Tetco's Lebanon Lateral Expansion Wins FERC Approval
Texas Eastern's 300 MMcf/d Lebanon Lateral expansion was
approved by FERC last week with a few conditions, including placing
the pipeline company at risk for the cost of unused capacity on the
line. The project would add 17,070 hp of compression to the
114-mile line, which stretches from an interconnection with
Panhandle Eastern near Gas City, IN, to interconnections with
Tetco, CNG Transmission and Columbia Gas at Lebanon, OH. Total
capacity of the system following the expansion would be about 660
MMcf/d. Three shippers, including Dayton Power and Light, Duke
Energy and Public Service Electric and Gas signed up for 28% of the
The Commission dismissed protests of Sun Company, an existing
shipper on the line, that Tetco failed to show sufficient market
support for the $31 million expansion. Sun urged FERC to disregard
Tetco's agreement with its affiliate Duke Energy for 31 MMcf/d
because it lacked "objective validation," and said Tetco could
provide 55 MMcf/d of service requested by Dayton Power and Light
with existing capacity. At most, Sun said, the pipeline has shown
arms-length contracts for only 8% of the proposed capacity. Sun
also charged Tetco failed to consider using capacity turned back by
other shippers or scheduled contract terminations.
But FERC determined at least 26% of the capacity proposed would
be subscribed under long-term (10-year) agreements considering
additional turnbacks and that was sufficient to issue a
certificate. "In view of the unsubscribed capacity involved here,
we will place Texas Eastern at-risk for costs of this project to
the extent that the facilities are underutilized."
As to Sun's charge that Tetco currently lacks adequate takeaway
capacity, the Commission said it found Tetco "will have ample
capacity commencing Nov. 1 and continuing for the next five years.
Contract terminations that include capacity downstream of Lebanon
will enable [Tetco] to take away any volumes contracted for through
the proposed expansion."
FERC concluded the project would lead to an 18% reduction in
100% load factor LLFT rates paid by incremental shippers and
granted Tetco's request to make a limited section 4 filing to
adjust its tariff accordingly prior to the in-service date of Nov.
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