NGI The Weekly Gas Market Report / NGI All News Access

Existing Shippers Blast Transco's MarketLink Project

Existing Shippers Blast Transco's MarketLink Project

Existing shippers on Transcontinental Gas Pipe Line have shredded the pipeline company's $529 million MarketLink expansion project, saying it should be rejected by the Commission, or Transco should be put at risk for the cost. The project would add 154 miles of pipeline looping and 62,400 hp of compression along Transco's Leidy Line, which extends from the Leidy hub in western Pennsylvania to New York City.

Protesters said the project lacks binding market commitments, fails to report its reliance on the upstream Independence and SupplyLink projects, threatens to create redundant capacity to New York City and fails to provide firm service to the Mid-Atlantic and Southeast region markets it is designed to serve.

Consolidated Edison, Public Service Electric and Gas, Washington Gas Light and Delmarva Power and Light, as well as Transco competitor Consolidated Natural Gas decried Transco's attempt to push a project through the Commission with contracts that allow the shipping parties, mostly marketers affiliated with Transco and Independence sponsors, to walk away without paying a penny if they can't find markets for the gas they ship on the expansion. CNG notes the only precedent agreement without a "market out" provision is that of LFG Energy for 5,000 Dth/d for 15 years. "To allow construction of a pipeline facility to be supported by a single contract evidencing less that 1% [of the 700 MMcf/d] of proposed capacity would certainly set a new precedent for the acceptable threshold of market support."

ConEd noted the project will add 472,000 Dth/d of capacity to primary delivery points in the New York City area (a 30% increase in deliverability) when New York's LDCs project demand to increase only 3% by Nov. 1, 2000, the proposed in-service date of the project. "Indeed, there is no projected need for peak-day capacity additions into the New York City area until after 2005. Even then, it would take nearly two decades at the present growth rate for the MarketLink capacity to New York to be fully needed. No peak capacity additions, moreover, are required to meet forecasted growth. The largest market segment forecasted for growth in gas use is power generation, for which peak capacity is generally not required." As a result, the project would create a large amount of excess capacity to the region, devaluing capacity contracts held by existing Transco shippers.

Furthermore, ConEd said, Transco proposes to provide access to the Mid-Atlantic and Southeast region markets through backhaul services, which depend "on the existence of 'at least the equivalent amount of forward haul volumes flowing simultaneously with the backhaul volumes.' Thus, it will not always be possible to perform firm primary path backhaul service. The Commission should not certificate a half billion dollar project in order to facilitate non-firm service."

Rocco Canonica

©Copyright 1998 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus