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FERC OKs Projects to Deliver Marcellus Gas to Canada

The Federal Energy Regulatory Commission Thursday issued certificates for National Fuel Gas Supply Corp.'s Northern Access Project and Tennessee Gas Pipeline's 230C Project, both of which would clear the path for the delivery of more Marcellus shale gas north into Canada.

National Fuel's Northern Access Project will be designed to transport 320,000 Dth/d of gas from the Ellisburg Compressor Station in Potter County, PA, to its connection with the Niagara Spur Loop Line (NSLL) at East Aurora, NY [CP11-128]. The NSLL is a 49-mile, 30-inch diameter pipeline extending from an interconnection with TransCanada Pipeline Ltd. at the U.S-Canadian border at Niagara to East Aurora. NSLL is jointly owned by National Fuel, Tennessee and Dominion Inc.

Tennessee proposes to construct certain facilities at Compressor Station 230C, which, in conjunction with National Fuels Northern Access Project, would allow for both northerly and southerly flow on the NSLL. When the 230C Project is complete, the NSLL will be capable of transporting about 548,000 Mcf/d of gas north to the interconnection with TransCanada, the order said [CP11-133].

The Northern Access Project calls for the installation of a 4,740 hp compressor station in Erie County (East Aurora Compressor Station); two additional compressor units totaling about 9,470 hp at its existing Ellisburg Compressor Station, and associated piping. The cost of the Northern Access Project and National Fuel's share of the Station 230C Project is nearly $60 million. National Fuel said it hopes to place the project in service by Sept. 1, 2012.

Tennessee's share of the the Station 230C Project, which will consist primarily of modifications and upgrades to Station 230C in Niagara County, NY, is estimated at $5.4 million.

Statoil Natural Gas LLC has subscribed to the entire capacity (320,000 Dth/d) to be created under National Fuel's Northern Access Project, according to the FERC order. The term of the agreement is 20 years. Tennessee did not hold an open season for the Station 230C Project because the project is solely intended to accommodate National Fuel's Northern Access Project, the order said.

However, the Station 230C project will provide Tennessee an additional 179,000 Mcf/d of northbound capacity to the interconnection of the NSLL with TransCanada at the Niagara bordering crossing, the order said.

"The Northern Access Project and the Station 230C Project will make bidirectional flow on National Fuel's Line X and jointly-owned NSLL possible, thus enabling National Fuel to provide transportation of natural gas for Statoil north to an interconnection with TransCanada at the U.S.-Canada border," FERC said.

The Commission approved National Fuel' request for a pre-determination to roll the costs of its Northern Access Project, including its investment in the Station 230C Project, into its next Section 4 rate case, but it denied a similar request by Tennessee.

"While Tennessee states that rolling in its portion of the costs of the Station 230C Project will have only 'a de minimis effect' on the rates of its existing customers, it has not demonstrated that such a roll-in will not result in existing customers subsidizing the costs of the project," the order said.

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