Questar's ( STR) Questar Overthrust Pipeline finalized a 20-year capacity lease with Kinder Morgan Energy ( KMP) and Sempra ( SRE) Pipelines & Storage.

The lease covers up to 625 million cubic feet of natural gas per day. Under the capacity lease, Rockies Express -- a venture of Kinder and Sempra -- can request Overthrust to expand its system up to 1.5 billion cubic feet (Bcf) per day upon mutual agreement of pricing terms.

The agreement also allows Overthrust to extend its system from the Kanda Station, near Rock Springs, Wyo., by adding compression and building 77 miles of 36-inch-diameter pipeline to an interconnection with Rockies Express (Entrega Pipeline) at the Wamsutter Hub. As a result, Overthrust shall become the westernmost segment of Rockies Express, providing seamless transportation from the Opal Hub in western Wyoming and other Rocky Mountain producing basins to eastern Ohio.

By using the Overthrust Pipeline asset, the company shall be able to improve returns on capital and generating new earnings from its pipeline business. The company also provides shippers on Rockies Express with access to more than 3 Bcf per day of supply from the Opal hub.

The Overthrust expansion to Wamsutter is expected to cost more than $200 million and is scheduled for completion by December 2007.
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