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Vector's Canadian Portion Gets Nod From NEB

Vector's Canadian Portion Gets Nod From NEB

While just a smidgen of its project would be in Canada, Vector still needed - and got yesterday - approval from Canada's National Energy Board (NEB). "This is a significant milestone and supports Vector's status as the most advanced project to meet increasing demand for natural gas for markets east of Chicago," said Vector Vice President Juri Otsason. Vector expects to receive final certification from the Federal Energy Regulatory Commission (FERC) in the second quarter, which will represent the final step in regulatory approvals.

The NEB found Vector to be "economically feasible" based on available gas supply, markets and shipper commitments. "The Board is also of the view that Vector will contribute to increased security of supply and liquidity in Canadian markets.

"TransCanada argued that some of its shippers could be harmed because of Vector. However, Vector does not expect a lengthy period of excess pipeline capacity in eastern Canada. The Board finds no evidence of the certainty or magnitude of potential harm and is not persuaded that it would be significant."

The total Vector project will consist of about 343 miles of pipeline. In Canada, Vector plans to construct and operate about 15 miles of pipe, extending from a point along the international boundary in the St. Clair River near Sarnia, ON, to a point near Dawn. The estimated capital cost of the Canadian portion of the project is $35.4 million.

Vector plans to be in service by Oct. 1, 2000 and intends to begin construction of some segments of the pipeline, including critical river crossings, in 1999. Full delivery capacity of the pipeline, which will transport gas from Chicago, IL, to Dawn, ON, will be 1 Bcf/d.

The Vector project is a joint venture of Calgary-based Enbridge Inc. and Detroit-based MCN Energy Group Inc. Vector is designed to transport western Canadian and U.S. sourced gas from the rapidly expanding Chicago hub, where it will interconnect with Northern Border Pipeline's extension and the Alliance Pipeline, to growing markets in eastern Canada and the midwestern and northeastern regions of the United States. The Board's decision follows an environmental screening of the facilities and a public hearing.

Vector took the lead among the pipelines intended to move gas east from Chicago when it won preliminary approval on non-environmental grounds from FERC back in October, putting it ahead of competitors TriState Pipeline, Independence Pipeline and the Tennessee Eastern Express projects.

In a draft order, the Commission said no evidence was produced to demonstrate Vector was not required by the public convenience and necessity. Vector is to bear the full risk of building the $447 million pipeline because it filed for an optional certificate (OC), which allows an applicant to gain Commission authorization for a project without demonstrating market demand for services.

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