Kinder Morgan, Calpine Plan to Build Natural Gas Pipeline to Calif.

HOUSTON â€”  Kinder Morgan Energy Partners and Calpine Corp. plan a $1.7-billion pipeline that could deliver natural gas to energy-starved California as soon as 2003.

The line, which requires federal approval, would be able to move 750 million cubic feet of natural gas a day, and may eventually be expanded to move 1 billion, the companies said. California, which is in the midst of an electricity shortage, is dependent on natural gas to fuel many of its power plants.

Calpine, a San Jose-based power plant developer, has committed to ship 400 million cubic feet a day on the Sonoran Line for 20 years. When complete, it would carry enough gas to generate 9,000 megawatts of power, Calpine spokeswoman Katherine Potter said. A megawatt can light about 750 U.S. homes.

“This should work out well for both companies,� Merrill Lynch analyst Donato Eassey said. “You don’t want to build a pipeline without customers, and you don’t want to build power plants without fuel.�

The Sonoran Line would begin in the San Juan natural gas fields in northern New Mexico and terminate at Antioch, just east of San Francisco, the companies said.

Construction won’t begin until Kinder Morgan, a Houston-based natural gas pipeline company, gets enough customers and wins regulatory approval.

California consumes as much as 9 billion cubic feet of natural gas a day, said Rob Christensen, First Albany Corp. energy analyst. Gas-fueled power plants proposed in the state could burn an additional 2.8 billion cubic feet a day within two years, he said.

The pipeline would compete with pipelines of Houston-based El Paso Energy Corp. The Federal Energy Regulatory Commission is reviewing accusations by the California Public Utilities Commission that El Paso has manipulated the state’s natural gas market, which El Paso has denied.

California natural gas prices have averaged $13.09 per million British thermal units this year, nearly quadruple the $2.71 average in the year-earlier period. (One million BTU is the standard measure for large trades and is roughly equivalent to 1,000 cubic feet.) The average gas price on the New York Mercantile Exchange during the period was $5.95, up from $2.73 last year.

In New York Stock Exchange trading, Calpine shares fell 96 cents to close at $55.96 and Kinder Morgan Energy Partners fell $2.55 to close at $67.50. Both stocks have risen more than 20% this year.