TriState Falls as Vector Picks Up the Pace
Vector Pipeline management was all smiles last week as
construction on the pipeline kicked into high gear and one of its
main competitors, CMS Gas Transmission & Storage Co.'s TriState
Pipeline, halted efforts to pursue its application for
construction. While TriState foundered, the Vector project, which
would make 1 Bcf/d of transport available from western Canada to
Chicago, is on schedule to start service in October.
Work began on the horizontal directional drilling under Deep
River in Lake County, IN, along with preparations to complete
construction of a segment though an adjacent golf course earlier
this week. Construction contracts for completion of the Deep River
and St. Clair River directional drills, in addition to the golf
course pre-build near Deep River were awarded to Murphy Bros. Inc.
of East Moline, IL.
The partners said that by the beginning of February, directional
drill activity would begin at the St. Clair River where Vector
crosses into Canada towards its final destination at Dawn, Ontario.
Requests for bids for remaining mainline construction were issued
on Jan. 17 with a decision on the successful contractors expected
in April 2000. Construction on the mainline pipe is targeted to
begin in early May.
"This is a major milestone for Vector," said Juri Otsason,
Vector vice president. "We're pleased to see the first construction
activity begin following the challenging extensive marketing,
planning and regulatory effort that has taken place over the last
Milestones were few and far between for TriState Pipeline, which
sent a letter to FERC last week stating its intentions to halt its
efforts to build the pipeline. TriState would have followed a
similar path to Vector, but hoped to use a part of Consumer
Energy's system as a cost-saving measure.
"TriState and its owner, CMS Gas Transmission & Storage Co.
continue to believe that the TriState project represents an
efficient project to transport natural gas from the Chicago Hub to
the Dawn Hub, via a structure that minimizes environmental
impacts...Nevertheless, upon review and analysis of the current
state of the project and the marketplace, TriState has concluded
that it will not continue to pursue its application [to build the
pipeline]," said George Hass, project manager for TriState
Pipeline, in the letter to FERC.
The withdrawal request, however, was made without the prejudice
of TriState refiling. "TriState and CMS also continue to have an
interest in providing transportation service between the Chicago
Hub and the Dawn Hub," Hass also said in the letter.
"We are keeping our options open," said John Barnett, a CMS
spokesman. "But we don't have any plans right now to refile
anything...After re-evaluating the situation over the past couple
of months, we came to the realization that this was not the time to
file this particular project."
Ever since it was first announced in November of 1998, the $400
million TriState project hit an abundance of regulatory and
internal problems. While Vector easily jumped hurdles at FERC,
TriState experienced jurisdictional disputes and a delayed
preliminary decision on the non-environmental aspects.
The final nail in the coffin may have come last September, when
Westcoast Energy, which had held a 33% interest in TriState, pulled
out of the venture and turned around and purchased a 30% stake in
the competing Vector Pipeline project, (see NGI, Sept. 27).
While TriState struggled, Vector flourished. Last November, FERC
denied requests for further rehearings and also granted Vector's
request to amend its certificate to allow relocation of the
Michigan compressor station from Milford Township to nearby
Highland Township, MI. These decisions allowed Vector to commence
construction on a timely basis. The $447 million Vector project won
final FERC approval in May of last year (see NGI, May 31).
However, a new entrant to the game is already setting up to
challenge Vector. The Coastal Corp.'s ANR Pipeline, Great Lakes Gas
Transmission and TransCanada PipeLines announced availability of
capacity on their systems for hub-to-hub transportation between
Chicago and Dawn, ON. The collaboration was formed earlier this
month (see NGI, Jan. 10) and if their capacity offering
generates enough interest among shippers, the three could make the
offering every winter, creating a competitor to Vector.
The Vector Pipeline is a joint venture of Calgary-based Enbridge
Inc., lead sponsor for the project, Detroit-based MCN Energy Group
Inc. and Westcoast Energy Inc. of Vancouver, British Columbia.
Pipeline capacity can be cost-effectively expanded to 1.5 Bcf/d.