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Discovery Pipeline Sets Open Season to Transport Gas Stranded Following Katrina

Discovery Gas Transmission LLC is holding an open season through Oct. 21 to transport up to 250 MMcf of gas stranded following Hurricane Katrina. FERC last Tuesday granted an emergency exemption and waivers to the pipeline to expedite the gas transportation project because of damage to a Dynegy Inc. processing plant in Venice, LA. The petition by Discovery asserted it could take up to a year to rebuild the Venice plant.

Discovery, which is operated by Williams Cos. and jointly owned by Williams and Duke Energy Field Services, received approval from the Federal Energy Regulatory Commission to construct the new receipt point at Texas Eastern Transmission's Larose compressor station in Lafourche Parish, LA (Docket No. EM06-1-000). The proposed in-service date is mid-November.

The Discovery system has a gas processing plant at Larose, LA, with a capacity of up to 800 MMcf/d. Its fractionator in Paradis, LA, has a 42,000 bbl/d capacity. Throughput on the pipe is about 300 MMcf/d, with capacity up to 800 MMcf/d. Discovery's facilities sustained only minor damage during Katrina and have been in full operation since Sept. 3.

"This emergency action will help speed the recovery of badly damaged energy supplies in the Gulf Coast," said FERC Chairman Joseph T. Kelliher. "The more natural gas that reaches the market, the less the price impact will be for homeowners this winter heating season."

The Commission's action grants Discovery's request to construct and operate $3 million in interconnections without triggering FERC regulations that restrict emergency transactions to 120 days. The company, whose system extends from the onshore area south of New Orleans 105 miles into the Gulf of Mexico, wants to provide service for up to a year or until the Venice, LA processing plant comes back on stream, whichever occurs first.

Discovery Gas plans to use Discovery Producer Service's gathering line to take unprocessed gas offshore and transport the gas to Larose. From there, the gas will be delivered into Texas Eastern Transmission Co.'s interstate pipeline network. The company also proposes to construct loops and taps to interconnect the gathering line into Texas Eastern on the upstream end and to Discovery on the downstream end. The processed gas would then be delivered into Discovery Gas Transmission's pipeline for redelivery into the interstate pipeline grid. Discovery Gas will recover from shippers the estimated $3 million cost of the interconnections through a facilities reimbursement charge.

Service will be performed under Discovery's existing FT-2 rate schedule, with details at . The open season, which began Wednesday, will end at 5 p.m. CST on Oct. 21. Shippers may contact Kevin Rehm at (713) 215-2694 or Asa Roberts at (713) 215-3078 to obtain a copy of the transportation services agreement.

Several natural gas processors in Louisiana were damaged during Hurricanes Katrina and Rita, including the Venice, Yscloskey and Grand Isle plants. About 20 gas processing plants located along the Gulf Coast were still shut in on Friday, which has affected other pipeline operators.

In related news, El Paso Corp.'s Tennessee Gas Pipeline has reconfigured its system because of damage to its Port Sulphur, LA compressor station 527 (see NGI, Oct. 10). Early estimates are that the station will be out of service for three to six months, and the company has reconfigured the system to move gas from the Main Pass, South Pass (excluding production from the South Pass 55 area) and West Delta area through a different compressor station (523 Cocodrie) for separation and dehydration and then north through the 500-2 line.

Because of processing plant outages and hydrocarbon dewpoint levels in the pipeline, El Paso said shippers may be required to deliver their gas to Discovery (meter No. 021032) or to other delivery meters upstream of mainline valve 528.

The Venice area still does not have any road access, according to Enterprise Products Partners' Doug Krenz, vice president of transportation. Enterprise's Mississippi Canyon Pipeline delivers more than 500 MMcf/d of gas to Venice and has facilities near the Venice plant. Krenz said employees only gained access to its facilities last week.

"The problem is access," said Krenz. "The roads aren't even open to Venice yet. Both Enterprise and Dynegy have leased barges to provide housing and staging areas for our equipment to make the repairs. We are making them from the sea side rather than from the land side at this point in time, which obviously makes it a lot harder. We're hopeful that we'll have road access as soon as possible but who knows? I know the teams are working on that. It will be very helpful when that occurs."

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