FERC OKs Sale of NGPL Offshore Laterals
Natural Gas Pipeline Company of America (NGPL) was given the
green light last week by FERC to sell its interests in 181 miles of
offshore laterals to Green Canyon Pipe Line Co., and 40 miles of
offshore laterals to East Breaks Gathering Co. L.L.C.
The facilities earmarked for Green Canyon include 39 laterals,
each five miles or less in length, that are located offshore
Louisiana. Some of the laterals have been previously abandoned and
retired in place. Most of the facilities interconnect with the High
Island Offshore System, U-T Offshore System and the Pelican
Interstate Gas System. The purchase price has been pegged at about
NGPL plans to sell its interests in nine other lateral lines and
associated facilities in the Gulf of Mexico to East Breaks. The
lateral segments, which also are less than five miles long,
currently are or had been interconnected to Stingray Pipeline. NGPL
estimated the purchase price for these facilities --- plus an
additional five lateral lines that it plans to sell later --- will
be about $5.1 million.
With the elimination of the bundled sales service, NGPL said the
offshore laterals were no longer a strategic benefit for the
The Commission conceded to NGPL's request to declare the
abandoned facilities to be exempt gathering upon their acquisition
by Green Canyon and East Breaks.
Chevron U.S.A. Inc. objected to the sales of the laterals to
both Green Canyon and East Break, saying that they violated a 1988
take-or-pay settlement in which Natural agreed --- after the
termination of its gas purchase contracts --- to continue to
operate or provide transportation to Chevron through certain
Chevron asked FERC to impose a default contract requirement on
the new owners of the lateral facilities, requiring them to provide
service to Chevron at its existing rate and service conditions. But
the Commission noted that it had no jurisdiction over exempt
gathering facilities to take this action.
Anyway, it pointed out "the purchasers represent that they will
continue to provide existing services at current rates and
contractual terms of service until Natural's agreements expire."
And after Natural's agreements expire, East Breaks has agreed in
principle to provide service to Chevron through the so-called
Chevron Interconnect at "mutually acceptable rates, terms and
conditions of service."
Lastly, the Commission scoffed at Chevron's suggestion that it
intervene in the sale. FERC "will not dictate to Natural that it
must sell its interest to Chevron, a shipper, or to Stingray, an
interconnecting pipeline, or to any other party. The suggestion
that the Commission should prevent the designated buyers from
acquiring the property would also be inappropriate and would
interfere with matters of private negotiation."
©Copyright 2001 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.