Canadian Millennium Sponsors Put Hold on Project Review
After spending more than C$60 million (US$41 million) and three
years of preliminary work, the sponsors of the upstream portion of
the Millennium Pipeline Project have decided to put the regulatory
review process in Canada on indefinite hold.
Canada's National Energy Board is due to rule soon on the
request by sponsors of the Canadian Millennium Pipeline for an
indefinite suspension of proceedings. Hearings were scheduled to
start Aug. 21 in London, ON.
"Considerable delays have been experienced" in the U.S. before
FERC, the NEB was told by Canadian Millennium sponsors. The latest
one follows a change in the eastern end of the project's route
through Westchester County in New York State to avoid safety
concerns related to a major power transmission line and to avoid
conflicts with wealthy landowners by using established
transportation corridors. The NEB has been told the switch involves
only 23 miles or 5% of the 422-mile route to New York City, but it
has prompted FERC to request much additional information and hold
more consultations with intervenors in the case.
TransCanada acknowledges that the landowner tangle is only one
among multiple issues that have tripped up Millennium, saying the
project's target of approval in one year has already turned out to
be 18 months too optimistic. "The numerous delays have ranged from
other route deviation reviews, as well as awaiting U.S. state
agencies' permits and certificates prior to issuing a Final
Environmental Impact Statement. The most notable regulatory
developments in the project have been the FERC's decisions not to
issue a Preliminary Determination, to hold a technical conference
to hear submissions as to the strength and the timing of market
growth in the U.S. Northeast and to request the U.S. Army Corps of
Engineers' review of the Lake Erie Crossing prior to issuing an
FEIS." The Corps' review took until June 1, requiring only a slight
increase in the depth of an underwater pipeline trench that
Millennium says it can do with only a "negligible" effect on costs.
Unveiled in the spring of 1997 by a consortium including
TransCanada PipeLines Ltd., Westcoast Energy Inc., Columbia Gas
Transmission Co. and MCN Energy Inc., the US$700 million plan calls
for deliveries of 700 MMcf/d along a route stretching from the Dawn
trading hub in southern Ontario across Lake Erie and New York State
to Long Island, starting in late 2001. TransCanada holds the
transportation-service contract for all the space on the Canadian
part of the proposed route. In turn, Millennium says nine
prospective shippers have booked 97% of the project's capacity.
The Millennium partners say they still have "total commitment"
to the international project. TransCanada says suspending the
Canadian share in the regulatory review could create flexibility
for accelerating the project as well as holding it up to match the
pace in the U.S.
The Westcoast subsidiary participating in the partnership, St.
Clair Pipelines Ltd., says "changes occasioned by these delays do
not invalidate the project. Quite the contrary, recent market
developments strongly corroborate the project need. The one-year
forward curve [in gas commodity-futures trading] for basis
differentials [price differences] between Dawn and New York is
approximately US$.075 per MMBtu. This exceeds the cost of
transportation between Dawn and New York. This is a significant
increase in the historical basis differential and is but one
example of the increasing market support and need for the project."
St. Clair also points to "a significant number" of gas-fired power
projects emerging in New York as another positive sign.
In Canada, landowner, native, municipal and consumer interveners
in the Millennium case are asking the NEB to make the consortium
give a guarantee now --- just in case the project collapses ---
that their expenses will be paid before granting any postponements.
Their requests appear likely to fall on sympathetic official ears.
In a lengthy letter to the Millennium group after it first asked
for the delay, a plainly annoyed NEB pointed out that the case is a
complicated Joint Panel Review that also involves the Canadian
Environmental Assessment Agency. The energy board said, "throughout
the process to date, significant resources and effort have been
expended by all parties to accommodate the ever-changing timetable
of the applicants." Even though it took a mediation effort with
intervenors to come up with the Aug. 21 date for starting public
hearings, the project sponsors evidently did not discuss their new
plans with the intervenors and "the panel is disappointed." A panel
member's appointment expires Dec. 31. A suspension of the Canadian
review "may impose an unfair burden on other parties to the
process..... the panel is concerned that an adjournment may lead
intervenors to incur costs for a project that may or may not come
Gordon Jaremko, Calgary