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MoPSC Questions Panhandle Eastern's Wholesale Compressor Replacements

The Missouri Public Service Commission (MoPSC) has filed comments questioning Panhandle Eastern Pipe Line's "wholesale replacement" of 71 mainline compressors with 15 new ones -- while keeping the same overall horsepower of 118,720 -- at a cost $192 million (CP06-272).

Noting that the pipeline serves a number of Missouri utilities, the state commission said the cost of the new facilities presumably would show up later in rates. Panhandle filed 30-day advance notification of its plans with the Federal Energy Regulatory Commission on May 4. The project is expected to be completed in early 2008. The new facilities are at compressor stations spanning much of Panhandle's mainline from Liberal, KS through Missouri, Illinois and Indiana.

MoPSC said there was "a presumption that the replacement facilities are necessary to replace antiquated equipment. However, it is difficult to understand how all of these compressors became antiquated at the same time and why replacement of all of these compressors is needed right now." Panhandle has only said the replacements are necessary "to ensure safe and reliable system operations, and maintain reliability of the stations' throughput."

"What events, trends or other supporting reasoning is precipitating this major project and major expenditure at this time?" the Missouri commission asked. Panhandle provided no documentation of problems or the age and efficiency of the facilities being replaced. "Given that there are a significant number of compressor stations that operate at, or very near, 100% capacity during peak hours, will this change of equipment improve the system in areas that need improvement?"

There are a host of additional questions to be answered. "Why has Panhandle chosen compressor stations with good fuel efficiency for upgrades?" Why is it replacing compressors in stations with lower use? The MoPSC would like to see "all data and information, including any cost-benefit studies relative to each station and the extensive plan as a whole..."

A Panhandle Eastern spokesman said the company is replacing older equipment that was installed when the pipeline system was built in the 1930s to 1950s. It is part of an ongoing maintenance program. He said the company would be responding to the Missouri commission by early this week.

Commission spokespersons said the replacement program came to their attention because it was so large. They were not aware of any program as large in recent times. The Missouri commission is aware that the Rockies Express pipeline has recently filed for Phase Two of its long line from the Rockies East, a 713-mile, 1.5 Bcf/d segment delivering gas from the Cheyenne Hub in Colorado to an interconnection with Panhandle Eastern in Audrain County, MO (see NGI, June 5). This phase, dubbed REX-West is to be completed by January 2008.

That connection would impact a portion of Panhandle's system, they said, but the pipeline's filing "makes no mention of whether that's a driver for the replacement program. We just wonder why such a large replacement project is being proposed. Theoretically, you would hope there would be some sort of upgrade such as making it more efficient or not as noisy, but as far as horsepower goes, they are just replacing it."

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