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Independence, MarketLink Take a Beating at FERC

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.

Rocco Canonica

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