El Paso Corporation: Construction of Ruby Pipeline's Western Portion 'Slower Than Expected'

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Researched by Industrial Info Resources (Sugar Land, Texas)--On Wednesday, natural gas exploration and production and transmission company El Paso Corporation (NYSE:EP) (Houston, Texas) reported third-quarter 2010 net income of $142 million, up 112% from 3Q09 net income of $67 million.

El Paso's Exploration and Production segment reported quarterly earnings before interest and taxes (EBIT) of $261 million, compared to $88 million in the same period in 2009, due in part to lower operating costs and higher production volumes. The company's production volumes averaged 764 million cubic feet equivalent per day (MMcfe/d), compared to 732 MMcfe/d in 3Q09. Production from the company's Haynesville Shale assets grew from a net production of 43 MMcfe/d in 3Q09 to 130 MMcfe/d in the quarter ended September 30, 2010.

Industrial Info is tracking more than $2.4 billion in active projects belonging to El Paso Corporation and its subsidiaries. One of the company's major projects is the Ruby Pipeline, a 680-mile pipeline that will run from the Opal Hub in Wyoming to interconnects near Malin, Oregon, traversing Wyoming, Utah, Nevada and Oregon. The project, which includes four compressor stations, began construction on July 31. In a conference call regarding the company's performance, Jim Yardley, the president of the El Paso Pipeline Group, spoke of the progress on the project.

"We now have eight construction spreads working on Ruby, having added a spread in one of the more mountainous areas of Utah to complete that section before winter. That section, so-called Spread 2, is proceeding very well," said Yardley. "In General, construction is progressing very well on the eastern spreads and slower than expected on the western spreads in parts of Nevada and Oregon. On the western spreads, we've had some delays in obtaining cultural resource clearances. This, in turn, has restricted our construction activity there. We recently had over 150 archeologists in the field, and now the permitting process is improved. In Nevada and Oregon, we now have access to over half the right of way. We continue to get more released on a regular basis in Nevada, and in Oregon we're seeing approval in the permit-approval timelines. As part of this process, Ruby continues to work with the tribes and their concerns about cultural disturbances."

El Paso is targeting an in-service date of June 2011 for the project, which the company expects to run 10-15% over-budget. "The key variables will be weather this winter, the pace of getting final regulatory clearances and dealing with various construction restrictions due to fish and game habitat or nesting periods," said Yardley.

Information on the Ruby Pipeline and other El Paso Corporation projects, including more than $500 million in projects at the company's Elba Island LNG terminal in Georgia, can be found in Industrial Info's North American Industrial Database.

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