Bronco Pipeline

The news today in the Rocky Mountain energy patch is the Spectra's proposed new pipeline, called the Bronco Pipeline. As I understand it, it will take natural gas from Meeker or Opal as the supply terminus of the line and move natural gas to the west coast, nominally the Malin Hub on the PG&E System in Oregon. This follows onto proposed extensions by various companies of the Rocky Mountain Express Pipeline to various points on the East Coast.

All of these projects are important because they move natural gas produced in the Rocky Mountain Region to markets for that gas. Energy development in the Rocky Mountains has always lagged, primarily because the price of the energy produced in the Rocky Mountains has almost always been low relative to that produced in other parts of North America. Not only has the price of the energy been relatively low, but the cost of producing it has been relatively high.

While the cost is high for a number of reasons, the low price of the energy is simply that the Rocky Mountians do not have much of a market for that energy. The local market is pretty small relative to the amount produced. As a case in point, most of the natural gas produced in the Rocky Mountains must be transported to the west coast or to the midwest to be used. So pipelines are very important. And we don't have enough of them, so plans for more of them are always to be encouraged. Particularly for those of us who build them.

The Barnett Shale around Dallas, Texas has become the hottest play in the United States, not because the resource is better than those found in the Rocky Mountains, but for many of the reasons that have held down Rocky Mountain production.

First of all the gas is accessible to strong natural gas markets. It can be moved to Gulf Coast or midwest markets without a need for costly new pipeline capacity. Secondarily, the local infrastructure is friendly to natural gas production. Plans for new production are met with a positive reception rather than hostility. As a producer, if you are going to get lower prices for your product and it is going to cost more to make your product, you don't really want to be everyones' enemy as well.