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FERC Extends Deadline for Gas Project Construction Under Relaxed Blanket Rules

FERC last Wednesday gave the natural gas industry four additional months -- until Feb. 28, 2007 -- to complete the construction of pipelines and other infrastructure projects under the agency's relaxed blanket-certificate rules. The agency relaxed the regulations in late 2005 to help with the rebuilding of energy facilities along the hurricane-battered Gulf Coast region.

In November, the Federal Energy Regulatory Commission waived regulations on a temporary basis to raise the cost limitations for projects that natural gas pipelines can construct without prior specific authorization under Part 157 blanket certificates. Specifically, the agency doubled the cost of projects that could be built under the automatic provisions of blanket certificates to $16 million, and raised the cost of projects that could be constructed under prior-notice provisions of blanket certificates to $50 million from $22 million [EM06-5].

FERC also expanded the definition of eligible pipeline projects to include mainline facilities, extensions of mainlines and temporary compression that raises the capacity of a mainline. The increased dollar limits and expanded eligibility definition applied to any new pipe project that offers increased or alternative access to natural gas supply, provided the facilities are constructed and placed into service by Oct. 31, 2006 (see NGI, Nov. 21, 2005).

Last week's order would extend the waivers to projects that are built and put in operation by Feb. 28, 2007. The extended deadline is intended to provide more time for facilities that cannot be placed in service by the start of the 2006-2007 heating season, enabling them to be completed during the heating season when the facilities are most needed, FERC said.

Interior Department's Minerals Management Services (MMS) estimates that as much as 400 MMcf of natural gas production still will be offline by the start of the 2006-2007 heating season, the Commission said. Based on the MMS information, FERC said it believes the deadline extension was warranted to help restore more production in the Gulf region.

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