Alliance: Lack of Takeaway Capacity Not a Problem
Some have speculated Alliance Pipeline might be hurt by FERC's
move not to issue preliminary determinations (PDs) to four projects
that would provide takeaway capacity for Canadian gas from Chicago
to East Coast markets. But Alliance officials last week quickly
dismissed that notion.
"First of all, we don't need to get the gas from Chicago to the
East Coast," said Dennis Cornelson, president and CEO of Alliance
Pipeline Ltd. Partnership. He and Alliance Vice President Jack
Crawford noted there was room enough for both Canadian gas and Gulf
Coast gas in the U.S. Midwest market. "The Midwest market relies to
a very large degree on gas imported from the Gulf. Even with the
additional Canadian gas, it's still a big net user of gas from the
Gulf. So it [Canadian gas] really doesn't have to go anywhere
Even if none of the four projects - Independence, Millennium,
SupplyLink and MarketLink - are built, Alliance could use the
displacement capability of existing pipelines, such as Midwestern
Gas, to get gas to the East Coast markets, Crawford said. Such
pipelines would be able to significantly reverse their flows during
certain times of the year. "So we've always said you don't really
need [additional] pipeline capacity out of Chicago to handle
Alliance," Cornelson told Daily GPI.
But he is confident new lines will be constructed. "The more I
talk to people the more I believe Chicago is not only a market hub
where a lot of pipelines come together...but it's also a future
supply hub," Cornelson said. "I think it's only a matter of time
before the market absorbs and fully understands the implications"
of this. "Then I think at the right time there will be further
pipeline expansion leaving Chicago."
FERC just wants the projects to be "further advanced" before
handing out approvals, he noted. Even when Alliance, which recently
began construction, was going through the regulatory process, the
Commission made "very clear to us" that it wasn't going to rubber
stamp every project. It told Alliance "don't count on us giving
everybody in the world a PD so that everybody...can build a
pipeline," Cornelson said.
"I think their general philosophy is 'show us the money'.
[They're not going] to give you a blank check to go out and try to
find the money," he noted. He said the Commission still must
"grapple" with the issue of "whether or not they're [going] to
allow pipeline players to take risks" by holding capacity on their
projects. Cornelson thinks FERC should permit this.
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