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Published: Friday, 3/17/2006

Pipeline planners assure gas users prices would fall

BY JON CHAVEZ
BLADE BUSINESS WRITER
William 'Andy' Lang says the pipeline will help slow
 increases in prices. William 'Andy' Lang says the pipeline will help slow increases in prices.
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A proposed natural gas pipeline would bring Ohio lower-priced gas from the western United States and Canada even after the $350 million cost of building it, the sponsors said.

"Absolutely it would," insisted Patrick McGonagle, vice president of Somerset Gas Transmission Co., parent firm of North Coast Gas Transmission Co. LLC.

The gas supplies from Chicago to be tapped by North Coast are significantly cheaper than the benchmark prices from the Gulf Coast from which Columbia Gas of Ohio gets most of its supplies, he said.

So, even figuring in construction and transmission fees the pipeline still would mean lower-cost gas would be available in northern Ohio, he added.

Timothy Considine, a professor of natural resource economics at Penn State University, said that, if North Coast builds its pipeline, gas prices in Ohio almost certainly would be lowered.

"It is going to increase supplies overall," said Mr. Considine, a former pipeline worker. "So you would think that would lower prices, assuming everything is constant."

North Coast officials outlined their plans at a press conference downtown at Government Center. They propose to build a 30-inch-wide pipeline from Defiance to Canton, which could supply Columbia Gas and Dominion East Ohio Gas, as well as possible industrial customers or groups of homeowners in northwest Ohio.

Attending were Alan Schriber, chairman of the Public Utilities Commission of Ohio, Toledo Mayor Carty Finkbeiner, Oregon Mayor Marge Brown, and several Toledo city councilmen.

"Competition will help mitigate the run-up of gas from other locations," said William "Andy" Lang, president of North Coast, of Columbus.

If approved by state regulators, construction could start in 2007 and gas could flow through the pipeline by November, 2008, Mr. Lang said. Needed are several regulatory approvals as well as sufficient financial commitments in advance from enough customers.

A short connector would need to be built from Cygnet, Ohio, where the company owns land, to Defiance. But Mr. Lang foresaw no problems. "I've been at this four years already. We have $20 million already invested," he said. Mr. Lang said North Coast could obtain gas from major western sources in Texas, the Rockies, and Canada, all of which sell gas cheaper than the Gulf Coast.

Columbia Gas, the metro Toledo area's biggest gas utility, brings nearly 95 percent of its gas from the Gulf Coast. An official said the company's analysis shows North Coast could not provide cheaper gas once it adds on transmission and pipeline construction costs.

But Mr. Considine disagreed, although he said prices may dip later, rather than sooner. "But there will be competitive pressures from this new gas," he said.

For the North Coast proposal to work, it must have enough customers agreeing up front to purchase its heating fuel. If Columbia Gas and Dominion East decline, Mr. Considine said, industrial users may buy the gas, he said.

Electric utilities, chemical plants, and other industrial users may jump on the North Coast offer.

Mark Frye, an energy consultant with Palmer Energy Associates in Toledo who advises a bulk-buying group, said the coalition is extremely interested. The new pipeline should help lower area prices, he added.

But to connect to the North Coast pipeline probably would entail a new pipeline from the Findlay area to metro Toledo, at a cost ranging from $8 million to $80 million.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.



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