'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
"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
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