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February 28, 2005

Securities and Exchange Commission

Judiciary Plaza

450 Fifth Street NW

Washington, D.C. 20549

Attn: H. Christopher Owings, Assistant Director

RE:

PRB Gas Transportation, Inc.

Registration Statement on Form S-1/Amendment No. 2

File Number 333-120129

Dear Mr. Owings:

On behalf of PRB Gas Transportation, Inc. (the "Company" or “PRB”) and in response to the Staff's letter to us dated February 11, 2005, we are forwarding for filing concurrently herewith Amendment Number 2 to our Registration Statement on Form S-1 (the “Amendment”). The numbering below corresponds to the numbering in the Staff’s letter to us and we have preceded each response with the text of the question or comment made in the Staff's letter.

General

1.

We note your response to prior comment 1. Please note that section 3(a)(9) of the Securities Act is not available for the exercise of warrants because the exercise involves the payment of consideration.

We have amended the warrant agreements to require cashless exercise and to prohibit exercise for a period of one year from the date of issuance.  We believe that the revised terms meet the requirements of section 3(a)(9) of the Securities Act.

2.

Please update the financial information included in your filing in accordance with the requirements of Rule 3-12 of Regulation S-X.

Our financial information has been updated to include our audited financial statements for the year ended December 31, 2004 and other financial information as required by Rule 3-12 of Regulation S-X.

3.

You now indicate that the use of the proceeds is to retire bank indebtedness and for working capital and general corporate purposes. Please include additional disclosure indicating that the bank indebtedness arose from the Bear Paw acquisition.

We have included the additional disclosure as requested.

Our Series A and Series B preferred stockholders ... , page 8

4.

Please delete the mitigating language that appears in the first sentence of this risk factor.

We have deleted the mitigating language in the first sentence as requested.

Use of Proceeds, page 10

5.

We note your response to prior comment 10. For each purpose you have identified, disclose an approximate dollar amount of the net proceeds you will allocate to that purpose.

PRB is a young company with a number of projects in early discussion stages. None of these discussions is sufficiently advanced for us to be able to make reasonable assessments of expenditure. We believe that any attempt to do so at this time would be inaccurate. As a result, we have expanded the discussion to note more fully that there are no definite plans for any specific use of proceeds other than the retirement of the bank line of credit.

6.

Disclose the specific date of maturity related to the line of credit. See instruction 4 to Item 504 of Regulation S-K.

We have disclosed that the specific date of maturity is the earlier of March

31, 2005 or within three days following funding of the initial public offering.

Capitalization, page 11

7.

You assume that the proceeds of the offering will be used to repay the $1.5 million line of credit. The terms of the line of credit require payment by March 2005. If you are unable to complete the offering by March 2005, please revise your filing to indicate the source(s) of liquidity for the $1.5 million payment and the potential ramifications to you if the payment is not made timely.

Although the bank has advised us of its willingness to extend our line of credit “until completion date” of our public offering (“IPO”) and the pledgor of a certificate of deposit has confirmed to us that he would continue to maintain that collateral on deposit with the bank until the earlier of the IPO or the bank’s extension of the maturity date, we have added a risk factor that addresses consequences to us in the event we do not have the funds to repay this loan obligation.

Subsequent events, page 28

8.

We note your response to prior comment 18. You indicate that you conducted a private placement during September through December 2004 that commenced before the filing of this registration statement and continued concurrent with this registration statement. As previously indicated, we deem the filing of a registration statement to be a general solicitation. It appears that you have engaged in a general solicitation not compatible with a private placement under Rule 506 of Regulation D or Section 4(2) of the Securities Act.

You have provided your analysis under the five-factor test as to why the private placement should not be integrated with the offering contemplated by the registration statement. However, we note that (1) one of the stated purposes of the private placement was to repay the Bear Paw promissory note and that the registration statement filed on November 1, 2004 indicated that you intended to use the proceeds from the initial public offering for the same purpose, (2) the offers took place at or about the same time, (3) you received the same consideration, and (4) you issued securities immediately convertible into common stock, the security being registered on this registration statement. Please expand your analysis as to why you believe that this private placement complies with Section 5 of the Securities Act. In the alternative, consider including risk factor disclosure regarding the amount of the potential rescission liability that you may have with respect to the Series C Convertible Stock and consider whether any contingent liability for damages must be reflected in the financial statements.

Release No.

33-4552 states that “Whether a transaction is one not involving any public offering is essentially a question of fact and necessitates a consideration of all  surrounding circumstances, including such factors as the relationship between the offerees and the issuer, the nature, scope, size, type and manner of the offering.” While Rule 502(c) prohibits the issuer or any person acting on the issuer's behalf from offering or selling securities by any form of general solicitation or general advertising, Interpretive Release 33-6455 notes that “(t)he analysis of facts under Rule 502(c) can be divided into two separate inquiries. First, is the communication in question a general solicitation or general advertisement? Second, if it is, is it being used by the issuer or by someone on the issuer's behalf to offer or sell the securities? If either question can be answered in the negative, then the issuer will not be in violation of Rule 502(c).” PRB believes that each of these questions is answered in the negative.  As we have previously noted, (i) PRB received commitments for the purchases before the filing of the registration statement, and (ii) the persons who purchased are all accredited investors with close ties to the Company and its chief executive officer. In fact as we have previously noted, approximately 44% of the Series C stock was purchased by our chief executive officer and his wife, our president, our vice president and counsel.

Taking those considerations into the balance along with our prior

analysis we continue to believe that the Series C preferred stock offering should

not be viewed as a “general solicitation” incompatible with an exempt private

placement. We have added, however, in response to the staff’s comment, the

following risk factor commencing on page 7 of the registration statement:

“We may be required to rescind the sale of up to $1,233,000 of stock if our private placement of Series C preferred stock is deemed to have violated federal and state securities laws.

In December 2004 we received $1,233,000 from the sale of 411,000 shares of Series C convertible preferred stock. We paid no cash or other commissions or finders’ fees in connection with this offering. In the view of the Securities and Exchange Commission, this placement might not have been eligible for an exemption from registration under the Securities Act of 1933.  In the absence of such an exemption, investors could bring suit against us to rescind their stock purchases, in which event we could be liable for rescission payments to these investors of up to $1,233,000, exclusive of interest and costs.”

Business, page 30

9.

We note your response to prior comment 21. Please file the material gas gathering and transportation agreements, or provide an argument based on Item 601(b)(10) of Regulation S-K as to why you should not be required to file these agreements. While we understand your concern that disclosure of certain terms would be detrimental to your business, the confidential treatment request procedure is available if your contracts contain sensitive data.

While we believe that our business is not substantially dependent (when viewed within the provisions of Item 601(b)(10)) upon any one gathering contract, we have filed three of our gathering contracts as Exhibits 10.10, 10.11 and 10.12.  These contracts represent 27.8%, 23.6%  and 17.5% of our revenues for the year ended December 31, 2004.

Stock Ownership of Management and Principal Stockholders, page 46

10.

Please disclose the amount of securities that each of the holders identified in this section will sell under the selling stockholder prospectus that forms a part of this registration statement.

We have expanded the disclosure as requested.

Certain Relationships and Related Transactions, page 47

11.

Please revise the title of this section to read “Certain Relationships and Related Transactions” as Item 404 classifies this information.

We have revised the title to read as requested.

12.

We note your response to prior comment 27. Please discuss the loan you received from a related party to acquire Mr. Norris’ securities, or expand your argument to indicate that this preferred stockholder has not at any time held or had control over more than five percent of your common stock on an as-converted basis or your preferred stock. If additional disclosure is required, include the name of the lender, the terms of the loan and the relationship of the lender to you. Please also include information about the lender’s preferred holdings.

We have expanded the disclosure as requested.

13.

It appears that Mr. Wright issued Series A investors options to acquire some of his holdings. Please indicate what exemption from registration Mr. Wright relied upon for this offering.

Mr. Wright entered into this agreement around the inception of the Company in connection with a stock purchase agreement between JMGG Partners, Ltd. and the Company (as discussed below in response to comment 26.) To put this agreement in context, when JMGG agreed to purchase the Series A Stock at or around the organization of the Company, Robert W. Wright and Kevin P. Norris had identified but not yet completed the acquisition of assets from TOP Gathering LLC. At the time of JMGG’s investment, the Company had no significant assets and no operating business. As an inducement to JMGG to invest $5,000,000, constituting almost all of the acquisition and working capital of the Company, for a then resulting post-investment valuation for the Company of more than $8,333,000, JMGG demanded the conditional right to acquire some of Mr. Wright’s common stock for $0.0125 per share. The theory  being that if Mr. Wright did not remain in the employ of the Company for certain periods identified within the stock purchase agreement, the initial pre-money valuation of the Company, agreed upon at arm’s length negotiations between the parties, would be vastly too high without Mr. Wright running the Company.  Absent those assurances, JMGG would not have made its investment. The very nominal consideration to be paid was the same price per share of common stock that Mr. Wright paid for his shares on the organization of the Company. These transactions were privately negotiated and agreed upon between highly experienced, accredited investors who were represented by counsel. There was no advertising or public solicitation in connection with the transaction by the issuer or anyone acting on the issuer's behalf. Against this backdrop and as discussed below, the Company believes that these transactions meet the standards of the exemptions allowed under Section 4(1) and 4 (2) of the Securities Act.

Financial Statements

PRB Gas Transportation June 30. 2004 (audited) and September 30, 2004 (unaudited)

Statement of Changes in Stockholders’ Equity. page F-5

14.

We note your response to prior comment 42. Help us better understand how you determined that the issuance of the Series C Convertible Preferred Stock at a rate per share materially lower than the IPO price did not result in a compensation charge given that it appears that a substantial portion of the sales were to officers and related parties. You indicate that certain provisions of the Series C Convertible Preferred Stock (e.g., lock-up provisions) serve to reduce the value of the shares. It is not clear to us how you assessed the relative value of such provisions in determining that no compensation charge was necessary. Please reconcile and explain, in greater detail, the difference between the sale price and the IPO price.

We have revised the accounting for the sale of the Series C preferred stock to reflect deemed compensation expense for those shares purchased by officers and related parties, and to reflect a deemed dividend for other investors.

Note 8. Stockholders’ Equity

Equity Compensation Plan. page F-16

15.

We note your response to comment 46 and your reference to Kaneb Services LLC as support for utilizing an expected volatility of 5% to calculate pro forma stock compensation expense disclosure and valuation of warrants issued to consultants. Several companies in the gas transmission industry (SIC 4922) use an expected volatility of between 20% and 50%. Other companies in the industry (SIC 5172), upon which you have patterned your volatility assumptions, use expected volatilities of at least 20%. In light of this, supplementally tell us why you believe it is reasonable to use a volatility figure that is much lower than that of your peers. Please provide detailed support in your response. If you do not have any detailed support for your assumption, please revise your filing to reflect a volatility figure consistent with the guidance in paragraph 285(b) and Appendix F of SFAS 123 and provide us with the calculations supporting your revised disclosure. Please note that we object to management’s identification of a single peer company in light of the fact that there are numerous similar filers with whom you could be compared and all of those filers appear to have materially higher volatility than the entity with which you compare yourself.

We have revised our anticipated volatility figure as requested. Please see Exhibit A for our calculations supporting the revised disclosure.

PRB Gas Transportation, Inc. Subsequent Events. page F-20

16.

You indicate that a preferred shareholder (“Pledgor”) pledged a certificate of deposit in the amount of $1 million for the bank line of credit. Please indicate the identity of the pledgor in the certain relationships and related transactions section and include risk factor disclosure about the potential ramifications of a default on your structure.

We have expanded the disclosure regarding the identity of the pledgor and have added a risk factor that addresses the ramifications in the event we do not have the funds to repay this line of credit.

Certain Gas Gathering Assets of Bear Paw Energy, LLC

Statements of Revenues and Direct Operating Expenses, page F-37

17.

In a footnote, please describe the nature of “Other operating expenses.”

We have added a footnote describing the nature of other operating expenses.

18.

In a footnote, please disclose the allocation methodology used to arrive at depreciation and impairment amounts for all periods presented.

We based dep