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FERC Approves Dominion Transmission's Northeast Storage Project

FERC last week approved Dominion Transmission Inc.'s proposal to provide 9.4 Bcf of additional natural gas storage capacity in West Virginia, Pennsylvania and New York, as well as 163,017 Dth/d of winter season firm transportation capacity.

As part of its Northeast Storage Project, Dominion seeks to develop a depleted production reservoir in Cattaraugus County, NY, as the Quinlan Storage Pool, and install a new pipeline and compression facilities; make upgrades to the Fink-Kennedy-Lost Creek storage complex in Lewis County, WV, including a new Wolf Run Compressor Station; and modify the existing Leidy metering and regulating station in Pennsylvania.

The project would provide 9.4 Bcf of storage service by developing 4 Bcf of working gas capacity in the Quinlan Pool, upgrading the Fink complex to utilize 4.468 Bcf of existing Fink complex working gas capacity, and utilizing 0.932 Bcf of existing certificated storage capacity that is unsubscribed on Dominion's system, according to the FERC order [CP04-365]. It said the Quinlan Pool would have a maximum deliverability of 200 MMcf/d and an injection rate of 100 MMcf/d.

To connect the Quinlan Pool to Dominion's existing facilities, Dominion plans to construct about 21.3 miles of 20-inch diameter pipeline in Cattaraugus County and in McKean and Potter counties, PA, along with smaller diameter facilities in New York, Pennsylvania and West Virginia.

As a result of an open season, Dominion said it executed precedent agreements with three local distribution customers for 10-year terms at maximum rates. The customers purchased 146,664 Dth/d of the winter season firm transportation service and 8.46 Bcf of storage capacity. Dominion will be at risk for the unsubscribed 981,220 Dth of storage capacity. The estimated cost of the project is $64.8 million, the pipeline said.

Although FERC approved the project, it said that Dominion could not begin construction until it has negotiated firm contracts equal to the level of service and terms of service represented in the precedent agreements.

Given that the project's transportation revenue would only exceed costs after the third year of service, FERC said it could not approve Dominion's request for rolled-in rate treatment at this time. "If Dominion seeks rolled-in treatment for these transportation services in a future...Section 4 rate case, it will need to demonstrate that there will be no subsidization from its existing shippers," the order said.

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