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'Justice Delayed' At the California Border

'Justice Delayed' At the California Border

"Justice has been delayed far too long," producer/shippers said in petitioning FERC last week for expedited resolution of their complaint against "El Paso's unjust and unreasonable pro rata capacity allocation and scheduling procedures."

Producers noted it has been 365 days since the original complaint (RP99-507) was filed and "the situation today is worse from a scheduling perspective than it was on the day the complaint was filed." The latest petition cited the Commission's duty to issue timely decisions, and noted "reviewing courts have a duty to 'compel agency action unlawfully withheld or unreasonably delayed'" The group faulted FERC's endless procedures and failure to resolve the case. It urged the Commission to order El Paso Natural Gas to "path" its system, matching receipts and deliveries as the producers originally requested.

Affidavits filed by employees of BP Energy (formerly Amoco Energy Trading), Texaco, Conoco and Burlington Resources testified to the companies' loss of so-called firm capacity and the mounting financial damages.

"The scheduling cuts on El Paso's system are currently out of control," said Donald C. Lindquist, manager of Texaco Natural Gas' Fuels Management Group. "We have no idea from day-to-day how much firm transportation will be cut and ultimately stranded." Texaco has 179,000 MMBtu/d of FT on El Paso for delivery at Topock. The total volumes of stranded transportation for Texaco in July and August were 12,500 MMBtu/d and 18,800 MMBtu/d, respectively. Texaco said because of the lack of transportation it has been forced to purchase Permian gas at a premium, "resulting in millions of dollars of additional costs." It also is losing suppliers because it has been deemed an "unreliable" buyer.

BP Amoco's financial hit from continuing and increasing cuts in its firm capacity at the Topock delivery point and from the San Juan Basin has gone from its originally estimated $1-$2 million to more than $6 million in the last year. "In addition to this financial harm, which consists of lost revenues from being forced to find other less attractive markets for our production, as well as stranded reservation charges..., Amoco is also realizing a much lower price in the basin due to the recent increase in the California Border and San Juan basin differentials." The affidavit by Penny Barry, manager of supply and transportation, west region, pointed out that consumers also are bearing a burden since the uncertainty of scheduling firm gas is contributing to widening the differential from the basin to the California border and hiking delivered prices. One observer said that when producers in the basin over-schedule gas to flow in the pipeline to help ensure that much of their gas will make the cut, it drives down the basin price. When gas supply is curtailed at the border, prices there increase, resulting in a wider basin-border price spread.

For the most recent month, August, BP Amoco's cuts averaged 48%. Barry noted that the explosion on El Paso had not significantly affected the levels, since cuts before the rupture were 47% and cuts after the blast were 51%.

Burlington Resources, with three firm contracts, said cuts in its firm contracted capacity at Topock peaked at 66% in June, 58% in July and 58% in August. Cuts in its FT at Ehrenberg peaked at 45% in June, 47% in July and 47% in August. Even its contract into Waha and points East registered peak cuts of 45% in June 41% in July and 51% in August. All of the peaks were before the mid-August explosion.

Rocco Canonica

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