As the 800 MMcf/d Zone 3 capacity enhancement on the Rockies Express Pipeline LLC gets ready to come online, the Rover and Nexus Gas Transmission pipelines, two other major east-to-west Appalachian takeaway projects, continue vying for regulatory approval.
FERC came a step closer to approving Nexus this week as it completed its environmental review. But backer DTE Energy Co. faces challenges at the state level as it looks to secure approval from Michigan regulators for Nexus-related contracts.
Meanwhile, Rover’s demolition of a historic home in Ohio outside of FERC’s knowledge has invited unwanted scrutiny as it awaits a final decision from the Commission.
Rover and Nexus together represent about 4.75 Bcf/d of east-to-west capacity out of the Appalachian Basin, a big chunk of the 17 Bcf/d of total takeaway that the Energy Information Administration said it expects to see coming out of the Utica Shale by 2018.
Nexus Receives Final EIS
FERC issued a favorable final environmental impact statement (EIS) Wednesday for the Nexus Gas Transmission Project and related Texas Eastern Appalachian Lease (TEAL) Project, paving the way for a final authorization decision on the proposed pipelines.
The Federal Energy Regulatory Commission “determined that construction and operation of the Projects would result in some adverse impacts, but impacts would be reduced to less-than-significant levels with the implementation of the applicants’ proposed and our recommended mitigation measures.”
Nexus would transport 1.5 Bcf/d from Eastern Ohio into Michigan, connecting Appalachian gas to markets in the Midwest and Canada. Nexus, which filed with FERC last November, is under development by Spectra Energy Corp. and DTE Energy.
TEAL is being developed by Spectra subsidiary Texas Eastern Transmission LP (Tetco) and would expand Tetco’s system by 950,000 Dth/d to support the Nexus project.
Nexus would involve constructing 210 miles of 36-inch diameter pipeline in Ohio and 47 miles of 36-inch pipe in Michigan, along with associated equipment and facilities. TEAL would involve constructing 4.4 miles of 36-inch diameter pipe and 0.3 miles of 30-inch pipe in Ohio, with associated equipment and facilities.
FERC said it reached its favorable decision partly because 46% of the proposed construction is within or near existing rights-of-way. The Commission said it has recommended 38 project-specific mitigation measures to further reduce environmental impacts.
Nexus, which received its draft EIS from FERC over the summer, has targeted an in-service date in 4Q2017.
ANR Challenging DTE Contract
Nexus is competing with the similarly routed Rover Pipeline Project, a 700-mile, 3.25 Bcf/d pipeline also looking to bring Appalachian gas to Michigan. Rover, backed by Energy Transfer Partners LP, received a final EIS from FERC in July and awaits a final authorization decision from the Commission.
In November ANR Pipeline Co. filed a brief urging Michigan regulators not to approve plans by DTE Energy subsidiary DTE Electric to contract for capacity on Nexus, arguing that there are “less costly options than Nexus” that would allow the utility “to access low cost Appalachian gas supplies.”
ANR said both Rover and its ANR East projects offer similar market paths to access Appalachian supply. DTE Electric and another DTE Energy subsidiary, DTE Gas, did not solicit competing bids from ANR East or Rover before contracting for Nexus capacity, according to ANR.
“DTE Electric has not met its high burden of demonstrating that its proposed contract with its parent-sponsored project is reasonable and prudent and minimizes its costs in light of these alternatives,” ANR wrote. “...DTE Electric’s request for approval of its contract with Nexus, as well as its request for pre-approval of the costs of Nexus, therefore, should be denied. ANR respectfully requests that DTE Electric be required to engage in an open and transparent competitive process for fulfilling its transportation service needs.”
FERC Reacts After Home Demolished
As for Rover, the project could see a delay in final authorization from FERC after the company demolished a home eligible for the National Register of Historic Places without notifying the Commission, according to a brief by analysts at Genscape Inc.
Genscape, citing correspondence between FERC and the Advisory Council on Historic Preservation (ACHP), said developers with Rover apparently purchased and demolished an historic home that was across the street from Rover’s proposed Mainline Compressor Station 1, meaning “Rover would have been required to add additional landscaping features to the station in order to preserve the viewshed from the house.”
But the house apparently was demolished without FERC’s knowledge.
“Rover’s defense for this,” Genscape wrote, “is that they had purchased the house for reasons unrelated to the Rover pipeline project (ostensibly for an affiliate to convert into offices), and only things directly related to the project needed to be communicated to the Commission...FERC, somewhat understandably, is not pleased at having been left out of the loop and with the destruction of a piece of national history, and has requested input from the ACHP on how to address the situation,” Genscape noted, suggesting the situation could mean a final decision from FERC might arrive later than it would have otherwise.
FERC, in a Nov. 16 letter to the ACHP, wrote that as it “considers the merits of Rover’s application, we are particularly interested in any information the [ACHP] can provide as to when it is or is not appropriate for a federal agency to determine that circumstances justify granting a requested authorization despite the potential anticipatory destruction by an applicant, as provided for by section 110(k)” of the National Historic Preservation Act (NHPA). “As the structure has been demolished, along with the two outbuildings, the integrity of the property has been compromised. Thus, the effects are considered adverse.”
The ACHP responded to FERC on Nov. 23 and recommended the Commission investigate the circumstances surrounding the demolition of the house and determine whether Section 110(k) applies. Then it will have to consult with ACHP to determine “whether or not the circumstances justify granting the authorization.”
Rover spokeswoman Vicky Granado, when asked about the historic house, told NGI via email this week that “there has been no impact to the timing of the project and we are confident that there will be a resolution to this issue shortly.”
Rover plans to go into service to Defiance, OH, by 2Q2017, with service to the Dawn Hub beginning in 4Q2017.