El Paso Corp. announced Wednesday that its subsidiary, Ruby Pipeline, LLC, has received more than 1.1 billion cubic feet per day (Bcf/d) of binding commitments from customers under 10- to 15-year contracts and is moving forward with the pipeline project, subject to regulatory approvals.
The Ruby Pipeline is an approximately 670-mile interstate pipeline that will extend from the Opal Hub in Wyoming to a pipeline interconnect at Malin, Ore., near California's northern border. The 42-inch diameter pipeline will have an initial design capacity of between 1.3 Bcf/d and 1.5 Bcf/d, depending on the final level of customer commitments, and will be in service by March 2011. El Paso is in discussions to obtain additional commitments for Ruby and plans to file a certificate application with the Federal Energy Regulatory Commission in January 2009.
The capital cost of the Ruby Pipeline will be approximately $3 billion, and El Paso has taken two significant steps to manage the project costs. First, it has signed purchase contracts with two steel mills for all of the pipe required for the project. In addition, it has executed incentive-based contracts with a consortium of three construction companies.
"Now that we have sufficient capacity commitments from customers, we in turn have committed to go forward with the Ruby Pipeline Project," said Jim Cleary, president of El Paso's Western Pipeline Group. "Ruby has proven itself as an attractive project for producers and end users in western states, and we are on track to have this much-needed pipeline capacity ready in less than three years."
El Paso will finance Ruby through a combination of free cash flow, project financing and other forms of capital, and does not plan to issue equity for this project. El Paso also may elect to bring in equity partners.
El Paso's committed backlog of new pipeline growth projects is now approximately $7 billion, including Ruby. These are projects that are all substantially fully contracted with customers and will be placed in service over the next five years.
For more information on the Ruby project, visit www.rubypipeline.com.
El Paso Corp. owns North America's largest interstate natural gas pipeline system and is one of North America's largest independent natural gas producers.