Tennessee Gas Pipeline Co. LLC (TGP) denied a shipper's allegation that it failed to accept a valid offer of turnback capacity during an open season for an expansion project in Pennsylvania. It urged FERC to reject a protest filed by the shipper and certify the project.
Last June, TGP, a unit of Kinder Morgan Inc., filed an application with the Federal Energy Regulatory Commission (FERC) for its Triad Expansion Project [CP15-520], which would provide 180,000 Dth/d of incremental firm transportation capacity to serve a new combined-cycle natural gas-fired power plant in Lackawanna County, PA (see Daily GPI, June 19).
During the open season from March 11 to April 1, TGP solicited offers from shippers to permanently relinquish capacity that could be used to serve the power plant.
According to TGP, on March 25, Penn Natural Gas Inc. (PNG) -- a unit of UGI Corp. and a shipper that had just entered into a 15-year contract last November when TGP's Uniondale Project was placed into service -- made a turnback offer of 30,000 Dth/d for the Triad project.
But TGP said it evaluated PNG's offer and decided to turn it down on April 16, on the grounds that the different lengths of the Uniondale and Triad projects' transport paths -- 275 miles and 17 miles, respectively -- "would result in the turnback of substantial capacity unnecessary for the Triad project...hence, turnback would result in the de-contracting of a significant amount of capacity over a significant distance."
TGP also rejected PNG's offer because it would not keep the former "financially whole." PNG subsequently filed a protest with FERC on July 27, and TGP said negotiations between the two sides since have been fruitless.
"Tennessee has a strong suspicion that PNG is using the Triad Project as a [ruse] to avoid its very recent contractual commitment because of changed market conditions," J. Curtis Moffatt and Jacquelyne Rocan, attorneys for TGP, said in a 22-page motion filed last Wednesday.
TGP said PNG was relying on two affidavits that estimate that, should TGP accept the deal, the Triad project's pipeline looping could be reduced from seven to six miles and compression could be reduced by 344 hp, leading to savings of between $5 million and $9 million. But TGP said its own analysis had determined that a turnback of 30,000 Dth/d would reduce the Triad project's mileage by 0.3 miles, at most, and save approximately $370,000.
"Tennessee does not view these savings as significant enough to change the scope of the Triad Project," the attorneys said, urging FERC to reject the assertion that TGP be forced to accept the offer, and to approve the certificate for the project, which the company hopes to have in service by Nov. 1, 2017.
Joseph Swope, a spokesman for UGI, told NGI on Monday that the company was unable to comment because the case is ongoing.
The Triad project calls for constructing seven miles of 36-inch diameter pipeline looping adjacent to existing right-of-way for the pipeline’s 300 Line and immediately upstream of its existing Compressor Station 321 in Susquehanna County, PA. TGP said it has reserved 43,477 Dth/d of existing capacity not otherwise subscribed on a long-term basis along the project path for the project.