Alliance Pipeline Delay Extended
In a move that is likely to send ripples through the market, particularly
around Chicago, the 1.325 Bcf/d Alliance Pipeline extended its commercial
in-service delay last week to Nov. 13 from Oct. 30. Pipeline officials
said moisture and debris in the line caused the delay.
"As we have increased the flow of test gas volumes during our system
commissioning, we have encountered moisture and debris from construction,"
said CEO Norm Gish. "Specifically, most of the debris is in the form
of small pieces of foam from the [smart] pigs that were used to remove
the hydrostatic testing water from the line. The problem forced us to shut
down the system for short periods of time to clean out accumulated debris.
"We have since designed and installed additional in-line screens
at our compressor stations. The situation is improving and we are removing
ever-decreasing amounts of debris with increased flows of test gas. However,
this situation has not permitted us to run our system with the significant
volumes necessary to adequately test the reliability of our compressors."
It is the second time Alliance has had to delay its in-service date.
In early September, Alliance officials said rain in Saskatchewan this summer,
directional drilling problems at a creek in British Columbia, complex connection
problems with the Aux Sable liquids plant in Illinois and connection delays
with several U.S. pipelines and LDCs was to blame for a one-month delay
to Oct. 30 (see NGI, Sept. 11).
The pipeline will continue increasing test volumes until it does begin
commercial service, said Gish. There currently is about 500 MMcf/d of test
gas in the line. He expects firm delivery capacity to reach the full 1.325
Bcf/d prior to Nov. 13.
Alliance officials also noted that this is the first time a pipeline
the size of Alliance has been brought on stream at one time.
Regardless of the challenge, however, market participants were expecting
the system to be delivering gas starting at the beginning of the month
of November and this delay is likely to have a significant impact on November
One Chicago trader said he had a strong suspicion something was fishy
when his index offers were lifted Friday afternoon by a marketing company,
which he knows to own capacity on the pipe. "Everyone was a buyer
of index gas today for November, especially those now short for the first
13 days. I sold mine at NGI plus 1.5, but had I known that Alliance was
delayed I would have held out for something a little better."
Basis, meanwhile, was pretty much unchanged at +13 to +14 for November.
"It takes a lot to move the Chicago basis," he said.
Rocco Canonica, Dexter Steis
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