Questar Pipeline, a subsidiary of Salt Lake City-based Questar Corp., has turned the spigot on at its new $50 million natural gas pipeline hub in northwestern Colorado -- a facility that will help Utah and its neighboring states play an increasingly important role as natural gas suppliers to the nation.
The White River Hub, which Questar built in a joint effort with Enterprise Products Partners of Houston, now links together six natural gas pipelines and is expected to benefit consumers east and west of the Rocky Mountain region by helping bring increasing supplies of natural gas to their doorsteps.
Questar also hopes to enhance the ability of natural gas producers to sell their production by setting up a "regional pricing point" where buyers can acquire the natural gas they need and arrange for its transport, said Questar Pipeline Chief Executive Allan Bradley in statement announcing the White River Hub was open.
Although natural gas producers in Utah, Wyoming and Colorado are expected to benefit, it likely will be a different story for Utah consumers, who eventually may end up paying a bit more to warm their homes and run their hot water heaters as a result of the new pipeline connections at the hub.
"All things being equal, it is reasonable to expect that Rocky Mountain prices will go up a little bit" now that the White River Hub is operating, said Kobi Platt, an economist at the Energy Information Administration in Washington, D.C.
For decades, Utah and its neighboring states were considered one of the country's natural gas backwaters. Rich in fossil fuel, the region nevertheless lacked the pipeline capacity to get much of its natural gas to growing markets in the Midwest and along the West Coast, where gas was in high demand.
As a result, a natural gas bubble developed in the region with excess supply holding down prices. Utah consumers benefited and over the years paid as much as 35 percent less for natural gas than their counterparts in other areas of the nation.
In recent years, however, a number of new pipeline projects helped narrow that price gap. Statistics provided by Bloomberg News indicate that natural gas produced in the Rocky Mountain states on average sold at a 32 percent discount to the average national price in 2007. So far this year, it has been selling on average at a 20 percent discount.
"We saw prices in the Rockies close a little the past 12 months after the Rockies Express Pipeline came on line," Platt said.
The Rockies Express carries natural gas from Wyoming and Colorado into Missouri but plans call for it eventually to be expanded another 600 miles so it can serve customers in Ohio. Questar's White River Hub now provides Utah natural gas producers with easier access to the Rockies Express and other long-haul pipelines.
The White River Hub, consists of 4 miles of 36-inch diameter pipe and 7 miles of 30-inch diameter pipe plus metering facilities. It is capable of transporting 2.5 billion cubic feet of natural gas per day,
As part of its involvement in the White River Hub, Enterprise Partners by the end of the year is expected to complete an expansion of its natural gas processing facilities in the area . Those facilities remove butane, propane and other "liquids" from natural gas in preparation for the fuel to be placed in pipelines for transport, Enterprise spokesman Rick Rainey said.
