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FERC Approves Tennessee Extension to Access New Supplies Offshore Louisiana

December 19, 2005
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FERC last Thursday awarded Tennessee Gas Pipeline a certificate to build an extension of an existing pipeline in federal waters offshore Louisiana, which would provide access to new deepwater natural gas supplies.

The project calls for the construction of a 6.23-mile, 24-inch diameter pipeline to extend its existing 30-inch diameter Triple-T line to establish an interconnect with Enterprise Products Partners LP's Anaconda Gathering System at Eugene Island Block 371 in federal waters offshore Louisiana [CP05-416]. The new facilities will transport up to 200 MMcf/d of new gas supplies.

Tennessee contends that the proposed Triple-T extension project will provide it with significantly greater access to deepwater supplies at minimal cost, the order said. Specifically, Enterprise has recently secured access to Kerr-McGee's newly discovered Constitution well, located in Green Canyon Block 680 and has constructed facilities to connect Constitution to the Anaconda system upstream of Eugene Island Block 371. Enterprise's Anaconda gathering system currently connects with ANR Pipeline at that location, but anticipated gas supplies are expected to exceed ANR's capability.

Tennessee said its proposed extension project would create a second pipeline to take deliveries at Eugene Island Block 371, providing enhanced access to new offshore gas supplies.

The project is expected to cost approximately $22 million, of which Tennessee will pay $9.5 million, ANR will provide $7.5 million and a non-affiliated third party will pay $5 million. FERC denied Tennessee's request for a predetermination that it could roll the project costs into its existing rate, saying that the El Paso-owned pipeline had failed to show that the project will not be subsidized by existing customers.

Tennessee said it hopes to have the pipe project in operation in time to receive initial gas flow from Kerr-McGee's Constitution deepwater discovery, which is currently scheduled to begin in June 2006.

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