The battle over who will get to build new pipeline capacity tothe prized Northeast gas market has reached a feverish pitch, withsponsors dreaming up ways to knock out their competitors’ projects.ANR Pipeline and National Fuel Gas Supply Corp., sponsors of theproposed Independence Pipeline, recently suggested a plan thatwould wipe out a large part of Columbia Gas Transmission’sMillennium Pipeline project. And Texas Eastern Transmission (Tetco)has joined the ranks, devising a proposal that could obviate theneed for the controversial Independence line altogether and part ofan associated project.

Tetco claims it has enough existing and projected turned-backcapacity on its system that, when combined with “certain additionalconstruction,” would satisfy the customer needs of Independence anda portion of the MarketLink project. It put the proposal on thetable earlier this month, pointing out that it was overlooked byFERC staff as a possible alternative to Independence in the draftenvironmental impact statement (DEIS) on the pipeline project.Tetco was evaluated as a possible substitute for the MarketLinkproject in the DEIS, the pipeline said, but the availability of itsturned-back capacity was not factored into the equation. TheCommission staff subsequently asked Tetco to provide it with”supplemental comments” on the alternative, which it did last week.

In its comments, the Duke Energy pipeline said that legalprecedent and the National Environmental Policy Act (NEPA) requireFERC to take a “hard look” at available turned-back capacity as analternative to proposed new construction [CP97-315]. Although itconcedes that some new pipeline construction will be needed intothe Northeast in the years ahead, Tetco urged the Commission to”adopt policies that will make it easier for existing availablepipeline capacity to be used as alternatives to new construction,where feasible.”

It believes such policies will be critical given the high amountof contracted capacity that’s expected to be turned back toNortheast pipes during the next few years, and the fact that muchof the pipe capacity that’s being proposed is to satisfy higher gasdemand for new electric generating load – which will be heavilyweighted to off-peak periods.

With respect to its surrogate proposal, Tetco said it couldsatisfy market demand of 663,000 Dth/d from an interconnection withANR Pipeline at Muncie, IN, to Linden, NJ – a demand level that is”commensurate” with the existing subscriptions for MarketLink(663,000 Dth/d) and 34,000 Dth/d more than the current subscribedlevel for Independence (629,000 Dth/d). It contends it can do thisby using existing and projected turned-back capacity, combined withconstruction of about 75 miles of pipeline looping, a replacementline and some additional compression. The capacity, Tetco said,could either be provided directly to Independence and to part ofthe MarketLink project through a lease arrangement, or to theirshippers.

All told, Tetco said its alternative would entail 193 miles ofpipeline and 43,900 horsepower of compression at a cost of $194million. This compares to 624 miles of new pipeline and 137,400horsepower of compression for the $678 million Independenceproject, which when combined with ANR’s associated SupplyLink linewould extend from Joliet, IL, to the hub near Leidy, PA. Sponsorsof Independence are ANR, National Fuel and Transcontinental GasPipe Line. Transco is the sponsor of MarketLink, which would loopthe pipeline’s existing system eastward from Leidy.

As another possible choice, Tetco estimated that – withoutbuilding any new facilities – it still could transport 300,000Dth/d on a firm, year-round basis over the Muncie-to-Linden routeby using existing and projected turned-back capacity. It said thecapital cost savings associated with this alternative would beabout $745 million, and $801 million for the scenario requiring newfacilities.

In separate comments, Consolidated Edison Co. of New York lastweek also questioned the need for the Independence and MarketLinkprojects. It called on FERC staff to do a “more serious needanalysis” of the two projects in its final environmental impactstatement (FEIS), considering “no action” as an alternative.”…[I]t must be recognized that no one takes the position that nonew capacity is or will be required in the Northeast. Rather, whatis being questioned is the need for major new projects likeIndependence and MarketLink, which are far in excess of forecastednear-term increases in demand. And given the obvious environmentalimpacts inherent in the construction of…624 miles of newpipeline, this question of market need is one that must beaddressed as part of the EIS consideration of the ‘no-action’alternative.”

Likewise, Rep. J. Pascrell Jr (D-NJ), who represents the 8thDistrict in northern New Jersey through which MarketLink would run,believes the Transco looping project has flunked the ‘need’ test.”I believe that Transco has failed to demonstrate a need for theproposed pipeline.” Also, “I have grave concerns about the safetyand environmental impact of the proposed pipeline project, whichwill bisect six towns that I represent. I strongly disagree withthe FERC staff conclusion that the project would ‘have a limitedadverse environmental impact.'”

Susan Parker

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