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FERC Says Ethane an Energy Product, Jurisdictional

FERC on Tuesday affirmed its jurisdiction over the interstate pipeline transport of purity ethane, asserting that the natural gas liquid (NGL) is both a feedstock and a fuel. In doing so it cited "future energy uses" of ethane in a number of proposed liquefied petroleum gas (LPG) projects.

The Federal Energy Regulatory Commission (FERC) denied Williams Olefins Feedstock Pipelines LLC's petition for non-jurisdictional status for the proposed Williams Bayou Ethane Pipeline project. The pipeline would deliver unbatched purity liquid ethane to petrochemical plants and storage facilities along a route from Orange, TX, to Geismar, LA. The ethane is to be used exclusively as a feedstock to produce ethylene, according to Williams.

Williams had said product to be transported by the proposed pipeline would only be used as a feedstock, making the purity ethane similar to other non-energy products, such as anhydrous ammonia, over which FERC has disclaimed jurisdiction.

However, FERC said, "...it is unquestionable that ethane has a thermal heat content and has the capability of being burned and used for fuel or energy purposes...including being added to low-Btu natural gas to increase its heat content and being used in low-ethane propane for export for international use."

In 2012, the United States became a net exporter of LPG, including ethane, for the first time, FERC noted, adding that Williams' own Bluegrass Pipeline Project to move y-grade NGLs (see Shale Daily, March 7) "touts access to not only petrochemical plants, but also storage facilities, fractionation and export terminals."

Additionally, FERC cited an LPG export project of Enterprise Products Partners LP as well as project by Williams and its Bluegrass partner, Boardwalk Pipeline Partners LP (see Shale Daily, Oct. 3). "The Commission anticipates that these propane projects will rely on blending ethane with propane to meet global use requirements,"FERC said.

"Against this background, it is evident that purity ethane has future energy uses. "Thus, purity ethane is a naturally-occurring hydrocarbon that is used or can be used for energy-related purposes."

Because Williams will not have title to the ethane to be shipped on the Williams Bayou Ethane Pipeline, it cannot be certain that some of the product won't end up being used for energy purposes, FERC said, particularly since some of the purity ethane is to be shipped to storage facilities and then potentially shipped out for an energy use. Granting non-jurisdictional status to some ethane pipelines and not others would result in a "Balkanized ethane pipeline system," the Commission said.

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