SALT LAKE CITY — Questar Corp. (NYSE:STR) announced several growth initiatives to address the western U.S.'s need for expanded electric-power generation and natural gas transportation and storage services.

In a national teleconference, Questar officials said the initiatives "will capitalize on booming energy demand in the West." The company plans to:•  Expand the interstate transmission system operated by Questar subsidiary, Questar Pipeline Co.

• Construct a salt-cavern storage facility near the city of Evanston in southwestern Wyoming.

• Make Questar Pipeline a major trading "hub," offering a variety of services to shippers,  marketers and interstate pipelines.

• Enter the wholesale power-generation business through an alliance with Sunlaw Energy Corp., a private, California-based developer.

Questar President and Chief Operating Officer Keith Rattie said "These new initiatives are complementary and part of a broader strategy. Taken together, they will drive future earnings to a higher level and make Questar less dependent on rising commodity prices for sustained double-digit earnings growth."

D.N. Rose, Questar Pipeline president and chief executive officer, said the company is holding an "open season" to confirm support for expanding its core pipeline system, which serves gas-producing basins in Utah, Wyoming and the western slope of Colorado. The system currently has a daily capacity of 1.4 billion cubic feet. Rose said the open season will determine the optimal size of the proposed expansion, preferred in-service dates, and receipt and delivery points shippers would utilize. Depending on customer response and federal approval, the expansion could be completed by Nov. 1, 2002.

Rose said the company also is holding an open season for the salt-cavern storage facility. He described it as "a high-deliverability storage facility," which has been under development for several years. Each of four caverns will hold up to 3.5 billion cubic feet of gas, which could be cycled up to 12 times per year. 

Questar believes the facility is ideal for peaking power and other flexible services, which rely on immediate delivery of supplies. "This will make high-deliverability, multi-cycle, salt-based storage available for the first time for customers connected to interstate pipelines that transport gas out of the Rockies," Rattie said. Depending on market support, Rattie said the facility will begin operation by 2004.

Questar Pipeline recently acquired contractual rights for its salt-cavern facility from Beta Energy Corporation and Energy R&D LLC. Beta Energy initially brought the salt-cavern project to Questar Pipeline in the mid-1990's. Beta Energy had located a salt formation that looked promising for natural gas storage and subsequently acquired leases for the project. Beta Energy had also identified prospective brine-disposal zones, negotiated a water-supply contract and presented the project to local and state permitting authorities. Beta Energy also developed a project feasibility-testing program, which has been successfully implemented. 

Questar, Beta Energy and Energy R&D LLC  had a joint-development agreement for the salt-cavern project. However, the recent acquisition by Questar Pipeline removes Beta Energy and Energy R&D LLC from development. Beta Energy Corporation and Energy R&D LLC focus on natural gas storage and compressed-air-energy storage projects throughout North America.

In conjunction with the pipeline expansion and storage projects, Questar is moving forward with plans to make Questar Pipeline a major trading hub. Rose said the pipeline system already has many of the attributes of a major hub, including abundant supply, multiple pipeline interconnections, and abundant storage. Questar Pipeline will introduce new hub services such as "parking" (temporary storage) and "balancing" (matching additions and withdrawals).

Development of a hub will increase liquidity, trading and transportation on and between Questar Pipeline and other interstate pipelines.

As part of a strategy to enter the wholesale power-generation business, Questar recently formed an alliance with Sunlaw Energy, which owns and operates power plants in Southern California. Rattie said Sunlaw "brings an attractive inventory of projects" under development in the area served by Questar's Southern Trails Pipeline. The pipeline's eastern segment runs from the Four Corners area to the California border and has a current daily capacity of 80 million cubic feet. Questar has sold the capacity to a major energy provider under a long-term contract.

Rattie said Questar is pursuing two fast-track power projects in Southern California. Both projects use combined-cycle natural gas-fired turbines capable of generating up to 60 megawatts of electricity. "Both are located on sites with access to gas, water and the transmission grid," Rattie said. "In both cases, the investment will be underwritten by long-term contracts with creditworthy counterparties for much of the capacity.

"Now these aren't done deals, yet," he continued, "but we've got a shot at getting one or both plants in service in time for the 2002 summer peak.

"Western markets are pulling hard on Rockies gas, and Questar is at the center of the action," Rattie added. "We've seen a jump in deal flow in recent months."

Questar is a $2.5 billion diversified natural gas company headquartered in Salt Lake City. Through subsidiaries, it engages in energy development and production; gas gathering and processing; wholesale gas, electricity and liquids trading; retail energy services; interstate gas transmission and storage; retail gas distribution; and information systems and technologies.

Forward-Looking Statements:

This release contains statements expressing expectations of future plans, objectives and performance that constitute forwardlooking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements based on future expectations rather than on historical facts are forwardlooking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. A discussion of risks and uncertainties, which could affect future results of Questar and its subsidiaries, is included in the company's periodic reports filed with the Securities and Exchange Commission.

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