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."