Scaled-Down Millennium Sought by Potential Competitors
National Fuel Gas Supply Corp. and ANR Pipeline, sponsors of the
proposed Independence Pipeline, are espousing a system alternative
that essentially would result in a considerably scaled-down project
for the competing Millennium Pipeline project.
Instead of bringing western Canadian gas into the U.S. across
Lake Erie, as the Columbia Gas Transmission's Millennium project
envisions, National Fuel and ANR seek a "one-corridor alternative"
by which the 650 MMcf/d Millennium volumes would be shipped over
expanded SupplyLink and Independence lines to the Leidy, PA, hub,
and then transported by displacement or backhaul to National Fuel's
station in Ellisburg, PA. From there, the scenario calls for
construction of a 19-mile pipeline connecting Ellisburg to
Columbia's existing A-5 Line, which extends to just north of New
Under this alternative, Millennium would essentially be
swallowed up by the related SupplyLink and Independence projects,
which would span from Joliet, IL, to the Leidy hub. The entire
Millennium project, which was conceived as a 417-mile line, would
be reduced to nothing more than a replacement and possible upgrade
of Columbia's 12-inch A-5 Line to either 24 or 36 inches. "My
suggestion is that's all they need" to bring expanded volumes to
the East Coast market, said National Fuel President Richard Hare.
This alternative-dubbed the Leidy Interconnection System
Alternative-was reviewed and rejected by FERC staff in its draft
environmental impact statement (DEIS) on Millennium, which was
issued in April [CP98-150]. Staff dismissed the alternative saying
it would have "greater environmental impact.....since it would be
about 88.5 miles longer and would require more compression....."
But Hare, responding to the DEIS, contends FERC staff erred in
its conclusion by assuming the Leidy Alternative would require the
construction of a 50-mile pipeline from the Leidy hub to its
Ellisburg station, plus an additional 8,000 hp of compression. He
says National Fuel is "certain" it can transport the Millennium
volumes from Leidy to Ellisburg by displacement and/or backhaul. No
additional compression would be needed at Ellisburg, Hare noted,
and the only construction required would be a 19-mile, 36-inch line
connecting Ellisburg to Columbia's A-5 Line. This would cost about
$31 million, he estimated.
The scenario espoused by National Fuel and ANR also would
require an additional 168 miles of looping of 36-inch pipe and an
added 14,000 hp of compression on the SupplyLink project,
increasing the projected cost from $125 million to about $395
million, he said. Also, an additional 90,000 hp at six compressor
stations would be needed for the Independence project, increasing
the cost from $678 million to $765 million, according to Hare. He
said these changes would boost the design capacity of both
SupplyLink and Independence to about 1.4 Bcf/d, enabling them to
meet both the needs of Millennium and Transcontinental Gas Pipe
Line's proposed MarketLink project.
All told, the additional facilities needed to carry out the
Leidy alternative would total $388 million, which he estimated was
about $78 million less than what it would cost to build the western
portion (Lake Erie crossing) of Millennium and the associated
Canadian facilities, such as TransCanada Pipeline's proposed St.
Clair pipeline, that would be required.
"This one-corridor alternative would be environmentally superior
because it would eliminate 254 miles of pipeline in the U.S. and
Canada and, most importantly, [would] eliminate the need to cross
Lake Erie. It would also be an economically superior alternative
because the cost of the facilities eliminated would substantially
exceed the cost of the required expansions to SupplyLink,
Independence and the National system," Hare told FERC.
Moreover, the alternative could result in further cost savings
by reducing the size of the proposed Chicago-to-Dawn pipelines, he
noted. For example, he believes the Vector Pipeline could be
downsized because-under the Leidy option-there would no longer be
any need for it to supply 650 MMcf/d of gas to Millennium. It
still, however, would "serve the needs in eastern Canada of
Consumers Gas and Union Gas, who are the two major sponsors of the
Vector Pipeline." Vector, however, already has received final FERC
Columbia understandably isn't interested in exploring the Leidy
alternative. "I've visited with them several times, and they were
not receptive to my suggestions. I suggested this alternative, plus
other enhancements to Millennium, but they chose to stay with their
project," Hare told NGI. Karl Brack, a spokesman for Columbia, said
the company remains "confident" that Millennium is the "right
choice for our customers." He indicated Columbia, which has a 47.5%
interest in Millennium, will respond to the National Fuel/ANR
proposal when it files its DEIS comments later this month. Other
sponsors of Millennium are TransCanada, Westcoast Energy and MCN
Hare urged FERC staff to give "serious consideration" to the
Leidy Alternative. In the DEIS, the staff endorsed the Niagara Spur
System Alternative for Millennium, which also would eliminate the
project's Lake Erie crossing. Under this scenario, the Millennium
volumes would be shipped from Dawn, ON, over the systems of Union
Gas and TransCanada, and picked up by Tennessee Pipeline at the
Niagara import point on its Niagara Spur-which loops the city of
Buffalo-and transported to an interconnect with National Fuel and
then onto Millennium in Allegany County, NY.
Hare conceded the Niagara Spur Alternative was "doable," and
added that National Fuel would "cooperate" if it turns out to be
the "chosen route." However, he contends it won't meet the
scheduled in-service dates that "everyone on the East Coast needs,"
would require Millennium to make a new project filing, has a longer
route and would be costlier.