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FERC Gives Islander East, Algonquin Another Two Years to Build Related Pipe Projects

FERC last Thursday extended for a second time the deadline for Islander East Pipeline and Algonquin Gas Transmission to construct and put into service their long-stalled companion natural gas pipeline facilities to serve the New York and New England markets.

The Federal Energy Regulatory Commission, in the latest order, gave the companies an additional two years to finish the related pipeline projects. The first extension, which Islander East and Algonquin were awarded last year, expired on Sept. 19.

"Islander East and Algonquin state that although most the necessary permits have been acquired, they still must obtain the Section 401 water quality certification from the state of Connecticut and the Section 404 permit from the United States Army Corps of Engineers" before they can begin construction of the pipeline facilities, the letter order said [CP01-384].

Islander East in August filed a petition in the U.S. Court of Appeals for the Second Circuit in New York to force the Connecticut Department of Environmental Protection (DEP) to award a water quality certificate that would pave the way for the construction of the 50-mile, 24-inch diameter gas pipeline. The DEP denied Islander East's request for a water quality permit in February 2004.

The Connecticut-to-Long Island Islander East pipeline project, which is jointly sponsored by Duke Energy and KeySpan, and the related Algonquin facilities were approved by FERC in September 2002, and were scheduled to be completed and in service last September.

The state of Connecticut initially interrupted the Islander East project by claiming it was inconsistent with its Coastal Zone Management Act statute, which gives states the right to block projects that they view as detrimental to their coastal areas. But former Commerce Department Secretary Donald Evans in May 2004 overturned the state's decision (see NGI, May 10, 2004). Connecticut now is withholding the water quality permit to prevent the construction of the pipeline.

The $180 million Islander East project, if built, initially would deliver 285,000 Dth/d of natural gas from New Haven, CT, across Long Island Sound to Suffolk County (Long Island) near Yaphank, NY, with a lateral to be constructed to Calverton, NY. Additionally, Algonquin, a subsidiary of Duke Energy, would loop about 13.7 miles of existing pipeline in Connecticut and add a new compressor station in Cheshire, CT. As a result of these upgrades in Connecticut, Algonquin would interconnect with Islander East.

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