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FERC OKs Freeport-McMoRan Pipe Project as Single-Use Line

FERC last Thursday issued a certificate clearing the way for Freeport-McMoRan Energy LLC to build a 5.1-mile, 36-inch diameter onshore pipeline in Alabama that would interconnect with a much longer offshore pipeline extending from a proposed offshore Louisiana liquefied natural gas (LNG) terminal and gas storage project.

The so-called Coden pipeline would be constructed near Coden, AL, in Mobile County, where it would interconnect with a proposed 92-mile, 36-inch diameter offshore pipeline that would bring regasified gas from a $440 million import terminal to be located at McMoRan's Main Pass Energy Hub (MPEH), about 38 miles east of Venice, LA, offshore in the Gulf of Mexico. The Coden line would have the capability to deliver a maximum of 1.5 Bcf/d.

FERC granted the company's request to operate the Coden pipeline on a proprietary, single-use basis, given that the facilities will be solely dedicated to Freeport-McMoRan, rather than as an open-access line. "We believe that allowing Freeport-McMoRan to operate its proposed pipeline on a propriety, single-use basis will not undermine the Commission's policy encouraging competition in the pipeline industry. To the contrary, we believe that this will actually encourage competition by facilitating the introduction of new, heretofore unavailable, sources of LNG into the pipeline grid," the order said [CP04-68, CP04-69].

However, as a safeguard, "we will condition the condition the certificate...to require that Freeport-McMoRan apply for a Part 284 open-access blanket transportation certificate within 30 days of receiving a bona fide request for firm transportation service on its pipeline, if there is capacity available to provide the requested service," it noted.

In addition, the Federal Energy Regulatory Commission approved Freeport-McMoRan's request for a Part 157 blanket certificate, which would allow it to expand the pipeline in the future and operate it without seeking a case-specific application under the Natural Gas Act, provided that the cost of the construction falls within FERC's limit.

The LNG terminal initially would be capable of receiving and processing 1 Bcf/d of natural gas, according to Freeport-McMoRan. The project would include a 28 Bcf onsite storage structure, capable of delivering up to 2.5 Bcf/d.

The company expects the U.S. Coast Guard and the Maritime Administration to approve its application to build the terminal and associated storage facility by the end of June.

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