango, Colo., to El Paso Natural Gas Co.'s (EPNG) Blanco, N.M., plant for an interconnect with EPNG (Fig. 4).
As part of the project, 5,500 hp of compression (Solar Centaur H) will be added at the La Plata compressor station adjacent the Ignacio plant.
Initial capacity of the line will be 300 MMcfd and will cost about $28 million.
Williams Field Services Co., like Northwest Pipeline a subsidiary of the Williams Cos., Tulsa, is currently installing a gathering and treating system (OGJ, Mar. 5, p. 28) to serve coalseam gas producers in the San Juan basin of Colorado and New Mexico (Fig. 4).
First service is anticipated by December with completion set for second quarter 1991.
The Manzanares coalseam gas gathering system will consist of 110 miles of 622 in. pipeline, 45,000 hp of compresssion, and an amine treating plant with capacity of 360 MMcfd. Construction costs are estimated to run $87 million.
First phase of the project is nearing completion. It consists of 16.5 miles of 22 in. x 0.281-in. W.T. X65 Grade and 6 miles of 10 in. x 0.188-in. W.T. X52 Grade pipe.
It involves added compression with rented units of 937 hp at Horse Canyon, N.M., and 937 hp at Manzanares.
The coalseam gas, says England, will have as its gathering point the Milagro C02-removal plant near Bloomfield, N.M.
Coalseam gas will be delivered into the interstate gas pipeline network near the Blanco hub providing a direct pipeline link with EPNG and Gas Co. of New Mexico.
England explains that coalseam gas gathering is a little different from conventional gas in that the coalseam gas contains no hydrocarbon liquids. It comes out of the ground with water and C02.
"There are problems in the gathering that are different for coal seam and conventional gas, so our strategy is to separate the two and that's why you see the Manzaneres system over the same areas that our conventional system serves," says England.
But getting gas out of the area poses major difficulties.
Currently, the only route is EPNG's 34-in. line from Blanco to near Gallup. Existing capacity is 1.5 bcfd, and the line is running under what El Paso says is a "capacity constraint": plenty of supply available but no spare capacity to carry it.
From the junction near Gallup, known as "Valve City," gas moves into EPNG's main line system to California.
El Paso has been active for more than a year trying to devise some relief for the bottleneck caused by this configuration.
In February 1989, EPNG proposed gathering and transmission facilities to handle anticipated coalseam gas in the area. The expected expansion was up to 500 MMcfd.
EPNG plans to build 14.2 miles of 30 in. x 0.320-in. W.T. Grade X70 pipeline loop on an existing 24-in. Ignacio, Colo., to Blanco, N.M., pipeline and another 11.9 miles of 34-in. pipeline loop on an existing 34-in. Blanco-Gallup pipeline.
The 11.9-mile section would consist of 6.5 miles of 34 in. x 0.302-W.T. Grade X70 pipe, 4.88 miles of 34 in. x 0.302-in. W.T. X70 pipe, 0.02 miles of 34 in. x 0.362-in. W.T. X70 pipe, and 0.50 miles of 34 in. x 0.435-in. W.T. X70 pipeline.
Further, the company will add a 3,580-hp, gas-turbine-driven centrifugal compressor at its Bondad, Colo., compressor station.
Anticipated construction costs approach $22.9 million.
In August 1989, EPNG filed an additional application with the FERC to expand its main line system from northwestern New Mexico to California by as much as 600 MMcfd (Fig. 5 and accompanying box). The $201 million project would add 240 miles of 30, 34, 36-in. loop and almost 65,000 hp of compression along with upgrading and restaging of existing compression (OGJ, Aug. 14, 1989, p. 18).
It would boost EPNG's delivery capacity to California to about 3.5 bcfd from 2.9 bcfd. Systemwide, Its current capacity is about 3.9 bcfd.
EPNG stated the project was compatible with the Mojave Pipeline proposal in which it is a partner.
Connection for the additional capacity would be near the Topock, Ariz., delivery point with existing utility systems of Pacific Gas & Electric Co. (PG&E) and Southern California Gas Co. (SoCal) as well as with facilities to be constructed and operated by Mojave Pipeline Co.
Last month, EPNG combined these two projects into one filing with the FERC for an optional expedited certificate (OEC). In this process, the filing company assumes all financial risks of a project in return for expeditious handling by the commission.
In its Sept. 17 filing, EPNG cited the current Middle East crisis and the spectre of undependable foreign oil in its request for approval of its pipeline plans.
Transwestern Pipeline Co., subsidiary of Enron Corp., Houston, will install compression at its Blanco plant and construct 100 miles of 30-in. pipeline from near the plant to its main line near Thoreau, N.M. The expansion will accommodate up to 520 MMcfd and cost an estimated $90 million.
In addition, Transwestern plans to construct on its main line a $160-million expansion of 200 miles of 30-in. loops along with minor modifications at compressor stations from its intersection with the San Juan lateral to the Arizona-California border.
This expansion will accommodate an additional 340 MMcfd on the main line system (OGJ, July 30, p. 36).
Target markets are in northern California, said Transwestern, as well as southern.
The San Juan lateral expansion is supported with transportation contracts for 200 MMcfd by Southern California Gas Co.; Sunrise Energy Co., for 50 MMcfd.; and Pacific Gas & Electric Co., for 213 MMcfd. The main line expansion is anchored by PG&E for 213 MMcfd and Sunrise for 50 MMcfd.
Transwestern expects to file for these projects with the FERC this month.
But some San Juan basin producers may get some more immediate relief from a plan proposed last month by Gas Co. of New Mexico (GCNM).
GCNM has offered shippers already connected to GCNM and its Sunterra gas gathering systems the opportunity to nominate volumes amounting to 80 MMcfd for movement from San Juan basin to EPNG's or Transwestern's main line.
The interconnection lies about 35 miles southwest of Albuquerque on GCNM's 16 in. Rio Puerco lateral in Valencia County.
Under the plan, GCNM will install 11,900 hp of compression to enhance its main line transmission system. San Juan basin volumes would move through the main line originating in San Juan County southeast to the Rio Puerco interconnect.
Phase 1 would add 1,200 hp for additional capacity of 20 MMcfd on the Rio Puerco lateral.
This phase could be in place by the beginning of next year, depending only on the delivery of a clean burn unit for the compressor, according to Ron Grossarth, GCNM director of market development. No environmental permits are anticipated.
Phase 2 would bring in 10,700 hp of additional and new compression to handle 60 MMcfd more gas. At Rio Puerco, 1,200 hp would be added with one Saturn.
At GCNM's "Santa Fe junction" near Bernalillo, 6,900 hp of new compression would be installed with one Centaur and two Saturns. And at Cabezon, a point some 20 miles up the main line from Albuquerque, two Saturns will be installed to add 2,600 hp of new compression.
Grossarth states that Phase 2 will require environmental permits. That, in addition to construction for new compression, will push completion of this phase to third quarter 1991.
He states that the advantages of GCNM's plan are timing, and that it allows San Juan basin producers to bypass the EPNG bottleneck at Valve City and provides a way to get into Transwestern's system. Project cost is estimated at $9 million to be paid for by a "facilities recovery charge" paid by shippers who sign commitments to use the new facilities.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.