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Pipelines Would Expand on NOPR's Blanket Certificate Authority

Pipelines Would Expand on NOPR's Blanket Certificate Authority

A major pipeline group last week said there was "much to like" in the notice of proposed rulemaking (NOPR) that would, among other things, expand the blanket construction and abandonment certificate authority for pipelines under FERC's Part 157 regulations, but it also had "several major concerns."

On the plus side, the gas industry's goal of a 30 Tcf market would be "enhanced" by the NOPR because a greater number of so-called "routine" pipeline projects that now are being treated as major Section 7 (c) applications (subject to a lengthy certification process) could, under the proposed rule, be initiated at the pipeline's own risk and expense without having to seek prior FERC approval, according to the Interstate Natural Gas Association of America (INGAA).

But the interstate pipeline group insists the list of pipeline-related facilities that would qualify for blanket construction authority, although expanded under the NOPR, still has come up short. It contends blanket authority, which under the NOPR would be extended to apply to meter stations, certain replacement projects and modifications to compressor engines that don't increase capacity, also should apply to interconnections, delivery laterals and other construction activities that would promote a "seamless national pipeline grid."

INGAA argued that "excluding the construction of interconnecting pipeline segments from the blanket certificate unnecessarily restricts open-access service." It called on the Commission to reverse its policy decision reached earlier this year in a case involving KN Interstate Gas Transmission, which denied blank construction authority to interconnections [RM98-9].

At a minimum, FERC should include the installation of compression in interconnection projects as being eligible for blanket certificate authority, INGAA said. "It is common for prevailing pressures of interconnecting pipelines to differ. This requires one of the pipelines to install compression. Including these facilities as eligible facilities will facilitate the free flow of gas."

Other eligible facilities, the pipeline group says, should be mainline extensions. Although FERC declared these as ineligible under the blanket certificate in a 1995 case, INGAA argued that "these lines are similar to [eligible] supply laterals and will continue the Commission's efforts to promote an interconnected and seamless national pipeline grid."

It was unclear in the NOPR whether construction of "storage injection/withdrawal wells and the associated storage lines" would be subject to blanket certificate authority "when such a project does not change the capacity of the field," noted INGAA. It asked the Commission for clarification on this point. In a separate filing, Michigan Gas Storage also asked FERC "to make it clearer that the 'eligible facilities' [for blanket certificate authority] include storage facilities as well as transportation facilities."

With respect to the storage issue, Petal Gas Storage, a subsidiary of Crystal Oil Co., called on FERC to add the construction and operation of new salt dome storage caverns to its list of facilities eligible for blanket certificate authority under proposed changes to the Part 157 regulations. As an alternative proposal, Petal Gas asked that it be allowed to construct a cavern (e.g. drilling and leaching) and install related facilities (e.g. flow lines) under Part 157 authority, with the understanding that it could not begin operation of any additional storage capacity and storage services until it received Section 7 (c) certificate authority from FERC.

"The regulations currently in place, as well as the revisions proposed in the NOPR, do not adequately reflect the critical importance of salt dome storage in an increasingly competitive natural gas marketplace, nor advance the Commission's stated goal of enhancing a natural gas company's ability to respond more quickly to accommodate new and changing market conditions," the storage company said.

On a related issue, FERC has proposed the expansion of a pipeline's authority for abandoning receipt and delivery points, as well as "eligible" facilities. Specifically, the NOPR would permit pipes to abandon a receipt or delivery point, or a related supply or delivery lateral, if the point has not been used to provide interruptible or firm transportation service for one year prior to the effective date of the proposed abandonment. Or a pipeline could abandon an "eligible" facility if it receives written consent from customers that have been served in the past 12-month period.

The latter part of the proposal - obtaining written consent - raised a red flag with INGAA. "Depending on the situation, e.g. the abandonment of a tie-over on a mainline or some facilities at an interconnect with another pipeline, this could be very burdensome because of the sheer number of customers that could be affected." Instead, the pipeline group proposed that abandonment be permitted in cases where it would not "terminate or degrade" service to existing customers. "This protects existing customers without an unnecessary administrative burden."

INGAA especially took issue with the provisions in the NOPR that would require pipeline replacement facilities to be located within the existing right-of-way or on the same site as the original facilities being replaced. In addition, the provisions would require pipelines to use the same temporary workspace that was used in constructing the original facility.

Calling the Commission's proposals on workspace "too restrictive," INGAA asked that workspace limits not be based on merely the size of the pipe to be replaced. "Rather, there are other factors involved and the workspace should be adjusted based on these additional factors. INGAA would like to work with the Commission and other industry participants on setting other workspace limits." It noted the INGAA Foundation has commissioned a study on this issue, which is expected to be completed in January.

Moreover, "even if the Commission sets limits, [it] should allow the pipelines flexibility to secure additional temporary and permanent right-of-way from landowners" on replacement projects, INGAA said. "The general belief is that landowners will be adversely impacted if the temporary workspace is increased. However, the converse is true. The more space pipeline contractors have to work with, the quicker they can do their work."

Separately, INGAA also said it was concerned about provisions in the NOPR that "could be interpreted to mean that anytime any change is made to a single compressor unit or a new unit is added, the noise level of the entire compressor station would have to be reduced to 55 [decibels]" in noise-sensitive areas, such as near schools, hospitals or residences.

"Such proposals imply that almost any modifications to individual compressor units will force other previously approved units in the same station to meet the 55 [decibel] noise limits, even if no modifications to these units are performed," INGAA said. It asked that the Commission clarify that the 55-decibel noise level would apply only to the individual unit being "added, modified, or upgraded" and not to the entire compressor station.

With respect to 7(c) applications, the Commission proposes to require a minimum content for an acceptable environmental report. For pipelines that don't meet the minimum requirement in their initial certificate applications, their filings would be rejected. "INGAA understands the Commission's desire to reduce the potential for extensive and time-consuming data requests and, thus, shorten the certificate-approval process. At the same time, [it] must temper such a desire with the realities faced by pipelines in obtaining this data," the pipeline group said. It urged FERC to modify the environmental "checklist" to allow for more general information to be submitted at the time of filing, "along with a schedule of when the more detailed information will be provided."

Susan Parker

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