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Producer Claims Columbia Used Unauthorized Gas Spec to Deny Interconnection Request

A Colorado-based oil and natural gas producer has accused Columbia Gas Transmission of using an allegedly unauthorized gas quality specification to refuse its request for an interconnect to the pipeline.

In a Section 5 complaint filed at FERC, Norstar Operating LLC said Columbia denied its bid for an interconnect because the casinghead gas production from the producer's new well in Ohio did not satisfy a 4% nitrogen standard that was set forth in Columbia's "standard meter agreement." But Centennial, CO-based Norstar, which is wholly owned by Norstar Petroleum Inc., argued that Columbia's meter agreement was not filed with the Federal Energy Regulatory Commission and was not part of Columbia's FERC gas tariff [RP06-231].

"Columbia's gas quality specifications do not set forth any standard respecting maximum nitrogen content or total 'inerts,'" Norstar said. By its refusal to accept deliveries of gas based upon a quality specification not in its pipeline tariff, Norstar contends that the NiSource-owned Columbia pipeline has violated the Natural Gas Act and its tariff.

Norstar said Columbia's action has resulted in the shut-in of casinghead gas production from the Ohio well (up to 2,000 Mcf/d). And as long as the gas is shut in, it said the well is unable to produce crude oil (up to 200 bbl/d). As a result, Norstar estimates that it is losing between $60,000 and $810,000 a month. "This level of economic harm is substantial for...small producers," it noted.

"Should the situation be allowed to continue, Norstar and the working interest owners of the [Ohio] well stand to lose their investment in drilling the well. The cost to treat the gas from the...well to reduce the nitrogen content to 4% or less is uneconomic and prohibitive," the producer said.

"This is not a case about whether too much nitrogen in a gas stream is or is not harmful to the pipeline. Nor is there any concern about adverse health and safety effects such as those of [hydrogen sulfide]. Nor is this case about the putative effects of high nitrogen-content gas on the quality of the other gas flowing in the pipeline. Equally important, this most assuredly is not a case about whether the de facto nitrogen limitation applied by Columbia would be just and reasonable if Columbia filed with the Commission for approval of a change to the gas quality specifications of Columbia's FERC gas tariff to incorporate such a nitrogen standard," Norstar said.

"Rather this case is solely about whether Columbia unlawfully refused to accept receipt of natural gas meeting the gas quality specifications of Columbia's FERC gas tariff on file with the Commission upon ad hoc application of a nitrogen quality specification found nowhere in Columbia's tariff," the producer charged.

Norstar urged FERC to order Columbia to cease and desist from imposing gas quality standard specifications not set forth in the pipeline's gas tariff, promptly interconnect its jurisdictional gas pipeline with the producer's Ohio well, and accept gas from the well that meets the gas quality specifications set out in Columbia's tariff.

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