Arizona Natural Gas Pipeline is Work in Progress

For now, much of the 260 miles of steel green pipe sits next to a trench that rolls over desert hillsides, providing a curiosity for people traveling along Interstate 17 and the perimeter of the Valley.

Come this fall, the $711 million Transwestern Pipeline Co. line should be buried and bringing natural gas pumped from New Mexico and Colorado to power plants making electricity for Phoenix.

More than 1,000 workers have trenched, welded, X-rayed, coated and buried about 140 miles of pipe from Interstate 40 in northern Arizona to Coolidge.

The pipeline has created controversy in Pinal and Yavapai counties and Buckeye because of its proximity to developments, and Transwestern is still negotiating with a few holdout private landowners.

Energy regulators, though, strongly support the line because until now, just one company had controlled the flow of natural gas to the region. Officials hope the line will take pressure off rising electricity prices.

"It was the first time we gave preapproval to such a project, agreeing in concept that the pipeline was needed," said Mike Gleason, chairman of the Arizona Corporation Commission. "We were very much in favor of it. We want the gas here to power production plants so we'll have the power here in Arizona."

Currently, fuel for power plants in Arizona is shipped through a network of lines built by El Paso Gas Corp. Those lines date to the 1930s.

It's too early to predict what the second line could do to utility bills for Arizona Public Service Co. and Salt River Project, the two biggest customers signed up to buy gas from the line.

Natural-gas prices have been rising steadily, pushing up the price of electricity. Both the Transwestern and El Paso lines act simply as delivery services, connecting utility customers with companies drilling gas in different regions.

"Competition with multiple pipes is better, and we have access to less-expensive natural gas now," said Tom Carlson, fuels director for APS.

Many contracts that APS holds to buy gas from companies at the other end of the El Paso line require that a certain amount of the gas come from Oklahoma and Texas, where prices are higher than in the Four Corners region where gas is pumped from New Mexico and Colorado, he said.

"The Transwestern pipeline has access to San Juan (Basin) gas more so than the El Paso line does, and that is lower-cost natural gas," Carlson said. "That has economic value as well."

Any savings the utility is able to make on gas purchases gets passed directly to electricity customers, as are all gas expenses, he said.

By October, the Transwestern line should be delivering fuel to the APS RedHawk Power Station, west of Phoenix, near the Palo Verde Nuclear Generating Station. By November, the line should be complete to the Sundance Generating Station near Coolidge.

SRP not only will buy gas from the line for its Desert Basin Generating Station in Casa Grande and Santan Generating Station in Gilbert, but the company is planning three more natural-gas facilities southeast of the Valley around the line, spokesman Scott Harelson said.

Both APS and SRP buy power from independent natural-gas plants that will benefit from the line. In many cases, the utilities supply the gas for the plants when they are buying the electric output, said Greg Patterson, director of the Competitive Power Alliance, which represents many independent energy producers.

"That's huge," he said of the cost benefits of the new line. "Those costs get passed directly to Arizona consumers."

The line also provides a more secure supply of fuel to the region, he said.

Transwestern Pipeline Co. is a branch of Dallas-based Energy Transfer Partners, a publicly traded partnership that reported profits of $110 million a month for the first three months of this year.

An enormous project