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Pipeline-By-Pipeline Approach Proposed for Gas Quality Issues

Industry should take a "pipeline-by-pipeline approach" to tackling and resolving the contentious natural gas quality and interchangeability issues, two major gas groups said in a joint statement issued earlier this month.

"We agree that a pipeline-by-pipeline approach is necessary to address and resolve any natural gas quality concerns regarding hydrocarbon liquid dropout (specifically, whether to establish a cricondentherm hydrocarbon dew point) and interchangeability of natural gas supplies (specifically, whether to establish an interchangeability specification such as Wobbe in the pipeline tariff)," said the Interstate Natural Gas Association of America (INGAA) and the American Gas Association (AGA), which represent interstate gas pipelines and gas utilities respectively.

As an initial step, a pipeline and its shippers should notify each other if they want to discuss gas quality/interchangeability issues, including the possibility of tariff changes, the two groups said in the statement that was filed at FERC on June 2. "As soon as practical, the pipeline and its customers should exchange historical information regarding the quality of gas delivered by the pipeline and used by the customers and other relevant information, such as any problems experienced in connection with hydrocarbon liquid dropout and the interchangeability" of liquefied natural gas and traditional gas, they noted.

Once information has been shared, "interstate pipelines and their customers should meet to discuss specifications to address hydrocarbon liquid dropout and the interchangeability of natural gas supplies and, if necessary, the need for pipeline tariff revisions in order to ensure the continuation of this reliability. Group discussions with all customers will be beneficial, although individual meetings are also encouraged."

If no customer contacts a pipe with gas quality/interchangeability concerns, the pipeline will not be required to initiate discussions on its own, INGAA and the AGA said. Also, pipelines that have already resolved these issues through settlement or administrative litigation will not be required to participate in this process either, they noted.

"If as a result of these discussions, tariff revisions to current gas quality specifications are deemed necessary, AGA and INGAA anticipate such tariff revisions being submitted in the form of a negotiated settlement and the FERC reviewing and approving such settlement."

Absent a consensus between parties, "AGA and INGAA anticipate that such discussions will continue under the guidance of the FERC mediation staff or other alternative mediation services with the goal of filing a consensus document with FERC no later than one year from the date of this joint statement," the two groups said.

The American Public Gas Association (APGA), which represents gas municipal utilities, said it "largely endorses" the joint INGAA-AGA statement, but it believes the process should be completed in six months rather than one year. "APGA's experience is that if you give parties a year to complete a task, they will take a year; if you give them six months...they will complete the task within the allotted time."

It also said that parties, who believe the negotiation is not achieving its intended purpose, should be permitted to ask FERC to take action on the matter. "FERC may then determine whether to allow the negotiation process to continue or to initiate formal proceedings," the APGA noted.

With these suggested changes, the group called on FERC to take "affirmative action" on the joint statement.

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