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FERC Approves NGPL's Interchangeability Compliance Filing

July 21, 2008
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Over the objections of shippers, the Federal Energy Regulatory Commission last Thursday approved a compliance filing for a series of proposed natural gas interchangeability specifications proposed by Natural Gas Pipeline Company of America (NGPL).

The specifications include a minimum Wobbe Index of 1,274; a maximum Wobbe Index of 1,380 for the Permian, Midcontinent, Texok (except Segment 25), Amarillo Mainline, Gulf Coast Mainline and Iowa-Illinois Zones; a maximum Wobbe Index of 1,400 for the South Texas and Louisiana transportation zones and Segment 25 of the Texok Zone; a maximum Btu value of 1,100 Btu per standard cubic foot (scf) for the Permian, Midcontinent, South Texas, Texok and Louisiana Zones; a maximum Btu value of 1,065 Bcf/scf for the Iowa-Illinois, Amarillo Mainline and Gulf Coast Zones; a maximum butane plus level of 1.5 mole percent; and a maximum inerts level of 4 mole percent. The Wobbe Index is a number indicating the interchangeability of fuel gas.

The interchangeability of domestic gas with liquefied natural gas (LNG) molecules has become a critical issue as more Btu-rich regasified LNG is introduced into the U.S. gas stream from imports, prompting pipelines such as NGPL to be concerned about the impact of the Btu-rich gas on the integrity of their systems, and local distribution companies (LDCs) to worry about the safety of regasified LNG for their end-use customers. In June 2006 FERC adopted a policy statement that takes a pipeline-by-pipeline approach to the complex issue of gas quality and interchangeability (see NGI, June 19, 2006).

NGPL, a pipeline subsidiary of Kinder Morgan, originally proposed a maximum Wobbe Index limit of 1,380 for its entire system, but then revised its proposal to raise the maximum Wobbe Index limit to 1,400 for gas received in the South Texas Zone, the Louisiana Zone, and in Segment 25 of the Texok Zone, which connects NGPL's South Texas Zone on its Gulf Coast Line to the Louisiana zone.

"With this revision, we find that Natural provides adequate access to imported LNG supplies in the Gulf Coast region, which will further maximize gas supplies transported on its system...Much of this imported LNG will flow northward towards eastern markets on other pipelines and will not adversely affect Natural's system," the FERC order said [RP01-503].

"We find that Natural followed the recommendations set forth in the [FERC] policy statement and the interim guidelines to calculate its Wobbe Index limits. The Commission finds that Natural's Wobbe proposal is properly supported by three years of historical data, and employs the tolerance ban recommended by the interim guidelines. Natural's proposed Wobbe Index limits offer a balance between system safety and reliability, and maximizing gas supplies on Natural's pipeline," it noted.

FPL Energy LLC argued that NGPL's proposed Wobbe Index was too broad and could negatively affect its generating plans in Forney and Lamar, TX, which are served by NGPL. It called for FERC to reject the pipeline's +/- 4% tolerance band, and order NGPL to meet with customers to develop standards that are based on sound technical, engineering and scientific considerations.

The pipeline averaged the the Wobbe Index for its Amarillo Line and the Wobbe Index for its Gulf Coast Line to arrive at a system-wide Wobbe Index of 1,327. It then applied +/- 4% tolerance bands to the system average to arrive at its proposed maximum and minimum Wobbe Indices, according to the order.

FERC rejected FPL Energy's request. "We will not require Natural at this time to implement more restrictive Wobbe Index tolerance bands on its system or implement a Wobbe Index rate of change mechanism. FPL Energy has not shown that implementing a more restrictive Wobbe Index tolerance band than the interim guideline-recommended +/- 4% is necessary for the safe and efficient operation of gas turbines used in electric generators attached to Natural's system," the order said. The Commission also denied Indicated Shippers' request to reduce NGPL's proposed minimum Wobbe Index to 1,265 from 1,274.

In the event FERC approved the proposed Wobbe Index limits, FPL Energy called on the agency to require NGPL to implement an appropriate cost-sharing mechanism so that captive end-use shippers would not have to bear a disproportionate cost burden of adopting gas interchangeability standards. The Commission denied that request as well.

But, the order said, "there is nothing in the present record to indicate that Natural's Wobbe Index proposal will require FPL Energy to incur any additional costs in running its electric generators. That is because the high-Wobbe Index LNG gas now entering Natural's system on [the] Gulf Coast, or expected to enter the system in the future, is unlikely to enter Natural's Cross Haul line, where FPL Energy's generators are located. Rather that gas will flow to the Chicago market over Natural's Gulf Coast Line or other pipelines serving East Coast markets. Therefore, it does not appear that Natural's Wobbe Index proposal will cause any change in the quality of the gas Natural currently delivers to FPL Energy."

NGPL originally proposed to include in its tariff an upper Btu limit of 1,110 Btu/scf for its entire pipeline system. However, in response to concerns that certain LDC shippers raised about their ability to accept gas with a Btu content in excess of 1,065 Btu/scf, NGPL modified its Btu proposal so as to ensure deliveries in its market area of not more than 1,065 Btu/scf.

FERC approved the revision in the Btu limit, allowing NGPL to implement a maximum Btu content of 1,110 Btu/scf for receipts and deliveries in its production areas; a maximum Btu content of 1,065 Btu/scf for receipts and 1,110 Btu/scf for deliveries in its transition area (the Amarillo Line and Gulf Coast line transportation zones; and a maximum Btu limit of 1,065 Btu/scf for receipts and deliveries in its market area (Iowa and Illinois).

The Commission denied Nicor Gas Co.'s request for a clarification of NGPL's authority to impose an operational flow order (OFO) if harm occurs on Nicor's system due to a high or fluctuating Btu level. NGPL's tariff "only authorizes it to issue an OFO in order to alleviate conditions 'which threaten or could threaten the safe operations or system integrity of [NGPL's] system or to maintain operations required to provide efficient and reliably firm service,'" the order said. "Northing in this language would authorize Natural to issue an OFO based solely on operational problems occurring on downstream systems."

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