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Tennessee Gets OK for Northeast Upgrade Project

FERC has issued a certificate for Tennessee Gas Pipeline's Northeast Upgrade Project, which would expand the company's existing 300 Line system in Pennsylvania and New Jersey to provide an additional 636,000 Dth/d of Marcellus Shale gas to Northeast markets. This comes only months after Tennessee placed into service an initial expansion and upgrade of the 300 Line.

"Based on the benefits Tennessee's proposal will provide to the project shippers, the lack of adverse effects on existing customers and other pipelines and their captive customers, and the minimal adverse effects on landowners or communities along the route, we find...that Tennessee's proposed Northeast Upgrade Project is required by the public convenience and necessity," the Federal Energy Regulatory Commission (FERC) said in its order [CP11-161].

The $376 million project will allow an additional 636,000 Dth/d of natural gas to be transported along Tennessee's 300 Line in Pennsylvania to an interconnect with Algonquin Gas Transmission in Mahwah, NJ, to serve growing markets in the Northeast.

To create the additional firm transportation capacity, Tennessee, a Kinder Morgan company, proposes to upgrade the remaining 24-inch diameter parts of the 300 Line by constructing five 30-inch diameter pipeline loops and modifying four existing compression stations. The five loops (totaling 40.3 miles) would close out the remaining unlooped segments of Tennessee's existing 300 Line east of Bradford County, PA into New Jersey. Tennessee has targeted the project for completion in late 2013.

The initial 300 Line expansion (also known as the Market Component), which was placed into service in November, increased capacity on Tennessee's system by 350,000 Dth/d (see NGI, Nov. 7, 2011). The project included installation of eight looping segments in Pennsylvania and New Jersey totaling 127 miles of 30-inch diameter pipeline, and the addition of about 55,000 hp of compression.

The entire capacity to be created by the Northeast Upgrade Project has been awarded to Chesapeake Energy Marketing Inc. (429,300 Dth/d) and Statoil Natural Gas LLC (206,700 Dth/d) under contract terms of at least 20 years.

The FERC order rejected arguments that an environmental impact statement (EIS), rather than an environmental assessment (EA), should have been conducted on the project due to its potential impact on the human environment. "The EA concludes, and we agree, the Northeast Upgrade Project would not constitute a major federal action significantly affecting the quality of the human environment. Therefore, an EIS is not required," FERC said.

Some also argued that an EIS was warranted to take into consideration the prolific development in the Marcellus Shale basin, which the Tennessee expansion would serve. "The EA considers the general development of the Marcellus Shale in proximately to the project within the context of cumulative impacts in the project area. The EA notes that the more detailed analysis of Marcellus Shale impacts sought by commentors is outside the scope of the project analysis because the exact location, scale and time of future facilities are unknown.

"Moreover the EA concludes that the potential cumulative impacts of Marcellus Shale development are not sufficiently causally related to the project to warrant the comprehensive consideration of those impacts in our staff's analysis," the FERC order said.

Intervenors in the case further expressed concern that Tennessee's project would threaten vital drinking water resources in the region, including the Delaware River between Pennsylvania and New Jersey, and the Monksville Reservoir in Passaic County, NJ. The pipeline's expansion project would cross both of these water bodies.

"Tennessee's HDD [horizontal directional drill] contingency plans include provisions to minimize the impact of inadvertent release of drilling mud (typically bentonite, a naturally occurring clay) into water bodies. Tennessee would also implement other measures...to minimize construction-related impacts on other surface waters such as a spill prevention, control and countermeasure plan that prohibits fueling and fuel storage within 100 feet of a water body," the order said.

Based on these proposed precautions and mitigation efforts, "the EA concludes that impacts on water bodies [from the project] would be minor and temporary and that operation of the project would not pose a threat to drinking water resources in the area."

The Commission rejected Tennessee's proposal to base the initial recourse rate for the Northeast Upgrade Project on the "combined costs and capacity of both the Northeast Upgrade Project and the Market Component of the 300 Line Project because to do so would result in the total coast of the 300 Line Project Market component being reflected, and recovered, in two separate rates at the same time."

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