CASPER, Wyo. (AP) — Chicago's two largest natural gas distributors and several midcontinent power utilities expressed a desire to add more Wyoming natural gas to their supply.
But first, those users say, Wyoming needs to clear regulatory hurdles to ensure a steady supply, and producers in the state need to aggregate their production into just a few large delivery pipes to make the investment worthwhile.
"We offer you the Chicago market. That's where it is cold, that's where a lot of people are. That's the market," said Tony Compton, manager of marketing for People's Energy, an Illinois natural gas distributor.
Compton represented one of nearly a dozen natural gas distributor and "end-user" utilities who spoke before the Wyoming Natural Gas Pipeline Authority during its regular monthly meeting Tuesday.
The agency has also solicited input from natural gas producers in Wyoming and natural gas pipeline companies in a fact-gathering mission to understand how to better link Wyoming's vast natural gas supplies to profitable markets in the nation.
Compton estimated that less than 10 percent of People's Energy's gas supply comes from the Rocky Mountain states.
But the company wants to reduce the amount of gas it gets from Canada and tap the Rockies for about 35 percent of its supply, first through the proposed Bison pipeline project to connect Wyoming to the Chicago-bound Northern Border pipeline system.
"We have a huge position on Northern Border and that's why it makes sense for us to diversify our portfolio. We think it is a win-win situation to reach down into the Rockies to get some more supply," Compton said.
Natural gas production continues to decline in Louisiana, Oklahoma, Texas and the Gulf of Mexico as the producers in the Rockies increase flows. Industrial, commercial and residential customers tied to those traditional midcontinent supply regions must look elsewhere to replace those declining supplies, and the pipeline authority is introducing them to producers and pipeline builders in the Rockies.
Officials hope that by introducing the parties, they can partner in projects to build more pipelines out of the Rockies to meet the nation's growing natural gas demand.
Wyoming's state coffers closely follow the successes of the natural gas, coal and oil industries here.
But many producers in Wyoming are too small to make big investments or long-term commitments that pipeline companies need to build a pipeline.
Nicor Enerchange, a midstream marketing company in the midcontinent region, offered its services to help the pipeline authority provide an aggregation deal for such companies to help secure investments into new pipeline capacity projects.
"We are seeing decreased supplies within the midcontinent region. We need to get more gas from this (the Rockies) region," said Mark Rueff of Nicor Enerchange.
Rueff said the reason his company is not a big buyer of Rockies or Wyoming natural gas now is largely because of the uncertainty regarding production here. There are vast gas reserves in Wyoming, yet regulatory difficulties and fierce environmental litigation makes it difficult for producers to ensure a steady supply of gas.
"Permitting is still an issue," Rueff said. "A dependable, steady supply is the No. 1 issue for a distributor because they have to know the supply is going to be there."
Bryan Hassler, interim executive director of the pipeline authority, said the agency may support an aggregation effort.
The Wyoming Natural Gas Pipeline Authority took no action. Its next meeting is scheduled for Aug. 25 at the Wyoming Oil and Gas Conservation Commission building in Casper.
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