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FERC Denies Blue Racer Proposals for West Virginia NGL Pipeline Expansion

FERC has denied a Blue Racer Midstream LLC (BRM) subsidiary’s plans to change the rate structure and terms of service for an expansion of a 58-mile natural gas liquids (NGL) pipeline in West Virginia, finding that the company’s intent to reduce available capacity to uncommitted shippers raises concerns of “undue discrimination.”

The Federal Energy Regulatory Commission denied Blue Racer NGL Pipelines LLC’s petition last week. The company wants to spend $25 million to reconfigure the G-150 pipeline system to provide batched propane and butane service with deliveries at an existing connection with TE Products Pipeline Co. (TEPPCO) and at a new connection with the much larger Mariner East 2 (ME2) pipeline once it enters service in 2Q2018.

G-150 currently moves propane from BRM’s Natrium Complex in Marshall County, WV, to TEPPCO at Follansbee, WV. Volumes have averaged just under 6,300 b/d on the system, or about 20% of the line’s capacity. Blue Racer asserts that G-150 is significantly underutilized due to the volume of propane available from numerous fractionators for delivery into TEPPCO’s lower pressure, relatively small, eight-inch pipeline system.

ME2, which is currently under construction, would have the capacity to move 275,000 b/d of NGLs from processing and fractionation facilities in Ohio, West Virginia and Pennsylvania to the Marcus Hook Industrial Complex near Philadelphia.

A reconfiguration of G-150, which Blue Racer would achieve with an ME2 interconnect, propane and butane pumps at Natrium, associated piping, controls and other equipment, would result in greater use of the system. An expansion would enable the pipeline to move at least 30,000 b/d, according to Blue Racer.

But only BRM entered into a transportation services agreement to become a committed shipper and made a volume commitment of 27,000 b/d during an open season last year. Under Blue Racer’s proposal, only about 3,000 b/d would then be reserved for uncommitted shippers.

Blue Racer also sought Commission approval of a two-tier rate structure, in which higher volume commitments would be discounted below lower volume commitments. 

A timely motion to intervene and protest was filed by Chesapeake Energy Marketing LLC, which FERC granted. Chesapeake requested that the Commission deny Blue Racer’s petition, arguing that the requested authorizations would significantly reduce its ability to move propane on the G-150 line. 

“Blue Racer has not explained how the existing shipper that is currently using the pipeline’s capacity for service to TEPPCO will be be impacted, and it appears that the existing service could be curtailed in order to provide priority service to the committed shipper, BRM,” FERC wrote in its order. The Commission added that Blue Racer’s proposal raises undue discrimination concerns by creating two classes of shippers. As a result, the Commission denied the company’s petition and didn’t address specific aspects of the rate structure and terms of service.

Blue Racer spokesperson Casey Nikoloric said the company still plans to move forward with the G-150 expansion. The FERC order, she said, only affects the contract and rate structure for service on the proposed reconfigured pipeline. The company is reviewing the order and determining how to respond.

 

 

 

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