FERC approves Questar Overthrust's $41.8M Wyoming expansion project

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Related Companies Encana Marketing (USA) Inc Questar Corp. (STR) Questar Overthrust Pipeline Co Rockies Express Pipeline

Related Documents Energy Regulatory Filing (Ord/Opinion) Questar Overthrust Pipeline Co 8/3/2009, filed on 8/3/2009

Related Articles 6/8/2009 FERC staff issues favorable assessment of Questar Overthrust expansion 3/16/2009 EnCana Marketing contract fuels 300,000 Dth/d Overthrust expansion

FERC on Aug. 3 approved Questar Overthrust Pipeline Co.'s $41.8 million expansion project aimed at boosting the system's capacity to move Rocky Mountain supplies from Opal, Wyo., to Wamsutter, Wyo.

The project calls for constructing and operating a new compressor station at Point of Rocks, adjacent to Overthrust's transmission mainline in Sweetwater County, Wyo., and adding compression at the existing Rock Springs Compression Station in the same county. The expansion would add approximately 32,000 horsepower of compression, creating an additional 300,000 Dth/d of capacity needed to move gas from receipt points on the northwest end of Overthrust's system at Opal to an interconnection with Rockies Express Pipeline LLC's system on the east end of Overthrust's system at Wamsutter.

"We conclude that Overthrust's proposed facilities will enable the company to meet expanded market demand and will facilitate the transportation of Rocky Mountain gas supplies from Opal to Wamsutter," FERC said.

Questar held an open season in 2008 and subsequently entered into a firm transportation service agreement with EnCana Marketing (USA) Inc. for 300,000 Dth/d of incremental capacity with a 10-year term. According to Questar, EnCana agreed to pay a negotiated-rate reservation charge of $3.44091 per Dth per day, which is the already-approved Wamsutter Expansion reservation charge.

"Since the expansion is designed to service a new market, existing pipelines and their customers will not be impacted," FERC said. "The new capacity is fully subscribed and does not replace firm transportation service on any other pipeline. Further, the proposed expansion of capacity will not have any adverse effect on the applicant's existing shippers or services."

FERC said it approved the project "based on the benefits Overthrust will provide to the market and the lack of any identified adverse impacts on existing customers, other pipelines, landowners, and communities."

The proposed service will generate revenues of $12,387,276 in the first year, FERC said, and the total cost of service for the first year is projected to be $7,699,165. "Thus, net revenue will exceed costs by $4.6 million for Year 1," FERC said, adding that "the expansion reservation revenues will continue to exceed the cost of service by over $4 million annually through Year 3. Therefore, we find that Overthrust can construct and operate the project without subsidies from its existing customers."

"Although not explicitly requested by Overthrust, a predetermination that Overthrust shall roll the costs of the expansion project into the existing Wamsutter Expansion reservation rates is warranted absent a significant change in circumstance, since the projected revenues from the new compression facilities will exceed projected costs," FERC said.

Questar Overthrust is a subsidiary of Questar Corp. (CP09-76)