UPDATE 1-Kinder to expand natgas pipeline to serve Calpine

Mon Feb 11, 2013 4:50pm EST

Feb 11 (Reuters) - Pipeline company Kinder Morgan Energy Partners has signed an agreement with power producer Calpine Energy Services to deliver and store natural gas for power plants in Texas, Kinder said in a press release on Monday.

Kinder will spend about $30 million to expand its Texas intrastate pipeline system in south Texas to deliver gas to Calpine's Magic Valley Generating Station in Hidalgo County, just north of the Mexican border.

Kinder will provide 450 million cubic feet per day of transportation and 5 billion cubic feet of storage capacity to serve nine Calpine electric generating facilities.

The project will transport gas produced in the Eagle Ford shale play, located in south and east Texas, and other Texas shale plays, a Kinder spokesman said in an email.

Increased domestic shale gas production has lowered both gas and power prices in the United States since the price of gas mostly sets power prices.

"Ensuring the availability and reliability of natural gas supply is an important aspect of optimizing the value of Calpine's clean, efficient and flexible power plants," Bob Hayes, Calpine's vice president of natural gas trading, said in the release.

Kinder Morgan Energy Partners owns an interest in, or operates, roughly 46,000 miles of pipelines and 180 terminals.

The general partner of KMP is owned by Kinder Morgan Inc .

FILED UNDER: