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Tetco's Lebanon Lateral Expansion Wins FERC Approval

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 proposed capacity.

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. 1.

Rocco Canonica

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