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Opening of Rockies Express Pipeline Signals Higher Natural Gas Prices in Colorado
Date: 28. 01.08
Contact Person : Phelps Lane, 720-920-9286

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.

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