Firm Leaves Wyo.-Calif. Pipeline to Competitor

Coastal Corp. has scrapped plans for a $600-million pipeline that would have carried natural gas from Wyoming to oil producers and utilities in Southern California.

Coastal Chairman Oscar Wyatt Jr. said at the Organization of Petroleum Exporting Countries meeting in Vienna on Tuesday that the WyCal project was abandoned because of fears of an economic slowdown and tough competition from a nearly identical pipeline proposed by a subsidiary of Tenneco Inc. “They simply outdistanced us on this one,” he said.

Coastal spent more than $150 million on pipe, compressors and right of way. The company should lose no more than $8 million to $10 million on the scrapped venture because it can sell the pipe and other equipment or use it on another Coastal project, Wyatt said.

Coastal and Tenneco had stuck by plans for the parallel pipelines for the last year, despite analysts’ claims that the market for gas in California was not big enough to support both projects.

Both companies fought for approval from federal regulators, lined up customers and insisted construction would begin this month. But Tenneco’s larger project and firm customer contracts apparently doomed WyCal.

“It appears that from a business standpoint, Coastal just didn’t feel like it had the nod,” said Carol Freedenthal, a Houston natural gas consultant. “Reality set in and they said, ‘Wait a minute, we’ve got a problem.’ ”