Dynegy Inc. and Chevron Corp. want FERC to either block FloridaGas Transmission’s (FGT) proposed abandonment and sale of 70 milesof mainline and associated facilities in the southern part of Texasor “at a minimum” ensure the continuity of transportation servicethere.

FGT seeks to sell the mainline facilities to CopanoPipelines/South Texas, L.P., which has requested that the 20-inchpipeline, compressor units (4,000 horsepower) and measurementfacilities be converted for use in intrastate transportation. Byselling the facilities, FGT estimates it will avoid paying about$35 million to replace the existing line to maintain currentmaximum allowable operating pressure (MAOP) in accordance withDepartment of Transportation standards. Also, it noted that only38% of the capacity of the line was used in 1998.

The proposed abandonment and sale will have an “enormousdetrimental impact” on Dynegy and its customers’ existing serviceif current transportation service isn’t continued, said Dynegy andChevron. Dynegy acts as supplier agent for Chevron, bringing gasinto FGT’s Texas facilities at the Valero-Nueces point, and Chevrondelivers the supplies to shippers under a firm transportationagreement with FGT. Some Chevron’s supply customers have more than10 years remaining on their transportation agreements with FGT,according to Dynegy.

Once the facilities are transferred, Copano has said it intendsto reverse the direction of flow of the Texas line so that gas willflow to a new intrastate pipeline interconnect, according toDynegy. Also, it plans to operate the facilities at a lowerpressure. “Based on these facts, continuing to utilize thetransferred facilities under an agreement with Copano is not aviable option for Dynegy and its customers who must usethe…facilities to bring supplies to FGT’s system for ultimatedelivery into Florida,” Dynegy said in a protest filed at FERC[CP99-233].

FGT has indicated that potentially stranded shippers in Texaswould have two options: either to move their gas on other pipelinesto Zone 1 interconnects with FGT, or to move their primary receiptpoints to other supply points within Zone 1 or in other supplyzones. Zone 1 extends from FGT’s upstream terminus in South Texasto Eunice, LA.

But “these options…are not practicable for Dynegy and itscustomers,” Dynegy countered, because they would mean “additionaland prohibitive transportation costs.”Therefore, “unless FGT iswilling to compensate its stranded customers for any addedtransmission or supply costs, its proposed abandonment must berejected,” the gas marketer noted.

This “piecemeal jettison of pipeline segments by FGT indicates apattern of abandoning transportation service to interstatecustomers that the Commission should halt,” Chevron said, addingthat such abandonments “continually disrupt ongoing relationshipsestablished between buyers and sellers of gas.” The producer citedseveral instances since 1996 in which FGT has abandoned portions ofits mainline. “Allowing FGT to continually disrupt ongoing serviceto its existing customers, for the sole purpose of its ownfinancial gain, is not in the public interest.”

Susan Parker

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