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National Fuel proposes $700 million gas pipeline

National Fuel Gas Co., seeking to capitalize on the growing demand for natural gas along the East Coast, is proposing to build a roughly $700 million pipeline that would stretch for 324 miles from southeastern Ohio to Corning.

The pipeline project, which would be the biggest in National Fuel's history, would carry natural gas produced in the Western United States that was shipped eastward through the Rockies Express pipeline that is expected to end in Clarington, Ohio, southwest of Pittsburgh.

The proposed National Fuel pipeline, which the company is calling the "West to East Project," would then link with the Rockies Express pipeline and carry gas farther east to link up with the Millennium Pipeline in Corning.

"We've been looking for opportunities in the pipeline segment," said Julie Coppola Cox, a National Fuel spokeswoman. "It's the kind of place where pipelines need to be located."

But National Fuel officials also noted that it was far from certain that the pipeline project would be built, since the company would need to obtain commitments from customers to use the pipeline's capacity and win regulatory approval before construction could begin.

In addition, the National Fuel proposal is one of about six pipeline projects that are on the drawing board to link up with the Rockies Express pipeline in Ohio and then carry natural gas to other Eastern markets.

"Certainly not all, or most, of those projects are going to move forward," said David F. Smith, National Fuel's president and chief operating officer.

But Smith said he believes National Fuel's proposal has some strong advantages, including a route that would travel along existing rights-of-way for about 75 percent of its length, reducing costly negotiations over access to property. Portions of the route would run through land that National Fuel's oil and natural gas drilling business controls.

In addition, the route moves near ample natural gas storage fields, providing a potential destination for some of the gas the pipeline might carry.

National Fuel, which currently is building a 77-mile extension to its Empire State Pipeline between Victor and Corning, did not disclose a timetable for building the extension, although it is certain to be at least three or four years down the road. The pipeline would be able to carry about 550 million to 750 million cubic feet of gas each day and would cost $630 million to $725 million, Smith said.

National Fuel surveyed potential customers of the proposed pipeline and found that the level of interest was encouraging, Smith said, although the company would want firm commitments from customers for much of the pipeline's capacity before proceeding with construction.

The National Fuel proposal also faces competition from other major pipeline projects, including a 375-mile extension with a capacity of 1.5 billion cubic feet of gas per day proposed by the operators of the Rockies Express pipeline. That extension would run from Clarington, Ohio, to Princeton, N.J., and open in 2011.

The Williams Cos., a Tulsa-based pipeline company, also has proposed a 250-mile "Rockies Connector Pipeline" from Clarington to York County, Pa. That would carry about 688 million cubic feet of gas per day and could be open by late 2010.

The Rockies Express pipeline, being built by KinderMorgan Energy Partners, Sempra Energy and Conoco Phillips, will run for 1,678 miles and cost $4.4 billion to build. The stretch of the pipeline from western Colorado to Missouri is expected to open in January, while the remaining portion of the route to Ohio is scheduled to open at the end of next year.


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