FERC last week cleared the way for Transcontinental Gas PipeLine (Transco) to begin building two phases of its controversialMarketLink project that would expand its existing transportationsystem in western Pennsylvania and northern New Jersey, but itbarred the pipeline from proceeding with a third phase until it canback up that part of the project with executed contracts.

Specifically, the Commission authorized Transco to construct166,000 Dth/d of capacity to serve five shippers by Nov. 1, 2001(Phase I), and 130,000 Dth/d of capacity to serve two shippers byNov. 1, 2002 (Phase II). But it said Transco could not proceed withthe remainder of its 700,000 Dth/d MarketLink expansion until itsubmitted executed contracts fully subscribing that capacity. Ineffect, FERC authorized Transco to construct less than half of theoriginal MarketLink project.

It directed Transco to file the executed contracts within fourmonths of the order. If Transco should fail to meet the deadline,the certificate authority it was awarded last April to build theremaining facilities would expire.

In limiting its approval to only two phases, FERC said in theorder that while “the market for Phases I and II is amplydemonstrated by executed contracts for all of that capacity, thereis no longer evidence in the record to support a finding of needfor the remaining facilities.”

The Commission issued a certificate to Transco on April 26 tobuild the entire 700,000 MarketLink expansion project.Subsequently, however, several major shippers (Dynegy Marketing andTrade, Enron North America and Engage Energy) backed out of theproject or requested service date extensions, which caused Transcoin September to seek an amendment to its certificate that wouldallow it to phase in the project [CP98-540].

In its September petition, Transco indicated it intended to askFERC in the future for the authority to build other phases as themarket demand for the remainder of the MarketLink project evolved.But the Commission last Wednesday put the brakes on the pipeline’splans for a series of phases, saying Transco would have to buildthe entire MarketLink project in three phases.

If Transco meets the four-month deadline imposed by FERC forcontracts, the pipeline will not need any additional certificateauthorization to build Phase III. That phase of the project wouldhave to be sized at about 400,000 Dth/d in order for MarketLink toreach 700,000 Dth/d. If Transco misses the cut-off date, it wouldhave to apply for a new certificate to build additional facilities,according to the order.

Transco was dealt yet another blow when FERC refused its requestto extend the completion date for MarketLink to Nov. 1, 2004.Instead, the Commission allowed the pipeline only two years fromthe date of the order to complete construction. That’s “more thansufficient time,” the order said.

On the plus side for Transco, the Commission rejected the stateof New Jersey’s request to stay the MarketLink project. “We findthat New Jersey has not demonstrated that it will sufferirreparable harm absent a stay if Transco conducts surveys andacquires rights of ways for the MarketLink facilities,” many ofwhich Transco already has completed, the order noted.

The $123 million Phase I project calls for the construction ofabout 22.2 miles of 36-to-42 inch diameter looping in westernPennsylvania and New Jersey; a new 15,000 horsepower compressorunit in Columbia County, PA; a new 15,000 hp compressor unit inMercer County, NJ; and associated facilities. Transco said itexpects to begin construction on the initial phase during the firstquarter of 2001. The $119 million Phase II entails the constructionof about 30.3 miles of 12-to-42 inch diameter looping inPennsylvania and New Jersey.

Phase I shippers that have executed 10-year binding contractsinclude Aquila Energy Marketing (25,000 Dth/d), Consolidated Energy(30,000 Dth/d), Consolidated Edison (10,000 Dth/d), St. LawrenceCement (1,000 Dth/d); and Williams Energy (100,000 Dth/d).

Two shippers have signed firm contracts for the Phase IIproject. They include Virginia Power Energy Marketing (100,000Dth/d) and PPL EnergyPlus LLC (30,000 Dth/d).

Susan Parker

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.