Kremmling, Colorado – Confluence
Energy, a Kremmling-based company using beetle
kill wood to produce pellets for home and commercial
heating, suggests pellets will soon become more
economical to heat homes in Colorado than even natural
gas. “This new competitiveness is due”, states Phelps
Lane, a Director of Confluence Energy, “to the
completion of the Rockies Express Pipeline, among other
factors.” The initial estimates from analysts and
experts on natural gas price movement after the pipeline
is completed for Colorado consumers vary widely (10-100%
increase), but there is consensus that this new pipeline
means increased prices for Coloradoans.
A new natural gas pipeline, stretching from Weld
County, Colorado to Brown County, Kansas, opened on
January 12th, 2008, according to Rockies Express
Pipeline, LLC. The pipeline – a joint venture
between Kinder Morgan Energy Partners, Sempra Pipelines
& Storage, and ConocoPhillips – is a proposed
1,679-mile gas pipeline that, when finished will deliver
rocky mountain gas to new markets as far east as
Ohio. The Company is currently contemplating an
eastern extension to New Jersey, and is soliciting
market interest.
As a producer-state, Colorado has traditionally
enjoyed an abundance of natural gas, resulting in
relatively inexpensive heating fuel for homes and
businesses. Prices have been depressed due to lack
of sufficient infrastructure to deliver Colorado
production to larger markets. With its ability to
transport 1.8 billion cubic feet of gas per day, this
pipeline expands the market for Colorado natural gas and
will fetch higher market prices. This added export
capacity amounts to an approximate 30% increase in
Colorado gas bound for other markets.
“We expect this to be yet another factor making our
stable, sustainable and clean fuel more attractive, for
both businesses and residential consumers, based on both
an absolute price comparison and comparative price
volatility” notes Lane. According to US Department
of Energy – Energy Information Administration data, the
volatility of Colorado Natural Gas prices for
residential consumers has been $2.65 per thousand cubic
feet, or about $0.26 / Mmbtu i. “Based on our
projections, our forward price volatility should be less
than $6.50 per ton, or about $0.040 / Mmbtu”, which
amounts to an 85% reduction in price volatility based on
currently available data.
Confluence Energy is the
largest manufacturer of wood pellet fuel in the Rocky
Mountain Region. We are committed to utilizing
immediately available biomass and add significant value
with our process to provide a meaningful, sustainable
energy solution. Our vision is to be a part of a
national-scale solution to the energy problem faced by
Americans.
i Measured by 1 standard deviation for
data from January 1989 to October 2007. |