Market conditions and environmental requirements for the Rockies Express Pipeline have increased project costs, but the first segment of what the owner calls the largest natural-gas pipeline built in the U.S. in 25 years is now in service, and construction has begun on the second.

Rockies Express Pipeline LLC Project is largest gas line in 25 years.

Houston-based Associated Pipe Line Contractors Inc. was recently awarded a contract to install 67.8 miles of pipeline in Indiana for the $5.6-billion interstate Rockies Express Pipeline (REX) and is scheduled to begin work this month.

The original estimated cost of the 1,679-mile-long project was $3 billion. But cost increases for materials, labor and construction equipment since planning began in 2005 have touched all phases of the project. Negotiating provisions of the final environmental impact statement took longer than anticipated and requirements for restoring land boosted costs for the entire REX project and have impacted certain project completion dates, say officials of the joint venture developing the pipeline.

“While it is still too early to estimate the precise cost impact, Kinder Morgan Energy Partners believe that the cost increase will be no more than 5% to 10% of the total REX project of approximately $5 billion,” says Allen Fore, REX spokesman.

On May 30, the Federal Energy Regulatory Commission approved REX’s application to extend the Colorado-to-Missouri pipeline through Illinois, Indiana and Ohio. However, REX was required to adopt some variations to its proposed route to minimize the pipeline’s impact on the environment before construction can begin later this year, according to FERC officials.

As a result, most of the new pipeline will follow existing pipeline easements, cutting down on potential environmental issues as well as limiting delays or lawsuits from property owners, according to KMP officials.

Houston-based KMP is overseeing project construction and will operate the pipeline when completed. The entire project is a joint venture of KMP; Sempra Pipelines and Storage, a unit of San Diego-based Sempra Energy; and ConocoPhillips.

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Rockies Express Pipeline LLC

When completed, the 42-in.-dia. pipeline will transport 1.8 billion cu ft per day of natural gas from the Rocky Mountain supply basins to markets in the Midwest and the East. The project will provide an outlet to the East for the region’s natural-gas supply that has normally had outlets only to western markets.

The overall pipeline project is completed and operating through eastern Missouri, says Fore. Pipeline construction through Lebanon, Ohio, should be completed by the end of this year.

The entire pipeline is being built in three segments. The first, REX-West, starts in Cheyenne, Wyo., and stretches into eastern Missouri. From there, the line, now called REX-East, will run to the Lebanon hub in western Ohio. That portion is expected to start operating in January. The final segment, running from Lebanon to Monroe County, Ohio, is expected to be in service next June.

“This project is particularly important now that the U.S. is facing an energy crisis,” said Scott Parker, president of Kinder Morgan’s natural gas pipelines. “We now must focus on completion of the project’s final segment that will move natural gas further east.”