Independence, MarketLink Take a Beating at FERC
Independence and MarketLink pipeline sponsors were forced to run
the gauntlet last week at a special FERC conference. The event drew
buses filed with t-shirted crowds of pipeline supporters and an
opposing army of congressmen, state representatives, local
politicians and landowner advocates, the likes of which hasn't been
seen at the Commission since the Iroquois Pipeline project was
proposed in the early 1990s.
Speakers unloaded an arsenal of criticism at the $1.3 billion
plan, which includes several sections of pipe ultimately stretching
from Chicago to New York City. The project, which would transport
up to 1 Bcf/d, has been the most contested project in FERC history,
prompting more than 7,400 letters to be sent to the Commission.
That was the main reason for calling the additional public
conference, i.e., to provide supplemental information that will be
considered by FERC in its final decision on the new pipelines.
In an unprecedented action in March, the Commission refused to
give Independence (and the associated upstream SupplyLink and
downstream MarketLink expansions) and the competing Millennium
pipeline project preliminary determinations (PDs) on the
non-environmental aspects of the projects until the environmental
reviews are completed. FERC took the action in response to the
large landowner opposition and questions about market need.
Independence and Millennium, however, did win draft
environmental acceptance from FERC staff in April but with
significant requested route changes. MarketLink proposes to loop
about 154 miles of existing Transcontinental Gas Pipeline to carry
gas from Leidy, PA, through Pennsylvania, New Jersey to New York
City. The proposed ANR Pipeline-sponsored SupplyLink project would
entail about 72 miles of looping of ANR's existing system between
Joliet, IL, and Defiance, OH. Independence, as currently proposed,
would run about 400-miles from Defiance to the hub in Leidy.
New Jersey Opposition Unanimous
At the conference last week, the projects, which FERC considers
one system, were criticized for everything from lack of market
demand to documented cases of landowner intimidation by the
sponsors, which are subsidiaries of Coastal Corp., The Williams
Companies, and National Fuel Gas.
"I can't find one single elected official at any level that
supports this project in my state to the best of my knowledge...,
not one." said Rep. Bill Pascrell Jr. (D-NJ), who requested FERC
hold the special conference. "That speaks volumes."
Part of the reason may be the method by which project sponsors
have negotiated with landowners. A fuming Wood County, NJ,
Commissioner, Timothy J. Brown, blasted the "devious, underhanded,
snake-oil-salesman methods [Williams unit Transcontinental Gas Pipe
Line] is using" to obtain the private property required to build
the project. "Intimidation is the name of the game," he said.
"The tactics being used to coerce and scare the public are
repugnant. These tactics must be investigated and halted
immediately... All it takes for evil to triumph is for good people
to do nothing."
Wood County landowner Jodie Stearns said the sponsors currently
are telling landowners that the project has already been approved
in an effort to scare them into giving up their property for far
less than it's worth. She said many landowners also are pursuing
trespassing actions in the local courts against the pipeline. "We
have been lied to. You have been lied to," she told FERC.
"We do not want this project. We do not want these bad
neighbors," said Stearns.
Pascrell said the pipeline sponsors are attempting to mislead
the entire state of New Jersey by publicizing the results of a
self-serving poll taken recently by Transco. "These questions in
this poll are the biggest insult that I have ever seen, and I've
been in public life for about 15 years.. It is written to get the
right response. Every question is like this.
"If we're going to allow this [project], we collectively better
be darn sure it is in the public interest and it is truly demanded
by the market."
If We Build It.....
Pascrell's main argument against the project focused on the
non-binding agreements with affiliates that were used to justify
market need. "If all that is required for a company [to show market
demand for a pipeline project is] to go out and find a way to meet
a capacity percentage, then companies will do as Independence and
Transco have done; they will enter into precedent agreements with
affiliates, such as Engage, such as Westcoast, for two-thirds of
the capacity or close to it and then claim that as evidence of true
demand," he said. "If you can't say where the market is, then you
can't say exactly what facilities you need to build...
"I'm not the first to make this argument," he added. "Where did
I first find it? In the Commission's [new] policy statement issued
just two weeks ago in a section called 'drawbacks on current
policy.' While there is some dispute as to whether this policy
statement officially applies to the consideration of this
application, what you have stated is none-the-less critical to our
discussion today. Your words signal that you believe we cannot look
at these applications in a vacuum and I agree." He cited a passage
in the policy statement in which the Commission acknowledged the
difficulty in justifying taking private property to build a
pipeline based simply on non-binding written agreements. "I urge
you to listen to your own words because you're right. Market demand
cannot be created only by papering together a certain percentage of
capacity in agreements. It takes more than that."
Pascrell, Rep. Ralph Gilmore (R-OH) and others stressed the need
to further consider alternatives to the project. Many speakers
pointed out the potential for a significant amount of pipeline
decontracting in the next couple of years.
"It appears that turned-back capacity on the Texas Eastern,
Tennessee Gas and the CNG pipelines along with some minor
modifications could add more transmission capacity than that
proposed by the Independence Pipeline," said Gilmore. "The
Millennium pipeline project [sponsored by Columbia Energy, MCN,
Westcoast and others] would transport new natural gas supplies
using existing rights of way for nearly 90% of its route. This
alternative would result in far less disruption to people and their
properties than Independence [and at a] lower cost."
In later testimony, Tetco's Gregory Rizzo agreed turned back
capacity could provide the majority of space needed over the next
few years, saying his company expects 500 MMcf/d of capacity to be
turned back by Nov. 1, 2000, the proposed in-service date of
Independence/MarketLink. Rizzo presented an alternative project,
which has not yet been filed but was included in the draft
environmental review of Independence. The alternative would use the
500 MMcf/d of turned-back capacity and add a few new facilities on
Tetco for a total cost of about $370 million compared to
Independence/MarketLink's $1.3 billion. Tetco's project would use
60% less horsepower, 75% less pipeline, and would require no new
construction in New Jersey, the state in which there appears to be
significant opposition to MarketLink.
Williams Shows Courage
Williams Executive Vice President Cuba Wadlington showed courage
in testifying last. He said he would take immediate action against
any acts of landowner intimidation by Williams employees.
"I do not have any snake oil on my body," he said. "And while
I'm 64 inches tall and weigh 230 pounds and I'm black, I do not
think I'm intimidating. I have a very friendly face. Since I'm not
a politician or a spinster, I will not attempt to put the polish
and wax that some have put on these issues prior to my opportunity
[to speak]," he said.
Wadlington attacked his attackers, saying all those who are in
opposition are doing so for "their own special interests, whether
running for office or to make their own living. Less than 5% of the
opposition comes from landowners," he claimed, noting that 33% of
the right of way already has been acquired by Transco.
Regarding market demand for the project, Wadlington said
MarketLink now is 100% subscribed. "As recently as last night we
had the last piece signed up for," he said. And on the issue of
potential turned-back capacity, he said, "those who are raising it
are being disingenuous and are misleading the Commission... It has
nothing to do with physical flow because that continues to grow."
There is contract turnover and requests for shorter contracts and
different terms, but all the existing capacity will be utilized and
expansions are needed, he said.