In the latest of a yearlong effort to put the brakes to anunwelcome MarketLink project, the state of New Jersey and thestate’s Department of Law and Public Safety called on FERC lastweek to rescind and vacate the certificate approving constructionof the controversial pipeline expansion through the northern partof the state, and to treat sponsor Transcontinental Gas Pipe LineCorp.’s recent request to amend the project as a new application.

In short, the state asked the Commission to requireTranscontinental to start over from scratch with its MarketLinkproject, which originally was intended as a 700 MMcf/d, 154-mileloop expansion of Transco’s existing system in Pennsylvania andnorthern New Jersey, but which has since been scaled back[CP98-540].

In seeking to vacate the certificate awarded to Transco lastApril, New Jersey — at the urging of Gov. Christine Whitman —asked FERC to immediately suspend Transco’s ability to condemnproperty in the state for construction of the MarketLink projectpending Commission action on the state’s requests.

The Garden State contends the make-up of the original MarketLinkproject — capacity requirements, targeted in-service date andcustomer identities — has changed so radically in the past coupleof months that it “makes a mockery of the Commission’s wholepipeline certification process.”

Transco now concedes its original proposal “has essentiallyfallen through,” the state said. “Yet [it] seeks to retain thecertificate it won through that process, even though the grounds onwhich it was issued have disappeared. The Commission should notpermit this. The certificate should be rescinded.”

“We’re disappointed that they’ve elected to take this course ofaction,” countered a Transco spokesman, but “we remain eager towork with New Jersey to address any concerns it may have.”

In a companion protest also filed last Monday, New Jersey saidTransco’s amended proposal seeking to phase in construction of itsMarketLink expansion calls for such a “completely differentproject” that “it should have been filed as, and should beevaluated as, a new request for a new certificate.” According tothe state, “the only feature that really remains of the originalproject is its name.” Congressman Bill Pascrell Jr. (D-NJ) alsolodged a protest at FERC to Transco’s amended proposal on similargrounds.

In its September amendment, Williams’ Transco proposed buildinga multi-stage project, with Phase I targeted for in-service by Nov.1, 2001 and Phase II by Nov. 1, 2002, for a total of about 296MMcf/d- “less than half [the capacity of] the original project” -at a cost of $242 million. The remainder of the project would befurther phased in as shippers firm up agreements. Transco at thetime said it expected the entire 700 MMcf/d to be in service byNov. 1, 2004. The pipeline’s initial application had called for the700 MMcf/d to be in service by Nov. 1, 2001.

Phase I and Phase II projects would serve seven shippers. Withthe exception of Transco affiliate, Williams Energy Services Co.,none of them are the original shippers, according to New Jersey.Even Williams Energy, the state noted, has cut its capacitycommitment to less than half of the initial amount and pushed backits date for service to begin to Nov. 1, 2001. Several of the newshippers also have the “rights to delay or withdraw” from theiragreements with Transco, which New Jersey believes makes the marketneed for the project questionable at best.

In the meantime, New Jersey has asked the U.S. Court of Appealsfor the District of Columbia to “hold in abeyance” its challenge tothe orders approving the MarketLink project until FERC rules on itsrequests. New Jersey and the state’s Department of Law and PublicSafety filed a joint appeal last June.

The state contends Transco’s proposed amendment violates anumber of conditions imposed by FERC in the MarketLink certificate,which it says prohibits phasing of the project, requires MarketLinkto be 100% subscribed before construction can start, and sets April26, 2002 as the deadline for the project to be completed and inservice.

Assuming FERC should require MarketLink to begin all over again,New Jersey has indicated it will oppose a new application asvigorously as it did the original one. “The demand is simply toosmall in quantity and too shaky in quality to justify the project.”

In the event of a new certificate proceeding, “the bar [forTransco] should be even higher than it was in the originalcertificate, not lower” for executed firm transportationagreements, the state believes. “In spite of its best efforts toensure against them, the Commission has now experienced thedisappearing firm commitments to the original project.” Transcomust be required to show “truly definite and binding” firmcontracts for 100% of the capacity. Also, it said the April 26,2002 deadline for MarketLink to be completed and in service shouldnot be changed.

Moreover, New Jersey said the Commission should give TexasEastern Transmission Corp.’s (Tetco) proposal for a systemalternative to MarketLink a second glance. Tetco estimated it wouldhave 300,000 Dth/d of available capacity for 2000 and additionalcapacity in future years, which it said — when combined withminimal construction — could meet the capacity needs of manyMarketLink shippers. But FERC rejected the Tetco alternative in itsenvironmental analysis of the MarketLink project, saying it wasinsufficient to meet the then-stated capacity goal of Transco(700,000 Dth/d) and the in-service date of Nov. 1, 2000.

Susan Parker

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