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Over Municipals' Protest, FERC OKs LNG-Related Interconnection

Over the protests of municipal gas utility shippers, FERC last Tuesday approved Tennessee Gas Pipeline's request to build a tap to receive revaporized liquefied natural gas (LNG) from Kinder Morgan Louisiana Pipeline.

The project calls for the construction of a 20-inch hot tap to interconnect with Kinder Morgan on Tennessee's pipeline in Jefferson Davis Parish, LA. The proposed interconnection would allow Tennessee to receive up to 500 MMcf/d of revaporized LNG from the Kinder Morgan pipeline. The source of the revaporized LNG would be the Cheniere Sabine Pass LNG terminal in Cameron Parish, LA.

The Tennessee Customer Group, which includes several municipal gas utilities, and FPL Energy LLC protested the proposed interconnection, saying that giving new volumes of revaporized LNG access to the Tennessee system would impact the quality of the gas received at the customers' delivery points. They said Tennessee's tariff does not set gas quality standards or limits for LNG, and thus it leaves the pipeline's customers vulnerable to potential operational problems caused by the Btu-enriched gas.

The customers called on the Federal Energy Regulatory Commission (FERC) to require Tennessee to develop gas interchangeability tariff standards that would apply to the interconnection between Tennessee and Kinder Morgan.

The El Paso pipeline subsidiary countered that numerous similar interconnection applications have been approved by FERC to facilitate the movement of revaporized LNG from terminals under development in the Gulf Coast without a requirement to address gas interchangeability tariff standards. It further noted that it has historically received LNG from several import terminals, including Distrigas of Massachusetts LLC's terminal in Everett, MA -- in Tennessee's market area -- and the Excelerate Gulf Gateway and Southern Union's Trunkline LNG terminals -- in Tennessee's supply area -- without any operational problems associated with gas quality. Moreover, it recently received LNG from the Sabine Pass terminal, the pipeline said.

The Commission did not share the concerns of the pipeline customers. "There will be ample opportunity for the gas received from the Kinder Morgan interconnection to blend with the existing supplies before reaching any of the Tennessee Customers' delivery points. Therefore, we find that the Tennessee Customers will not be adversely affected by the interconnection and we deny the Tennessee Customers' request that Tennessee develop gas quality standards for LNG entering Tennessee Gas' system in this proceeding," the order said [CP08-400].

"Further, Tennessee Gas and its customers, including Tennessee Customers, are in the processing of developing new gas interchangeability standards. Any future gas standards developed by Tennessee Gas will be applicable to the entire Tennessee Gas system, and therefore will be applicable to all existing interconnections, including the Kinder Morgan interconnection that we are authorizing in this proceeding."

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