Coastal Scraps Plan for Gas Pipeline to California

Coastal Corp. abandoned a proposed $665-million pipeline that would have carried natural gas into California from Wyoming, leaving a rival pipeline proposal the apparent winner in a high-stakes race to meet the growing gas needs of the state’s oil producers and utilities.

Oscar S. Wyatt Jr., chairman of Houston-based Coastal, said through a spokesman that the decision was based on fears of an economic slowdown and tough competition from the Kern River Gas Transmission Co.’s proposed $900-million pipeline, a venture between Tenneco Inc. and Williams Cos.

Industry observers said the market for natural gas transmission capacity was not big enough to support both pipelines and that WyCal lost because by aiming at serving utilities, it focused on the wrong segment of the market.

WyCal’s approach made less sense following the Iraqi invasion of Kuwait, analysts said.

“It basically solidifies the move by Kern River and (Kern’s partner) Mojave (Pipeline Co.) to bring their lines into California,” said Frederick John, senior vice president at Southern California Gas Co. “The marketplace is speaking.”

The Kern River project is scheduled for completion in 1992.