SoCal Gas Ends Opposition to Wy-Cal Project : Signs Option to Buy Space on Pipeline

Wy-Cal Pipeline Co.--the underdog in the race to build a natural gas pipeline into California--got a boost Monday when Southern California Gas Co. agreed to drop its opposition to the project and signed an option to buy space on the pipeline.

Wy-Cal, which has proposed a 1,000-mile, $665-million pipeline from Wyoming to Kern County, said SoCal Gas had agreed to an option to buy space to move no less than 75 million cubic feet a day of gas on the pipeline, the maximum capacity of which is 650 million cubic feet a day, over the next 20 years.

The announcement comes a week after Wy-Cal announced that Pacific Gas & Electric Co. had acted on its option to buy 50 million cubic feet a day on the same pipeline over 20 years. As a result, PG&E; got an option to buy up to 25% of WyCal.

‘An Ongoing Contest’

The announcements apparently rejuvenate the Wy-Cal project, which had fallen behind rival Kern River Gas Transmission Co. in its bid to build a pipeline from the Rocky Mountains.

Wy-Cal also has a letter of intent from Southern California Edison to transport 50 million cubic feet of gas a day for 15 years.

“It’s still an ongoing contest . . . (but) it reaffirms that Wy-Cal is still a viable contestant in what has been called the gold rush to California,” said Ellen Beswick, editor and publisher of the industry newsletter Natural Gas Intelligence in Washington.

The two projects and several others are competing for a share of the expected strong market for natural gas in California.

Wy-Cal has an added advantage over Kern River: a certificate from the Federal Energy Regulatory Commission. Kern River’s application with FERC is pending.

If SoCal Gas exercises its option with Wy-Cal, it can buy a portion of the pipeline’s California facility after 20 years. SoCal has a similar agreement with Kern River, said gas company spokesman Richard S. Terrell.

Previous Agreement

A Kern River spokesman said his project had customers interested in more than 800 million cubic feet a day, including firm commitments for 180 million cubic feet a day.

SoCal Gas previously agreed to move 150 million cubic feet a day on the Kern River pipeline and 200 million cubic feet a day on the Altamont pipeline from Canada that would connect with the Kern River system.

In keeping its options open with both competing pipelines, SoCal Gas “is just hedging (its) bets now,” Beswick said.