Amoco, Burlington Resources and now Southern California Gas have broadened the attack on El Paso Natural Gas’ capacity allocation procedures and have requested that FERC block El Paso’s new $38 million contract with Enron for 1.2 Bcf/d of firm capacity.

In a motion with FERC for expedited partial summary disposition, the three have charged that El Paso violated its major settlement agreement in August by allowing Dynegy expanded California border delivery point rights on a portion of its contracted capacity. They also claim that violation has continued in El Paso’s latest agreement with Enron.

After Amoco and Burlington told the Commission this fall that they were losing millions of dollars because of pro rata capacity allocations at El Paso’s Topock delivery point into SoCalGas, the Commission initiated a Section 5 proceeding to revise El Paso’s allocation of capacity at both receipt and delivery points (see NGI, Sept. 27, Nov. 15). It also ordered El Paso to come up with a revised method of allocation by Jan. 10, following which a technical conference will be held.

However, Amoco, Burlington and SoCalGas now say the Commission should step in immediately to prohibit El Paso from selling its “Block II” firm transportation capacity (593,000 Dth/d) to Enron in violation of its rate case settlement. They claim significant harm is being done and could be avoided if the Commission determines a settlement violation has occurred. The settlement stipulates that this Block II capacity, which now makes up a portion of the 1.2 Bcf/d included in a one-year contract with Enron that begins in January, has primary delivery point rights at only Topock/PG&E, and not at any other points. But El Paso changed the rules for this space in August by “unilaterally, and in violation of the Settlement and its tariff, grant[ing] Dynegy primary delivery point rights for Block II capacity at SoCalGas Topock.”

The shippers requested that the Commission rule on this matter immediately because the Enron contract is for only one year and “is likely to terminate before the Commission addresses the violations and harm demonstrated herein. Moreover a favorable ruling would have an ameliorative effect of limiting the gas that can utilize the constrained SoCalGas/Topock delivery point. This will help mitigate the significant level of cuts that have occurred since August of this year for shippers.”

In their initial complaint, they told FERC curtailments of firm capacity reached as high as 57% of nominations at Topock/SoCalGas. There are four delivery points at Topock – Mojave, SoCalGas, Southwest Gas and PG&E – but SoCalGas often is the most economically attractive. Because delivery point access is left wide open on most El Paso contracts, timing often dictates who gets market access.

As a remedy, the producers proposed that El Paso be required to limit primary delivery point capacity at the interconnection with SoCalGas to the take-away capacity of the LDC’s system (540 MMcf/d). Amoco estimates it’s losing up to $2 million annually and Burlington said its losses average $3,000/day because of the curtailments at the Topock point.

KN Marketing LP told the Commission a similar situation is occurring on the eastern end of El Paso (see NGI, Dec. 20). In a new complaint filed last week against El Paso it said it has lost nearly $800,000 and its reputation has been tarnished because at times as much as 46% of its contracted firm capacity has been curtailed due to overbooking on the pipeline primarily between the San Juan Basin and delivery points in West Texas.

Rocco Canonica

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