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Vector Ahead in the East-Bound Race

Vector Ahead in the East-Bound Race

The U.S. leg of the proposed Vector Pipeline has won final environmental approval at FERC, moving it within one step of becoming certified as the first new pipeline capable of providing takeaway transportation for the steady influx of western Canadian gas supplies entering the Chicago market. The Commission's action comes in the wake of the National Energy Board's final approval of the 15-mile Canadian portion of the project.

Vector is the only project designed for redelivery of western Canadian gas to markets in the U.S. Midwest and the Northeast that has managed to sail, at least so far, through the certification process at the Commission. Other competing pipeline projects have been plagued by unprecedented landowner opposition and questions about the 'need' for the projects, and have yet to receive their preliminary determinations.

The "biggest single factor" responsible for Vector's success so far has been the low level of landowner opposition. "I think that we have had relatively little issues [dealing with] environmental and landowners' concerns" because most of the new line will be built at or near existing right-of-ways, said Juri Otsason of Calgary-based Enbridge Inc., which has a 75% interest in Vector and is also part owner of Alliance Pipeline. Also, Vector has "kind of stayed our course," not making any changes or amendments to its initial project proposal, he noted. And lastly, it applied to build the pipeline under an optional certificate, which puts it "at risk" for the costs of construction.

Otsason doesn't believe that having obtained shipper agreements for most of the proposed pipeline's 1 Bcf/d capacity - 828 MMcf/d - has been the reason FERC has looked upon Vector favorably. "...I'm not sure that that is really a significant difference between the projects," he told NGI.

Otsason said Vector is "hopeful that we will get our final certificate early next month." It expects to begin construction on the 344-mile pipeline (330 miles in the U.S.) , which will span from the Chicago hub to the Dawn, ON, hub, either late this year or during the 1999-2000 winter season. Most of the construction, he noted, will occur during the summer of 2000. The pipeline is expected to be in service by Oct. 1, 2000 at about the same time that the Alberta-to-Chicago Alliance line is targeted for completion. In addition to Alliance, Vector will provide takeaway capacity for western Canadian gas imported into Chicago on Northern Border Pipeline.

The majority of the 1 Bcf/d of gas on Vector will be destined for Dawn, particularly during the winter months, but some will be dropped off in Michigan during the summer. "I think because Vector will be passing through a number of areas where there is a significant gas market and also a lot of storage capability, shippers will at times use their capacity to drop gas off in Michigan, for example, in storage. While at other times they will flow it all the way to Ontario," Otsason said.

At Dawn, Vector will be looking to Union Gas Ltd. to provide most of the takeaway capacity to eastern Canada and to eastern U.S. markets through its connection with TransCanada Pipelines - which would transport the gas to Niagara Falls to be picked up by Tennessee Gas Pipeline, Iroquois Gas Transmission and the Portland Natural Gas Transmission System.

In addition, he said that "further down the road" Vector would probably look to "something like" the proposed Millennium project to increase takeaway capacity at the Dawn hub for western Canadian gas. "I think in light of [the] developments at the FERC in the last few weeks...the timing for Millennium to be in service by 2000 is probably questionable." Detroit-based MCN Energy Group, which owns 25% of Vector, is one of the sponsors of Millennium.

Otsason doesn't believe the Dawn hub will be hurting for takeaway capacity without Millennium. "I wouldn't say necessarily that it [Millennium] is critical. There's a fair bit of excess capability on the Union system except for a very few days in the winter time," he said. "Ideally from Vector's standpoint, the more options downstream the better. So we certainly would like to see something like Millennium be there. But it's absolutely not critical."

With respect to the final environmental impact statement (FEIS), FERC staff concluded construction and operation of the Vector pipeline would have "limited adverse environmental impact" if appropriate environmental measures were put in effect. The fact that 93% of Vector would be built near or within existing pipeline and powerline rights-of-way, that 59 miles of the pipeline would be leased and that most of the facilities would be located in sparsely populated rural areas were cited by Commission staff as reasons for its decision.

The staff said it reviewed four system alternatives (both existing and proposed), but said none were found to be "both environmentally preferable to Vector's proposal and able to meet the project objectives." It also examined a number of major route alternatives and variations, but did not recommend that any be adopted by the Commission.

Susan Parker

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