FERC last Thursday issued a certificate to Northern Border Pipeline to carry out a 130 MMcf/d expansion of transportation capacity from Harper, IA, to North Hayden, IN.
The so-called Chicago III Expansion Project will allow Northern Border to deliver to the Chicago Hub an additional 130 MMcf/d of natural gas supplies originating from production areas in Canada and the Williston and Powder River basins.
Specifically, the project calls for Northern Border to undertake equipment modifications and replacements at two existing compressor stations in Iowa and Illinois, and to install one new compressor unit at a third station located in Iowa in order to expand capacity on the eastern end of the system and improve the efficiency of the stations, the order said [CP05-88].
Northern Border said it has entered into long-term firm agreements with BP Canada Energy Marketing Corp., Basin Electric Power Cooperative and Tenaska Marketing Ventures for the entire capacity to be created by the expansion. The contract terms range from 5 1/2 to 10 years.
The pipeline estimated that the project will cost approximately $20.7 million to build. Northern Border asked to be allowed to roll the costs of its project into its system-wide rates in its next general rate case, but FERC rejected its request.
"As a result of the volatility of natural gas prices and the fact that Northern Border did not consider other company-use requirements in its cost and revenue comparison, we find that Northern Border has not provided sufficient evidence for us to conclude at this time that rolling the costs of the proposed expansion into system rates would not result in a subsidy of the expansion by existing customers," the order said.
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